HC410065RO


                                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 
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEAL OF                              DOCKET NO. HC410065RO

                                          :  DISTRICT RENT OFFICE
          OLGA MORA,                         DOCKET NO.FK410065R
                                            
                                             TENANT: Carmine and              
                                             Christina Cassino
                            PETITIONER    :  
      ------------------------------------X                             


           ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


      On March 12, 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 15 West 74th Street, 
      Apartment G, New York, New York, wherein the Administrator determined 
      that the tenant had been overcharged.           

      The Administrative Appeal is being determined pursuant to the provisions 
      of 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 commenced by the tenant's filing of a rent 
      overcharge complaint on November 26, 1991.  The tenants had assumed 
      occupancy on September 1, 1991 pursuant to a one year lease at a rent of 
      $1300.00 per month.          
                       
      In answer to the tenant's complaint, the owner submitted the complete 
      lease history from the base date.  The rent history showed an initial 
      registered rent of $714.13 on the base date of April 1 , 1984.   Annual 
      registrations were filed every year though 1987.  The 1987 registration 
      stated that the premises were occupied by a professional business, and 
      the apartment was thus exempt from regulation.  Annual registrations 
      were not filed again until 1992, where the complainant was listed for 
      the first time.  The owner explained that the apartment was occupied by 
      commercial tenants until the tenancy of David Korb, immediately prior to 
      the complainant's occupancy.   Mr. Korb occupied the premises from May- 
      August, 1991.









          HC410065RO



      In Order number FK410065R, issued on February 5, 1993, the Administrator 
      determined that the tenant had been overcharged in the amount of 
      $10,144.97, including treble damages for overcharges collected since 
      April 1, 1984.   The Administrator calculated the lawful rent by 
      "deeming" one two year commercial lease commencing on September 1, 1986, 
      a two year deemed lease and a one year deemed lease for a period of 
      owner occupancy, from September 1, 1988 until April 30, 1991, and a one 
      year vacancy lease for David Korb, commencing on May 1, 1991. 
      Overcharges were first determined in Mr. Korb's lease, in part from the 
      rejection of the owner's claim of $5,000.00 in apartment improvements, 
      because they were found to be only maintenance and repair, and thus 
      ineligible for a rent increase.  Overcharges were also determined for 
      the complainant's vacancy lease, because of compounding of guidelines 
      and vacancy allowance increases for the second lease in the same 
      guidelines period.

      In its petition, the owner contends in substance that the 
      Administrator's order was in error in that it failed to consider the 
      actual lease history of the premises in calculating rent increases that 
      have been granted for periods of commercial occupancy, owner's occupancy 
      and other exemptions.  The owner proffers its own calculations - as 
      detailed in an enclosed chart- wherein it calculated one year guideline 
      increases for each year of commercial and owner occupancy, and vacancy 
      allowances at the commencement of the commercial occupancy and again 
      with the commencement of the owner's occupancy.  As based on these 
      calculations, the owner acknowledges an inadvertant overcharge of $17.55 
      per month, coming to a total amount of $193.05, which it refunded to the 
      tenants prior to the issuance of the order.  The owner also contends 
      that the disallowance of the claim for new equipment as ordinary 
      maintenance and repair is unsupported by facts or reasoning and is thus 
      "arbitrary and capricious."  Instead, the owner claims that the 
      improvements were mostly structural in nature and thus qualify for a 
      rent increase.  Even if unqualified, however, the owner contends that it 
      believed they were legitimate improvements, and therefore it was 
      improper to impose treble damages, a position supported by DHCR 
      opinions, case law and Policy Statement 89-2.  The owner contends that 
      willfulness was not present in any overcharge, as evidenced by the 
      owner's voluntary rollback of the rent and refund of overcharges.

      In their answer, the tenants state that the owner's PAR fails to provide 
      a single credible reason to revoke the Administrator's order.  They 
      contend that the alleged rental history of the apartment clearly shows 
      that their initial rent of $1,300.00 was an overcharge.  The owner's 
      rent calculation of the commercial lease period was self-serving in that 
      the owner gave itself one year leases and all vacancy allowances, 
      whereas the Administrator properly calculated two year deemed leases and 
      a one year deemed lease prior to the complainant's occupancy.  
      Furthermore, they contend, the owner was not even entitled to increases 
      in 1987 and 1988 because he failed to file annual registrations in those 
      years.








          HC410065RO


      The tenants also argue that the owner's objections to the denial of the 
      claim for new equipment are all without merit, and the Administrator's 
      decision was correct.  In the first place, the invoice fails to identify 
      which of the two apartments on the first floor was actually repaired 
      and, in all likelihood, the work was done in both of them; if so, the 
      cost of the work in only the subject apartment is never specified.  
      Similarly, the invoice fails to break down the cost for each item 
      listed.  The tenants also object to the authenticity of the invoice, 
      noting that the amount was hand-written while the rest of the invoice 
      was typed.  However even if the invoice only represented work for the 
      subject apartment, the tenants believe the claim was unqualified as 
      wholly in the nature of repairs and maintenance, as was found by the 
      Administrator.  The tenants also support the finding of willfulness and 
      the imposition of treble damages.  They contend, in the first place, 
      that the DHCR does not, as a rule, remove treble damages just because an 
      owner claims that it thought work done in the subject apartment 
      qualified for a rent increase.  In cases where the DHCR has removed 
      treble damages, the tenants point out that there was usually a major 
      portion of the claim that did qualify as improvements, or the owner "in 
      good faith" believed that the work was a "substantial rehabilitation" of 
      the apartment such as would qualify for a "first rent," neither of which 
      is evident in this case.  The tenants also contend that since the prior 
      tenant actually used the apartment as a residence, it was not properly 
      a commercial tenancy.  Therefore, the owner's failure to register it 
      during that tenancy was improper, and further evidence of willful 
      overcharging.  Furthermore, the use of $1,200.00 - itself an unlawful 
      rent - as the base for calculating the tenant's vacancy rent of 
      $1,300.00, an increase that is a blatant avoidance of the guidelines, is 
      proof of willful overcharging.  Finally, the tenants contend that the 
      owner's petition was untimely filed with the DHCR and should have been 
      rejected.

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

      At the outset, an examination of the record including the U.S. postal 
      mail on the envelope in which the owner's petition was filed, discloses 
      that said petition was timely filed within the 35 day filing period, 
      contrary to the tenant's answer to said petition.

      Turning to the merits, an examination of the record is sufficient to 
      validate the Administrator's calculation of deemed increases for the 
      period when the subject apartment was exempt from regulation because of 
      a commercial tenancy and owner occupancy.  In essence, the tenants are 
      correct when they say the owner's calculations are self-serving because 
      the maximum possible yearly increases are taken.  Rather DHCR policy 
      provides that calculating the increases during an exemption period would 
      require the increase of a deemed two year vacancy lease and such other 
      one and/or two year deemed renewal lease increases as may be required to 
      "bridge the gap" between the last stabilized tenant's 




      lease and the September 30th guidelines base date applicable to the new 
      tenant's vacancy lease.  Since this is exactly the formula relied on by 
      the Administrator, the order's calculation of guidelines increases is 







          HC410065RO

      affirmed.

      The petitioner's contention that most of its $5,000.00 claim for work 
      done in the apartment qualified as "new" or "major" improvements, 
      because they were "structural" in nature is belied by the invoice itself 
      which is clearly and unambiguously a list of repairs; i.e., remove old 
      rotted damaged walls, remove overhead ceiling, remove protruding pipes, 
      remove part of flooring, frame out wall, sheetrack wall, install 
      clampshell around doorframe, tape and compound wall and paint apartment.  
      However, even if the other items listed did suggest improvements(build 
      new ceiling, run pipes in wall and run new electric line), no increase 
      would be allowed because the invoice failed to break down the cost of 
      each item or to designate the apartment.

      The petitioner's objection to treble damages is similarly without merit.  
      There is no credible evidence that the claim for "improvements"- 
      accounting for $125.00 per month - was not a willful overcharge.  Of the 
      twelve items, only the three listed above can even remotely be 
      considered "improvements".  The awarding of treble damages is consistent 
      with DHCR cases where rent increases were denied for work constituting 
      normal decorating or maintenance (Accord: ARL-03105L).  Part of the 
      remaining overcharge - $73.35 - is unexplained and therefore must be 
      considered willful.  In addition part of the overcharge was attributed 
      to the owner's taking of two vacancy allowances during the Guideline 22 
      period - prohibited by Guideline 22 and therefore willful.  Since the 
      majority of the overcharge was due to willfulness which the owner has 
      failed to refute, the imposition of treble damages was warranted.

      The owner is directed to reflect the findings and 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 $10,144.97.  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



          HC410065RO

      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





    

TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name