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
|
