STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:HI410109RO
Manhattan East Associates DRO DOCKET NO.:ED410326R
TENANT:Marla Debra Shapiro
ORDER AND OPINION DENYING FOR ADMINISTRATIVE REVIEW
On September 24, 1993, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on September 3, 1993,
by the Rent Administrator, 92-31 Union Hall Street, Jamaica New York,
concerning the housing accommodations known as 155 East 84th Street,
Apartment 1A, New York, New York, wherein the Administrator determined
that the owner had overcharged the tenant.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record relevant to the issues
raised in the administrative appeal.
This proceeding was originally commenced on April 26, 1990 when the
tenant filed a complaint of rent overcharge. The tenant stated that the
owner's failure to provide heat, as was required by the lease, had
increased the rental cost of the subject premises beyond the amount
permitted by the Rent Stabilization Law.
In answer, the owner stated that the tenant had been fully aware at the
time of renting that each tenant provided its own heat by means of
individual electric systems, the cost of which was to be paid directly
to Con Edison by the tenant. The owner also stated that it had
completely renovated the subject apartment at a cost of $14,990.63 which
equated to a permissible rent increase of $374.76. With its answer, the
owner submitted invoices and cancelled checks to substantiate its claim
for the individual improvements increase, a copy of the proof of service
of the 1985 registration, and a real estate broker's affidavit attesting
to the tenant's knowledge with respect to the tenant's responsibility
for providing heat.
Although subsequently, on numerous occasions, the owner was requested to
submit a copy of the 1984 apartment registration (RR-1) along with proof
of its service, the owner failed to do so, but explaining that the
subject apartment had been vacant in 1984, submitted in its stead the
1985 annual registration. The owner stated that the tenant had vacated
the subject apartment after filing the complaint.
In Order Number ZED410326R, the Administrator established the legal
stabilized rent at $450.00 and determined that the owner had collected
an overcharge of $9,455.53, for the period from February 1, 1990 to
April 30, 1990, inclusive of excess security and treble damages.
In its appeal, the owner contends in substance that the order should be
reversed as it had not defaulted but had responded to the complaint six
times, submitting proof of required registration and proof of renovation
costs of more than $15,000.00 where all but $1,778.67 was disallowed by
the Administrator. The owner further contends that based upon the Rent
Regulation Reform Act of 1993, treble damages are unwarranted.
The record indicates that the tenant herein vacated the subject
apartment before the issuance of the Administrator's order.
The Commissioner is of the opinion that this petition should be denied.
Pursuant to Section 2528.1 of the Rent Stabilization Code, each housing
accommodation subject to the Rent Stabilization Law on April 1, 1984, or
thereafter, and not exempted from registration by the DHCR shall be
registered with the DHCR within 90 days after such date. There is ample
evidence that the subject apartment has been registered annually since
1985. However, there is no proof of its initial registration. The
owner's claim on appeal that the apartment was registered as vacant in
1984 is not substantiated by the record and is, in fact, contradicted by
the owner's assertion to the Administrator that it believed it was
unnecessary in 1984 to register vacant apartments. Further, there is no
evidence that the owner filed an amended initial registration upon
occupancy by the first rent stabilized tenant as required.
Because the owner failed to submit proof of the initial registration,
the owner was required to submit a rent history from April 1, 1980,
including all leases from that time. The owner's failure to comply
resulted in the establishment of the legal stabilization rent by means
of court approved default procedures. The Commissioner notes that the
default method was appropriate despite the appearance in the record of
an Order Fixing the Maximum Rent under rent control in 1974 and the
filing of a decontrol report in 1976 since these documents deal with a
time when the subject apartment was under rent control and do not excuse
the failure to submit a rental history from April 1, 1980.
Code Section 2528.4 provides, in pertinent part, that failure to
properly and timely comply with registration requirements bars an owner
from collecting any rent increases until the initial registration
including service on the tenant has been completed. Since the record
shows that the owner failed to meet initial registration requirements,
the Administrator acted correctly in freezing the collectible rent at
the default level. The owner is advised to file an initial registration
to prospectively eliminate this prenalty.
Pursuant to Section 2522.4(a) of the Code, an owner is entitled to a
rent increase equal to 1/40th the cost of providing increased space and
services, new equipment, or new furniture or furnishings on written
tenant consent to the increase. In the case of vacant housing
accomodations written consent is unnecessary.
When the rent is challenged, an owner must submit documentation,
including invoices which state with specificity the location and the
nature of the work done and proof of payment as well as tenant consent
where required, to substantiate its entitlement to the rent increase
claimed. An examination of the record discloses that the Administrator
was correct in allowing a rent increase for individual apartment
improvements of only $44.47 (1/40th of $1778.67) for the installation of
new equipment. Improvement costs of $11,636.40 were correctly
disallowed because no proof of payment was presented and some of the
items such as bathroom repair, painting and floor sanding are considered
to be ordinary repair and maintenance; as such, their costs do not
qualify for a rent increase.
With respect to treble damages, the Commissioner notes that the Rent
Regulation Reform Act of 1993 does not apply to proceedings initiated
before July 1991. Moreover, the overcharge found herein arises not only
from the failure to register but also from the collection of an improper
rent increase based on apartment repairs and maintenance. Accordingly,
the Administrator did not err in imposing treble damages.
The Commissioner has determined in this Order and Opinion that the owner
collected overcharges of $9,455.53. Upon the expiration of the period
for seeking review of this Order and Opinion, pursuant to Article 78 of
the Civil Practice Law and Rules, the tenant may file this Order as a
judgment. 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 date of the Rent Administrator's Order to the issuance date of
the Commissioner's order.
A copy of this order is being sent to the current tenant in occupancy.
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
THEREFORE, in accordance with the provisions of the Rent Stabilization
Law and Code, it is
ORDERED, that this petition be, and the same hereby is, denied and the
Rent Administrator order be, and the same hereby is, affirmed.
JOSEPH A. D'AGOSTA