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. 7345
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO. HJ210068RT
                                              :  DRO DOCKET NO.ZDE210017TC
               JOANN STANGA                      

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


               On October 12, 1993, the above-named petitioner-tenant filed a 
          Petition for Administrative Review against an order issued on 
          September 8, 1993, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York, concerning the housing accommodations 
          known as 9935 3rd Avenue, Brooklyn, New York, Apt. D1, wherein the 
          Rent Administrator determined the fair market rent pursuant to the 
          special fair market rent guideline promulgated by the New York City 
          Rent Guidelines Board for use in calculating fair market rent 
          appeals.

               Subsequent thereto, the petitioner-tenant filed a petition in 
          the Supreme Court pursuant to Article 78 of the Civil Practice Law 
          and Rules requesting that the "deemed denial" of the petitioner's 
          administrative appeal be annulled.  This proceeding was then 
          remitted to the Division for a determination of the petitioner's 
          appeal.

               The Administrative Appeal is being determined pursuant to the 
          provisions of Sections 2521, and 2522.3 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 and an objection to registration in May, 1989.  
          In such complaints, the tenant stated in substance that she was not 
          served with a copy of the initial apartment registration form 
          (hereafter RR-1 form); that she first commenced occupancy pursuant 
          to a lease beginning February 1, 1988 at a rental of $600.00 per 
          month and that the subject apartment was rent controlled immediately 
          prior to her occupancy.

               The owner and owner's managing agent were served with copies of 










          S.J.R. 7345,  HJ210068RT

          the tenant's complaints and directed to submit proof that the tenant 
          had been served with the RR-1 form.  The owner and managing agent 
          were also afforded an opportunity to submit comparability data to 
          help establish the fair market rent.  No response was received from 
          the owner or managing agent.  It is noted that DHCR records list the 
          registered owner as "Menalon Realty, 1002 5th Avenue, Brooklyn, New 
          York, 11209".  However some mail sent to this address was returned 
          by the Post Office with the notation "no such number".  Accordingly  
          the Rent Administrator's order in this case was sent to the managing 
          agent and to the owner at the managing agent's address.  It appears 
          that the managing agent then returned the copies of the Rent 
          Administrator's order to the DHCR with no explanation.

               In Order Number ZDE210017TC, the Rent Administrator adjusted 
          the initial legal regulated rent by establishing a fair market rent 
          of $468.26 effective February 1, 1988, the commencement date of the 
          initial rent stabilized lease.  The fair market rent was determined 
          solely on the basis of the special fair market rent guideline.  In 
          addition, the Rent Administrator determined that the tenant had paid 
          excess rent of $6871.80 through January 31, 1992, and directed the 
          owner to refund such excess rent to the tenant.

               In this petition and a supplement to such petition, the tenant 
          alleges in substance that the owner never served her with a copy of 
          the RR-1 form; that the owner never filled out that portion of the 
          vacancy lease rider that would have informed the tenant of the prior 
          tenant's status and rent level; that therefore the rent should have 
          been frozen at the last rent paid by the prior rent controlled 
          tenant pursuant to the decision in Smitten v. 56 MacDougal Street 
          Co., 167 A.D.2d 205, 561 N.Y.S.2d 585 (1990); that the overcharge 
          should have been deemed willful and treble damages imposed; and that 
          in establishing the fair market rent, the Rent Administrator should 
          at least have used the January 1, 1986 maximum base rent rate of 
          $278.73 as listed in DHCR rent records rather than the maximum base 
          rent rate of $324.87 actually used.

               Copies of the tenant's petition and supplement were sent to the 
          owner at its last registered address and to the owner's managing 
          agent.  The copy sent to the owner was returned by the Post Office.  
          The managing agent's copy was not returned.  No response was 
          received on behalf of the owner.

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

               Section 2521.1(a)(1) of the Rent Stabilization Code provides 
          the following:

          "For housing accommodations which on March 31, 1984, were subject to 
          the City Rent Law and became vacant after that date, and which are 
          no longer subject to the City Rent Law, and are rented thereafter 
          subject to the RSL, the initial legal registered rent shall be the 
          rent agreed to by the owner and the tenant and reserved in a lease 
          or provided for in a rental agreement subject to the provisions of 
          this Code, provided that such rent is registered with the DHCR 






          S.J.R. 7345,  HJ210068RT


          pursuant to Part 2528 of this Title (Registration of Housing 
          Accommodations), and subject to a tenant's right to a Fair Market 
          Rent Appeal to adjust such rent pursuant to Section 2522.3 of this 
          Title."

               The penalty for non registration is provided in Section 
          2522.3(a) of the Rent Stabilization Code which provides in pertinent 
          part that if a housing accommodation was registered in accordance 
          with Part 2528 of this Title, the right to a Fair Market Rent Appeal 
          is limited to the first tenant taking occupancy on or after April 1, 
          1984, except where such tenant had vacated the housing accommodation 
          prior to the service by the owner of the Notice of Initial Legal 
          Registered Rent (RR-1 form).  In such event, any subsequent tenant 
          in occupancy shall also have a right to file a Fair Market Rent 
          Appeal until the owner mails the required Notice and 90 days shall 
          have elapsed without the filing of an appeal during said 90 day 
          period.

               With regard to the tenant's contention in the instant case that 
          the rent should have been frozen at the last rent controlled rent 
          due to the owner's failure to serve the RR-1 form, it is noted that 
          the correct penalty in such a case is to consider any fair market 
          rent appeal filed by a tenant to be timely and to process such 
          appeal on the merits in acccordance with Section 2522.3(a).  That is 
          what was done in this case by the Rent Administrator and no 
          additional penalty such as freezing the rent is warranted.  The 
          purpose of service of the RR-1 form is to provide the tenant with 
          the opportunity to file a fair market rent appeal which has already 
          been done in this case.  It is noted that there is nothing in the 
          Rent Stabilization Law or Code which provides that if the initial 
          rent is not properly registered, the rent then becomes the last rent 
          controlled rent.  Rather Section 2528.4 states that the failure to 
          register will bar the owner from collecting any rent in excess of 
          the "legal regulated rent in effect on the date that the housing 
          accommodation became subject to the registration requirements".  
          Clearly such "legal regulated rent" is not the last rent controlled 
          rent.  With regard to the Smitten case cited by the tenant, it is 
          noted that the DHCR was not a party to this proceeding so there is 
          no issue of res judicata or collateral estoppel and since the DHCR 
          and the courts have concurrent jurisdiction, DHCR has the right to 
          independently interpret the Rent Stabilization Law and Code in cases 
          coming before the DHCR.

               With regard to the tenant's contention that an incorrect 
          maximum base rent was used in establishing the fair market rent, it 
          is noted that the owner had been denied 1984-85 maximum base rent 
          increases but had been found entitled to 1986-87 maximum base rent 
          increases.  Therefore in accordance with established policy, the 
          1986 maximum base rent for purposes of calculating the fair market 
          rent contained an allowance for the 1984-85 maximum base rent and 





          was correctly determined by the Rent Administrator.








          S.J.R. 7345,  HJ210068RT

               With regard to the imposition of treble damages, Section 2526.1 
          of the Rent Stabilization Code provides that any owner found to have 
          collected an overcharge above the authorized rent shall be liable 
          for a penalty equal to three times the amount of such overcharge but 
          that if the owner established by a preponderance of the evidence 
          that the overcharge was not willful, the DHCR shall establish the 
          penalty as the amount of the overcharge plus interest.  Further 
          treble damages may not be based upon an overcharge having occurred 
          more than two years before the complaint is filed or upon an 
          overcharge which occurred prior to April 1, 1984.  This section does 
          not apply to fair market rent appeals.  It was proper to treat the 
          tenant's complaints herein as a fair market rent appeal since the 
          tenant was the first rent stabilized tenant.  Pursuant to Section 
          26-512(b)(2) of the Rent Stabilization Law, for apartments which are 
          removed from rent control and become subject to the Rent 
          Stabilization Law by virtue of a vacancy occurring after June 30, 
          1974, the owner is permitted to charge an initial fair market rent 
          as "agreed to by the landlord and the tenant", subject to the 
          tenant's right to challenge the initial rent as exceeding the fair 
          market rent.  If the tenant does not challenge the initial rent, it 
          becomes the legal base rent.  If the tenant challenges the initial 
          rent, a determination may be made that the tenant's initial rent 
          exceeds the proper fair market rent for the apartment.  In such 
          cases, the owner is required to give the tenant a refund or credit 
          for the amount collected in excess of the fair market rent.  However 
          such determination that the initial rent exceeds the fair market 
          rent is considered in the nature of a rent adjustment rather than a 
          rent overcharge and thus the imposition of treble damages and/or 
          interest is not warranted.  It is noted that rent overcharge 
          proceedings where treble damages may be imposed generally involve 
          cases where an initial legal regulated rent (Fair Market Rent) is 
          already established and an owner willfully charges rents higher than 
          permitted by the Rent Guidelines Board upon subsequent renewal 
          leases or refuses to submit a complete rental history thus leading 
          to the conclusion that rent overcharges occurred.  In addition 
          Section 2526.1(g) of the Rent Stabilization Code provides that 
          "[t]he provisions of this section [Section 2526.1, concerning 
          overcharge penalties and assessment of costs] shall not apply to   
          a proceeding pursuant to Section 2522.3 of this Title (Fair Market 
          Rent Appeal)."

               The owner is directed to roll back the rent to the lawful 
          stabilized rent consistent with this decision and to refund or fully 
          credit against future rents over a period not exceeding six months 
          from the date of receipt of this order, the excess rent collected by 
          the owner.

               In the event the owner does not take appropriate action to 
          comply within sixty (60) days from the date of issuance of this 





          order, the tenant may seek to enforce this order by filing an 
          appropriate action in a court of competent jurisdiction.  A copy of 
          this order is being sent to the current occupant of the subject 
          apartment.


          S.J.R. 7345,  HJ210068RT


               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.

               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




                     






































          S.J.R. 7345,  HJ210068RT


    

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