STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO. HJ610066RO
: DRO DOCKET NO. ZFF610269R
RIVERDALE ESTATES TENANT: Jennifer Thomas
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
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
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
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
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