HC410030RO

                                  STATE OF NEW YORK
                      DIVISION OF HOUSING AND COMMUNITY RENEWAL
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          ------------------------------------X  S.J.R. NO. 7259
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.HC410030RO
                                              :  DRO DOCKET NO.ZED410409R
               43 WEST REALTY CO.                TENANT: THOM SESMA

                                PETITIONER    : 
          ------------------------------------X                             
             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


               On March 11, 1993, the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          February 5, 1993, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York, concerning the housing accommodations 
          known as 328 West 43rd Street, New York, New York, Apartment No. 
          3FW, wherein the Rent Administrator determined that the owner had 
          overcharged the tenant.

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2526.1 of the Rent Stabilization Code.

               The issue herein is whether the Rent Administrator's order was 
          warranted.

               The Commissioner has reviewed all of the evidence in the record 
          and has carefully considered that portion of the record relevant to 
          the issue raised by the administrative appeal.  

               This proceeding was originally commenced on April 26, 1990 by 
          the tenant's filing of a rent overcharge complaint in which the 
          tenant stated in substance that he had first moved to the subject 
          apartment on December 1, 1985 at a rental of $634.25 per month; that 
          his initial rent was not based on the prior tenant's last rent; and 
          that the owner had failed to comply with the decision issued under 
          DHCR docket number ZL3113158RT issued on December 27, 1989, which 
          had set the fair market rent for the subject apartment as $244.08 
          effective August 1, 1982.  A copy of said docket was enclosed with 
          the tenant's complaint.

               On May 10, 1990, a copy of the tenant's complaint was served on 
          the owner along with a notice directing the owner to submit a rental 
          history from the base date including actual rents collected from the 
          tenant.  In such notice, the owner was informed that treble damages 
          would be imposed on any overcharge found to be willful unless the 
          owner establishes that the overcharge was not willful.  No response 
          was received from the owner.

               On December 7, 1992, the owner was also sent a copy of the 
          tenant's complaint, and a final notice concerning the imposition of 









          HC410030RO




          treble damages and afforded an opportunity to respond.  Again there 
          was no response from the owner.

               In Order Number ZED410409R, the Rent Administrator determined 
          that a rent overcharge of $59,766.54 had occurred during the period 
          from December 1, 1985 through November 30, 1991 including interest 
          during the period from December 1, 1985 through April 25, 1988 and 
          treble damages during the period from April 26, 1988 through 
          November 30, 1991.  The Rent Administrator established the rent of 
          the tenant herein based on the prior order issued under docket 
          number ZL3113158RT.

               In this petition, the owner alleges in substance that upon 
          information and belief when the prior tenant filed her complaint 
          under docket number ZL3113158RT, the owner herein did not own the 
          subject premises (although the owner did own the subject premises 
          after said prior complaint was filed before the prior tenant vacated 
          the subject apartment); that the prior owner was totally at fault 
          and that the owner herein is not responsible for any overcharge; 
          that the order under docket number ZL3113158RT was not issued until 
          December 27, 1989, so that when the tenant herein first moved to the 
          subject apartment there was no determination of the fair market rent 
          and no reason to believe that the tenant herein was being 
          overcharged; that on September 10, 1990, after being appraised of 
          the overcharge claims, the owner immediately offered to roll back 
          the tenant's rent; that the Rent Administrator's order herein makes 
          no reference whatsoever as to the basis for the finding of a rent 
          overcharge; that the owner never received a copy of the tenant's 
          complaint until December 7, 1992 when it received the final notice 
          of imposition of treble damages so that the DHCR had already 
          predetermined the case; that the case was then decided within two 
          months of December 7, 1992 - an extremely short period of time by 
          DHCR standards; that in any event the imposition of treble damages 
          was not warranted since DHCR has set no standards for such 
          imposition and since any overcharge was caused by the prior owner; 
          that Section 2526.1(f)(2) of the Rent Stabilization Code provides 
          that in the absence of collusion between an owner and any prior 
          owner, a current owner shall not be liable for treble damages upon 
          such portion of an overcharge resulting from overcharges caused by 
          any prior owner; that the tenant herein ceased paying rent 
          immediately after the February, 1990 rent payment; and that the 
          owner in good faith attempted to resolve the overcharge issue 
          promptly upon discovering its existence.

               In answer to the owner's petition, the tenant stated in 
          substance that at the time he filed his complaint the owner had made 
          no effort to refund the money owed to him in compliance with the 
          earlier order; that the owner never tendered him any check for the 
          overcharges; and that the owner gave no reason for its failure to 
          respond in the proceeding before the Rent Administrator.







          HC410030RO


               The Commissioner is of the opinion that this petition should be 
          denied.

               
               An examination of the rent records in this case discloses that 
          the fair market rent of the subject apartment was established in an 
          order issued under docket number ZL3113158RT on December 27, 1989.  
          A copy of said order was served upon the owner herein and no appeal 
          was taken from said order so that the determination of the fair 
          market rent represents a final order and was properly used to 
          determine the initial rent of the tenant herein.  Further the record 
          shows that although the owner wrote a letter dated September 10, 
          1990 to the tenant offering a rent reduction, no refund check was in 
          fact tendered to the tenant.  In addition a copy of such letter was 
          never sent to the DHCR during the course of the proceeding before 
          the Rent Administrator and no refund of the entire overcharge was 
          tendered within the time afforded to interpose an answer to the 
          tenant's complaint.  Therefore,  the September 10, 1990 letter of 
          the owner does not meet the requirements of Policy Statement 89-2 to 
          establish lack of willfulness.  In addition, the fact that the 
          tenant herein moved to the subject apartment before the issuance of 
          the December 27, 1989 DHCR order does not establish a lack of 
          willfulness.  The owner should have complied with such order when it 
          was issued and taken immediate action to reduce the rent of the 
          tenant herein and to refund any excess rent paid by the tenant 
          herein and not waited until September 10, 1990 to take any action.

               Further, contrary to the owner's assertions, the owner was 
          initially served with a copy of the tenant's complaint and afforded 
          a chance to respond on May 10, 1990.  It is noted that the May 10, 
          1990 notice was sent to the owner at the same address where it 
          received the later notices of December 7, 1992.  Moreover, even if 
          the owner did not receive the first notice, the later notices of 
          December 7, 1992 were sufficient to ensure the due process rights of 
          the owner.  The sending of the final notice of treble damages does 
          not mean that DHCR has prejudged the case - this merely gives the 
          owner notice of the penalties that may be imposed.  It is noted that 
          the owner never responded to any notices and has not given any 
          explanation for its failure to respond.  It is also noted that 
          Section 2526.1(f)(2) quoted by the owner in its petition refers only 
          to situations where no records sufficient to establish the legal 
          regulated rent were provided at a judicial sale - a factor absent in 
          the case at bar.  Finally, the owner's contention regarding the 
          tenant's failure to pay rent after the February, 1990 rent payment 
          should have been raised in the proceeding before the Rent 
          Administrator and cannot be considered herein since this is not a de 
          novo proceeding.  Accordingly, the Rent Administrator's order was 
          warranted.








               The owner is directed to reflect the findings and 







          HC410030RO

          determinations made in this order on all future registration 
          statements, including those for the current year if not already 
          filed, citing this order as the basis for the change.  Registration 
          statements already on file, however, should not be amended to 
          reflect the findings and determinations made in this order.  The 
          owner is further directed to adjust subsequent rents to an amount no 
          greater than that determined by this order plus any lawful 
          increases.

               The Commissioner has determined in this Order and Opinion that 
          the owner collected overcharges of $59,766.54.  This Order may, upon 
          expiration of the period for seeking review of this Order and 
          Opinion pursuant to Article Seventy-eight of the Civil Practice Law 
          and Rules, be filed and enforced as a judgment or not in excess of 
          twenty percent per month of the overcharge may be offset against any 
          rent thereafter due the owner.  Where the tenant credits the 
          overcharge, the tenant may add to the overcharge, or where the 
          tenant files this Order as a judgment, the County Clerk may add to 
          the overcharge, interest at the rate payable on a judgment pursuant 
          to section 5004 of the Civil Practice Law and Rules from the 
          issuance date of the Rent Administrator's Order to the issuance date 
          of the Commissioner's Order.

               THEREFORE, in accordance with the provisions of the Rent 
          Stabilization Law and Code, it is

               ORDERED, that this petition for administrative review be, and 
          the same hereby is, denied, and, that the order of the Rent 
          Administrator be, and the same hereby is, affirmed.

          ISSUED



                                                                        
                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner





                     

















          HC410030RO





















    

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