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

          APPEAL OF                              DOCKET NO. HJ610066RO
                                              :  DRO DOCKET NO. ZFF610269R
                   RIVERDALE ESTATES             TENANT:  Jennifer Thomas     

                                PETITIONER    : 

               On October 14,1993 the above-named petitioner-owner filed a 
          Petition for Administrative Review against an order issued on 
          September 9, 1993, by the Rent Administrator, 92-31 Union Hall 
          Street, Jamaica, New York, concerning the housing accommodations 
          known as 3240 Henry Hudson Parkway, Bronx, New York, Apartment No. 
          2D, wherein the Rent Administrator determined that the owner had 
          overcharged the tenant. 

               The Administrative Appeal is being determined pursuant to the 
          provisions of Section 2521.1(a)(2) 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 commenced on June 17, 1991 when the tenant 
          filed a rent overcharge complaint.  The tenant stated she had 
          commenced occupancy of the subject apartment on March 1, 1988 
          pursuant to a two year vacancy lease at a rental of $1750.00.

               In response to the complaint, the owner asserted that since the 
          tenant was the first rent stabilized tenant, the overcharge 
          complaint was improper and should be dismissed.  Subsequent thereto, 
          the owner submitted invoices and copies of cancelled checks to 
          support the owner's claim for a rent increase based upon individual 
          apartment improvements, copies of annual apartment registrations and 
          a copy of a DC-2A notice, allegedly timely served on the tenant,  as 
          well as a lease history from March 1979.  

               While the processing of the matter continued, examination of 
          DHCR records disclosed that the subject apartment had been 
          previously expelled from rent stabilization and returned to rent 
          controlled status effective February 10, 1983 during the occupancy 
          of a prior tenant pursuant to Expulsion Order no. 701 by the N.Y. 
          Conciliation and Appeals Board (hereafter CAB),and pursuant to 
          Docket ZAD21003 by the New York City Office of Rent and Housing 
          Maintenance.  The rent controlled rent was determined to be $562.06 
          effective February 10, 1983 pursuant to Docket ZAD21003 issued on 


          March 22,1984.  

               In response to a final notice in which the owner was informed 
          of the possible imposition of treble damages, the owner stated that 
          it believed the tenant was time-barred from challenging the initial 
          regulated rent and that the rent having been increased within 
          permissible parameters, including guidelines increases, fair market 
          rent adjustments and apartment improvements, there was no 

               In the order herein appealed, the Administrator determined that 
          the legal rent for the subject apartment was $1769.62 effective 
          March 1, 1993 and directed the owner to refund to the tenant an 
          overcharge of $45, 032.72 including interest on the overcharge which 
          accrued from March 1, 1988 to June 30, 1989 and treble damages on 
          the overcharges occurring subsequent to June 30,1989.  

                In its appeal, the owner contends that the Administrator's 
          order should be reversed as 1) the tenant, who was timely served 
          with a DC-2A notice, failed to timely file a fair market rent 
          appeal, the appropriate remedy for objecting to the initial 
          regulated rent; 2) the subject apartment was rented to the tenant at 
          a charge below the permissible lawful rent;  3) the Administrator 
          erred in its interpretation of the prior CAB  expulsion order in 
          finding  that the owner was not entitled to a fair market rent 
          adjustment upon readmission to rent stabilized status;  and 4) in 
          any event the imposition of treble damages was not warranted.  

               In response to the appeal, the tenant contends that the appeal 
          should be denied and the Administrator's determination be affirmed 
          because 1) the owner was not entitled to the benefits of a fair 
          market rental and was bound to a calculation of the rent as 
          determined in the prior CAB order;  2) inasmuch as the owner was not 
          entitled to a fair market rent, the tenant's complaint is not stale;  
          and  3) the owner's DC-2A notice was defective since the owner 
          failed to notify the tenant of the prior orders determining the 

               The owner filed a reply to the tenant's response supplementing 
          its appeal and stating in substance that the tenant's overcharge 
          complaint was not timely and that in accordance with the earlier CAB 
          order, it was entitled to take the special fair market rent 
          guideline upon the initial renting to the tenant herein because said 
          CAB order only prohibited a "free market rent." 

               The Commissioner is of the opinion that this petition should be 

               Based upon CAB Opinion Number 20,913, issued on June 3, 1982 
          and amended on February 10, 1983, and Expulsion Order 701 which 
          ordered the expulsion of the apartment from rent stabilization, the 
          instant owner was not entitled to the benefits of a fair market 
          rent.  Pursuant to said order, the apartment was to remain subject 
          to the City Rent Law until it became vacant when it would again be 
          eligible for rent stabilization, at which time, the initial 
          stabilized rent would be based on the "Maximum Rent (Maximum Base 
          Rent or Maximum Collectible Rent whichever is greater) permitted 
          under the City Rent Law plus the lawful guidelines increases for the 


          new tenancy."  Further, in said CAB order, it was stated that "to 
          permit the owner to benefit from its flagrant violations of the law 
          in allowing it to return to the system of a free market rental after 
          expulsion for willful overcharge, upon the next vacancy, would make 
          a mockery  of the rent stabilization system which so heavily depends 
          upon voluntary compliance, particularly, in the area of regulation."  
          This penalty is codified in Section 2521.1(a)(2) of the Rent 
          Stabilization Code.

               For housing accommodations which on March 31, 1984 were subject 
               to the penalties provided in former section YY51-4.0 of the 
               Administrative Code of the City of New York, and which became 
               vacant thereafter, the initial legal registered rent for the 
               first rent stabilized tenant shall be the rent established by 
               the DHCR for the prior tenant, increased by the guidelines rate 
               of rent adjustments applicable to the new lease plus such other 
               rent increases as are authorized pursuant to section 2522.4 of 
               this Title (Adjustment of Legal Regulated Rent), and shall not 
               be  subject to a Fair Market Rent Appeal pursuant to section 
               2522.3 of this Title.  

               Further, contrary to the owner's contention, "free market rent" 
          in the CAB order meant that the rent of the subject apartment upon 
          vacancy after recontrol would not be a free market rent subject to 
          a fair market rent appeal but could only be increased by the 
          standard guidelines increase fir leases and not the special fair 
          market rent guideline.   

                Because the establishment of the initial stabilized rent was 
          limited by the imposition of this penalty and the owner was not 
          entitled to charge a fair market rent, service of the DC-2A form was 
          a nullity.  Accordingly, the tenant's remedy did not rest in a Fair 
          Market Rent Appeal (FMRA) and was correctly filed and processed as 
          an overcharge complaint  without the ninety day limitation required 
          in filing a FMRA.  Further the registration filed by the owner upon 
          initial renting to the tenant herein was deliberately misleading as 
          it did not take the prior CAB expulsion order and the New York City 
          recontrol order into account, items which the tenant had no way of 
          knowing.  Accordingly, the tenant's overcharge complaint must be 
          considered a timely challenge to the initial rent charged the tenant 
          on March 1, 1988.   The Commissioner finds that the Administrator 
          did not err in establishing the initial rent based on the last 
          maximum rent under rent control - $604.11- plus  guidelines 
          increases and applicable individual apartment improvements.  
          Finally, the Commissioner is of the opinion that the owner has 
          failed to establish that the overcharge was not willful.  
          Accordingly, treble damages were correctly imposed.                 
                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.


               The Commissioner has determined in this Order and Opinion that 
          the owner collected overcharges of $45,032.72.  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,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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