SJR6945, HC410059RO


                                  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  SJR6945
          IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
          APPEAL OF                              DOCKET NO.IF410014RP,        
                                                           HC410059RO         
                                              
                  Moonglo, Inc.               :  DRO DOCKET NO. AG410415-R
                                                 TENANT: Juan Aroca/Lisa      
                                PETITIONER    :           Mastropole  
          ------------------------------------X                             
             ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW

               On March 22, 1993, the above-named petitioner-owner refiled a 
          Petition for Administrative Review against an order issued on 
          December 6, 1991, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York, concerning the housing accommodations 
          known as 201 East 38th Street, New York, NY apartment no. 6, 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.  

               The owner's original appeal was dismissed as untimely
          and the owner subsequently instituted a proceeding pursuant to 
          Article 78 of the Civil Practice Law and Rules in the Supreme Court 
          New York County  seeking reversal of the dismissal order.  By order 
          dated July 29, 1993,the proceeding was remitted to the DHCR for 
          processing the appeal on the merits,

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 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 filing of a fair market 
          rent appeal  on June 27, 1986 by the former tenant, Juan Aroca.  The 
          tenant stated that he was the first rent stabilized tenant to occupy 
          the apartment and that while the rent prior to his occupancy
          was $102.83, he was paying $574.00 which was the highest rent in the 
          subject building.  The tenant stated also that the tenancy had begun 
          pursuant to a one year vacancy lease commencing January 1, 1986, 
          that he had first moved to the subject apartment on January 15, 1986 
          and that he had never received a copy of the apartment registration 
          form(RR-1 form).

               The record indicates that ownership of the subject building 
          changed  several times during the pendency of this proceeding and 







          SJR6945, HC410059RO

          that the petitioner took title in 1988.  

               On  October 14, 1991, in response to the complaint, the owner 
          stated that the complainant had been evicted and was precluded from 
          filing a Fair Market Rent Appeal because he had been served with a 
          DC-2 notice on January 22, 1986 and the statutory time to file the 
          appeal had expired within ninety (90) days thereafter.  The owner 
          submitted proof which allegedly had been found in the records of a 
          prior owner,  a copy of an envelope postmarked January 22,1986  
          which had been mailed by certified mail to the complainant at the 
          subject address.  Notations on the envelope indicated that the 
          recipient was deceased and that said envelope had been returned 
          unopened to the owner.  The owner stated that although said envelope 
          was still sealed, it believed that a DC-2 notice and the initial 
          apartment registration were contained therein.  The owner requested 
          that a hearing be held to resolve the issue of whether proper 
          service had been effected.

               Subsequent thereto, the Administrator advised that since the 
          tenant's initial lease commenced February 1, 1986, proof of service 
          of the RR-1, dated January 22, 1986, a date prior to the 
          complainant's tenancy, was not proof of valid service and that the 
          proceeding would be processed as a Fair Market Rent Appeal.  

               In a response dated October 30, 1991, the owner disputed the 
          Administrator's conclusion based upon the lease commencement date 
          and submitted evidence -  i.e. the tenant's complaint in which the 
          tenant stated that he had been in occupancy on January 15, 1986 and 
          a transmittal letter from the rental broker, enclosing a money order 
          of $203.85 representing rent  for January 20, 1986 to January 31, 
          1986- that notwithstanding the lease commencement date, the tenancy 
          had actually begun before service of the RR-1 and the DC-2 on the 
          tenant on January 22, 1986.     The owner again requested dismissal 
          of the fair market rent appeal as untimely.  

               In the order issued on December 6, 1991, the Rent 
          Administrator,  determining that the appeal was timely and that the 
          tenant was eligible to file a fair market rent appeal, adjusted the 
          initial legal regulated rent by establishing a fair market rent of 
          $417.78 effective February 1, 1986, 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 its appeal, the owner contends that the Rent Administrator's 
          order should be reversed for the following reasons:

          1.  although the owner's submission of October 30, 1991 was timely 
          received by the DHCR, the Administrator failed to consider the 
          import of the submission, thus depriving the owner of an opportunity 
          to be heard with a consequent denial of due process;
          2.  the Administrator's failure to set forth the facts and evidence 
          relied upon to sustain the timeliness of the Fair Market Rent Appeal 
          constituted a further violation of the owner's due process;  
          3.  because the tenant was properly served with a DC-2 notice by 
          certified mail, the complaint should have been dismissed;  
          4.  the Administrator arbitrarily disregarded documentary evidence 
          of the tenant's actual date of occupancy when in fact the tenant had 
          admitted the alleged date of occupancy  and there had been no 


          SJR6945, HC410059RO

          statement from the tenant disputing same.  Any factual dispute 
          concerning the validity of the service should have been resolved at 
          a hearing which the owner had requested.  

               Although afforded the opportunity to do so, the current tenant, 
          Lisa Mastropole, who has been substituted for the complainant, 
          failed to respond to the petition.   

               With due regard for the owner's due process rights, the 
          Commissioner has given full consideration to all of the owner's 
          submissions and to the entire record and is of the opinion that this 
          petition should be denied.  
               
               Section 2522.3(a) of the Rent Stabilization Code provides that 
          where the firsttenant taking occupancy after December 31, 1973 of a 
          housing accommodation previously subject to the City Rent Law (rent 
          control) was served with the notice required by Section 26 of the 
          former Rent Stabilization Code (DC-2 notice), the time within which 
          such tenant may file a fair market rent appeal is limited to 90 days 
          after such notice was mailed to the tenant by the owner by certified 
          mail.  

               The mailing requirement imposed by Section Code 2522.3(a) are 
          reasonably calculated to provide notice to the first stabilized 
          tenant of the right to challenge the initial stabilized rent.  The 
          record indicates that the prior owner ostensibly complied with these 
          mailing requirements.  However, the envelope's return with the 
          notation "deceased" by the postal authorities should have provided 
          notice to the owner that the tenant had not been given the 
          requirednotice.  Valid service has been upheld where a tenant fails 
          to claim the mailing or where a tenant refuses the mailing.  There 
          is no evidence in the record  that the tenant refused to claim or to 
          accept the certified mail.  The owner's statement that it believed 
          that the tenant's father had the same name and had died at that time 
          is not sustained by the record.  Moreover, a case for refusal is not 
          made out by the allegation.   The owner knew that the tenant was 
          alive and paying rent and by the return of the unopened certified 
          mail, that the tenant had not received notice of his right.   The 
          record confirms, despite the tenant's statement on the complaint and 
          the broker's transmittal letter regarding commencement of the 
          tenancy, that the lease commenced February 1, 1986.  Given the 
          apparent lack of receipt of notice by the tenant and the ambiguity 
          regarding the commencement date of the tenancy, the Commissioner 
          finds that the owner did not serve a valid DC-2 notice on the 
          complainant.  Therefore, the tenant's application was timely and the 
          Administrator was correct in processing  the tenant's fair market 
          rent appeal.
               
               Pursuant to Code Section 2527.5, the granting or ordering of a 
          hearing is discretionary.  Where it is possible to resolve an issue 
          without holding a hearing, as is the case herein, a hearing will not 
          be ordered.

               The owner is directed to roll back the rent to the lawful 
          stabilized rent consistent with this decision.   

               The owner is directed to reflect the findings and 
          determinations made in this order on all future registration 







          SJR6945, HC410059RO

          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




                     






























    

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