OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                               JAMAICA, NEW YORK 11433
          ------------------------------------X  S.J.R. 7344 Deemed Denial
          APPEAL OF                              DOCKET NO. HG410071RO

                    WERPOR ASSOCIATES,        :  DRO DOCKET NO. GC410549R

                                PETITIONER    :  TENANTS: Venetia Reece
          ------------------------------------X           Mary Neufeld        
                                        IN PART   

          On July 16, 1993, the above-named petitioner-owner filed a Petition 
          for Administrative Review against an order issued on June 11, 1993, 
          by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New 
          York, concerning the housing accommodations known as 1431 York 
          Avenue, New York, New York, Apartment No. 22, wherein the Rent 
          Administrator determined that the owner had overcharged the tenant.

          Subsequent thereto, the petitioner filed a petition in the Supreme 
          Court pursuant to Article 78 of the Civil Practice Law and Rules 
          requesting that the "deemed denial" of its administrative appeal be 
          annulled. The proceeding was then remitted to the Division pursuant 
          to Court order for further consideration.

          The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2526.1 of the Rent Stabilization Code.

          The issue herein is whether the Rent Administrator's order was 

          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 originally commenced by the filing of a rent 
          overcharge complaint by the tenants on March 26, 1992. The tenants 
          took occupancy pursuant to a one year lease commencing November 3, 
          1991 and expiring November 2, 1991 at a rent of $700.00 per month.  
          The complaint stated that the tenants were told by the owner that 
          the lawful rent was $147.51 plus one fortieth the cost of 
          improvements, which amounted to an additional $600.00. It further 
          stated that the renovations were all cosmetic in nature, except for 
          a new stove and refrigerator.

          In answer to the complaint, the owner submitted the complete rental 
          history and extensive documentation of work performed in the 
          apartment prior to the complainants' occupancy. The owner claimed a 
          total cost of $32,491.74 for the work performed, as documented by 
          cancelled checks, invoices and a list of items and payments that was 


          expressly prepared by the owner for the instant proceeding. The 
          owner stated that all work was done when the previous tenant vacated 
          the apartment, since said tenant would not allow any work to be done 
          by the owner while she was in residence. 

          In an order under Docket No. GC410549R, issued on June 11, 1993, the 
          Rent Administrator determined that the tenant was overcharged a 
          total of $34,186.23, including treble damages and excess security. 
          The Administrator denied the owner's entire claim for the cost of 
          apartment improvements, in the amount of $32,491.74, for the 
          following reasons:
               (1) The work performed by Bloch plumbing contractors was 
          performed after the tenants signed the vacancy lease, and thus 
          needed their written consent;
               (2) The invoices from Isaac Stern, electrician, for the upgrade 
          of gas service, and from Bayit Contractors, for the replacement of 
          the sewage pipes, indicated that the work was in the nature of 
          normal maintenance to which the tenant is entitled;
               (3) The invoices listing items purchased at Rickel, Davidson 
          Aluminum & Meta Corp., Channel Home Centers and Karl's Sales & 
          Service Co., do not list the subject building or the subject 

          In its petition, the owner contends that the Administrator's order 
          was in error in rejecting its documentation for the improvements.
          With regard to the gas service, the owner maintains that the prior 
          tenant had no gas service whatsoever, and that the complainants 
          agreed to the installation of a temporary linkage to the gas line in 
          the apartment next door, number 21, until Con Edison inspected the 
          apartment and approved the installation of a gas meter. The receipts 
          from Bloch, the plumber, related to this temporary gas service, and 
          it was incorrect, states the owner, for the Administrator to claim 
          that the complainant did not give her consent. Similarly, the owner 
          contends that the "upgrade" of gas service was not mere maintenance 
          and repair but rather the installation of an entirely new service, 
          since the apartment had had no gas service at all. The owner also 
          notes that the Administrator mistakenly attributed the upgraded gas 
          service to the electrician. With regard to the replacement of the 
          sewage pipes, the owner also challenges the finding that this was 
          maintenance and repair.

          The owner also contends that the disallowance of receipts from 
          common suppliers, such as Rickel, because they did not list the 
          subject building or subject apartment was arbitrary and capricious 
          because retail suppliers only issue cash register receipts which 
          never list such information. Such receipts are valid in this case 
          because, the owner maintains, the only building owned by the owner 
          other than his personal residence is the subject building, and all 
          purchases were related to the architect's plans which were filed 
          with the Buildings Department. 

          Finally, the owner disputes the finding of willfulness because the 
          entire rent increase was based upon the verified cost of legitimate 
          renovations which the owner expected, in good faith, would qualify 
          for an increase because the apartment was left in a shambles by the 
          prior tenant.
          In response, the tenants submitted an answer and a copy of the 
          owner's documentation of the work performed on which they 
          highlighted what they alleged were inaccurate and questionable items 
          in red ink. The answer specifically challenges the Bloch invoices as 


          invalid, since they were dated after the lease was signed; also, 
          there was no proof of an earlier contract for the work. Similarly, 
          the tenants claim that the "upgrade" of gas service occurred after 
          they moved in, and thus could not qualify for a rent increase 
          without their consent. They then question the invoice for Stern, the 
          electrician, because the bank cancellation date on the back of the 
          check, 12/19/91, predates the issuance date of 12/25/91. The tenants 
          also express doubts concerning the performance of plumbing work by 
          Bayit, and question the proof of payment. With regard to the 
          question of willfulness, the tenants claim that the "$30,000" figure 
          is a "deliberate misrepresentation," and that there were only a few 
          basic improvements out of the entire claim.

          The owner submitted a response to the tenants' answer wherein it 
          reiterated its claim that all invoices related to work that was 
          either performed or commissioned before the tenants moved into the 
          apartment, and that it was improper to reject those bills simply 
          because they were dated after the lease was signed. The owner also 
          notes that although the tenants admit there was a new stove, the 
          cost of new piping to connect the stove to the gas line was 
          rejected. The owner also claims that the electrician installed an 
          entirely new wiring system to accommodate an air conditioner, but 
          that this too was rejected. On the finding of willfulness, the owner 
          contends that if it had charged one fortieth of the entire cost of 
          the renovations - which was about $39,000.00 - the rent increase 
          would have been much greater, and that this shows that there was no 
          intent to overcharge.

          The Commissioner is of the opinion that this petition should be 
          granted in part.

          Section 2522.4(a)(1) of the current Rent Stabilization Code 
          provides, in pertinent part, that an owner is entitled to a rent 
          increase where there has been a substantial increase of dwelling 
          space or an increase in the services, or installation of new 
          equipment or improvements, or new furniture or furnishings, provided 
          in or to the tenant's housing accommodation and when the tenant has 
          consented to such increase. An owner may not, however, collect a 
          rent increase for work that constitutes normal maintenance, painting 
          or repairs. In addition, the courts have ruled that an increase for 
          new equipment installed during a vacancy prior to the commencement 
          of a new tenancy or upon the commencement of a new tenancy and 
          reflected in the lease rent, may be collected without the new 
          tenant's consent to pay such increase. (Matter of LeHavre Corp. v. 
          Gribetz, et. al., N.Y.L.J., Matter of Morton I. Hamburg v. CAB, 
          N.Y.L.J., November 9, 1972, p. 18, col. 8, (Sup. Ct., N.Y. Co., 
          Sarafite, J.).  

          Although the owner submitted many pages of photocopied documents in 
          support of its claim for apartment improvements, including invoices, 
          cancelled checks and even cash register receipts, a comprehensive 
          review of them reveals that omly one item of all the items claimed 
          qualifies for a rent increase. In the first instance, the denial of 
          all costs paid to Bloch for plumbing "improvements" because the 
          invoices were dated after the tenants' occupancy, and therefore 
          required their written consent, was in accordance with previous 


          holdings of the Commissioner (Accord: ARL 03737-K, BH410300RT, 
          BH410140RO). It is noted that no increase could have been granted 
          for this work even if the invoice had been dated prior to the 
          tenant's occupancy since it was in the nature of maintenance and 

          With regard to the "restoration" of gas service, whether the 
          temporary linkage to the gas line in the apartment next door or the 
          re-installation of the apartment's own service, once Con Edison had 
          installed a new meter, the Commissioner finds that this work does 
          not qualify as an "improvement" but is instead coincidental with the 
          maintenance and repair of gas service that had been damaged or 
          deteriorated, which is a required service according to the apartment 
          registration. The claim that much of the damage that necessitated 
          the repairs was caused by the previous tenant is not relevant; the 
          Rent Stabilization Code does not allow for reimbursement to the 
          owner for such costs as a basis for a rent increase.

          The Administrator also properly rejected all receipts that did not 
          specify the subject apartment. This has always been a requirement 
          for proving the cost of new equipment, and of any related items 
          incidental to the installation of the equipment. 

          The documentation for the cost of a new stove is satisfactory, 
          however, in that the invoice lists the subject apartment and is 
          dated October 6, 1991, which is just prior to the tenants' 
          occupancy. It should be mentioned that the copy of the invoice that 
          was sent to the Administrator was partially obscured where the 
          apartment number was listed; the copy of the same invoice in the 
          appellant's packet shows the apartment number clearly. Furthermore, 
          the tenants did acknowledge in the complaint that a new stove had 
          been installed (a new refrigerator was also acknowledged in the 
          complaint, but all copies of the invoice in the record are 

          Finally, the Commissioner must reject the owner's contention that 
          there is no evidence in the record that overcharges were willful. 
          The total amount of overcharges determined by the Administrator is 
          based upon the costs of the work performed in the subject apartment, 
          which the owner estimates as $30,000.00. However, the owner's 
          documentation indicates that, with the exception of the new stove 
          and, at best, two other items (the refrigerator and kitchen 
          cabinets), the cost of which are not adequately documented, the 
          greater part of the claim is for items that are clearly repairs and 
          maintenance of the premises. Since the DHCR has consistently 
          followed a policy whereby such overcharges are considered willful, 
          the imposition of treble damages must be upheld.

          With the addition of the cost of the stove (1/40th of $251.50 = 
          $6.29), the amount of overcharges is as follows:

               Tenants' vacancy lease:  Base rent of $128.05 + Guidelines No. 
                                        23 increase of 4% for a one year lease 
                                        + 5% vacancy allowance + $6.29 


                                        increase for stove =  $145.86.

                    $700.00 (rent charged) - $145.86 = $554.14 (overcharge)
                                                  x 20 months 
                                                      + 554.14 (security)     
                                                     $33802.54 (total)

          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.

          If the owner has already complied with the Rent Administrator's 
          order and there are arrears due to the owner as a result of the 
          instant determination, the tenant shall be permitted to pay off the 
          arrears in twelve equal monthly installments.  Should the tenant 
          vacate after the issuance of this order or have already vacated, 
          said arrears shall be payable immediately.

          The Commissioner has determined in this Order and Opinion that the 
          owner collected overcharges of $33,802.54.  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

          ORDERED, that this petition for administrative review be, and the 
          same hereby is,granted in part, and, that the order of the Rent 
          Administrator be, and the same hereby is, modified in accordance 
          with this order and opinion.



                                          JOSEPH A. D'AGOSTA
                                          Deputy Commissioner



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