OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433

          APPEAL OF                                DOCKET NO.HI620028RO
                                              :    DRO DOCKET NO.
              Stanley Wasserman                               FG620039RP
              Real Estate                          TENANT: Samuel Armand

                               PETITIONER     :


          On September 1, 1993, the above-named owner filed a Petition  for
          Administrative Review against an order of  a  Rent  Administrator
          issued on July 28, 1993, wherein the Administrator determined that 
          the owner of the housing accommodations known as Apartment 3C  at
          2106 Bronx Park East, Bronx, New York, had overcharged the tenant 

          Since February 1989, when the tenant filed the complaint  herein,
          the  subject  apartment  has  been   the   subject   of   various
          determinations and  appeals  culminating  in  the  aforementioned
          Administrator's order, which states inter  alia:  that  a  rental
          increase based on the installation of major capital  improvements
          ("MCI increase") was granted by the Division effective August  1,
          1986; that the initial overcharge, calculated under order number 18 
          of the Rent Guidelines Board, was in the amount of $15.00 for each 
          month from May,  1987,  through  April  of  1989;  and  that  the
          aforementioned MCI increase became collectible on February 1, 1989. 

          The owner's petition now  attacks  that  order  "based  upon  the
          agency's failure to  take  into  account  the  $15.00  per  month
          surcharge allowable under Rent Guideline Board (RGB) Order  #18,"
          adding that "RGB 18 allows the addition of a $15.00 surcharge for 
          apartments renting under $350.00  on  September  30,  1986,"  the
          tenant's rent having been $317.62 on that date.  In a supplementary 
          letter, the owner adds: "Since the Rent Stabilization Code . .  .
          precludes the collection of anything more than 6% of the permanent 
          MCI increase ($19.06) in the definition of  the  legal  regulated
          rent," the rent on September 30, 1986  --  even  adding  the  MCI
          increase -- was under the $350.00 threshhold.


          The Commissioner is of the opinion that this petition  should  be

          It is of course true that when the owner added the $15.00 surcharge 
          to the rent computed under order  number  18,  it  did  not  then
          constitute an overcharge since the MCI increase in question, which 
          brought the rent over $350.00 and thus made the owner  ineligible
          for the $15.00 surcharge, had not yet been approved.  However, the 
          Commissioner notes that the owner has received retroactive "credit" 
          in the Administrator's calculations, for an MCI increase commencing 
          in 1986.  That credit indeed results in the owner's retention  of
          $15.00 more in rent, for 21 months, than was permissible for  the
          period with which the Administrator's order deals.  If the owner, 
          that is, were to retain the low-rent surcharge after being credited 
          with an MCI increase that effectively lifts the lawful rent above 
          the maximum for surcharge eligibility, the tenant would have paid 
          too much, to the  extent  of  the  surcharge.   The  latter  must
          therefore be refunded, which is precisely what the  Administrator
          has ordered.

          With regard to the owner's contention that it was still below the 
          $350.00 threshhold because of the 6% annual limitation on MCI rent 
          increases, it is noted that for purposes of calculating a  lawful
          stabilization base rent to determine if an owner is entitled to a 
          low-rent surcharge, the entire amount of the MCI in included even 
          though the owner is barred by a 6% annual cap.  Morever  in  this
          case, due to the effective date of the MCI rent increase, the owner 
          was entitled to a 6% cap on the MCI arrears as well.  This addition 
          clearly made the rent exceed the threshhold amount of $350.00.

          The Commissioner has determined in this Order and Opinion that the 
          owner collected overcharges of $496.13.  The tenant may offset up 
          to 20 percent per month  of  that  overcharge  against  any  rent
          hereafter due the owner.  The tenant 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 date of this 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.

                                                JOSEPH     A.      D'AGOSTA
                                                Deputy         Commissioner



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