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. IB410154RO
: DRO DOCKET NO. ZHC410043TC
E.G.A. ASSOCIATES, INC. : TENANT: RANDY LEE MOREY
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On February 25, 1994, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
January 21, 1994, by the Rent Administrator, 92-31 Union Hall
Street, Jamaica, New York, concerning the housing accommodations
known as 324 East 66th Street, New York, NY, apartment number 4,
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 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
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 a Fair
Market Rent Appeal (hereinafter FMRA) on March 23, 1993. The tenant
stated that he had commenced occupancy of the subject apartment on
April 7, 1981 at a rent of $450.00. The tenant stated that he had
received mail which indicated that the subject apartment was
registered as rent controlled.
In answer to the complaint, the owner asserted that the
complainant was the first rent stabilized tenant in the subject
apartment and that the tenant's FMRA was barred by his failure to
respond within 90 days to a DC-2 notice which had been served
by certified mail on the tenant in May 1981. The owner submitted a
copy of said DC-2 notice and the envelope in which it had been
mailed as said envelope indicated that it had been unclaimed by the
tenant when delivery was attempted. Although afforded the
opportunity to do so, the owner declined to provide comparability,
preferring to assert only the statute of limitations defense.
In reply to the owner's answer, the tenant stated that the
documents submitted by the owner were defective in that the envelope
did not have a mailing date thereon and the DC-2 notice was
incomplete as it did not include the 1974 Maximum Base Rent (MBR) as
was required by law.
The owner was notified by a summary notice dated December 6,
1993 that the initial legal rent would be determined on the basis of
the 1980 MBR and the 1980 fuel cost allowance.
In the order here under review, the Rent Administrator adjusted
the fair market rent to $224.53 effective April 7, 1981 and directed
the owner to refund excess rent of $39,702.99 inclusive of excess
security to the tenant.
In its appeal, the owner contends that the FMRA is barred by
the statute of limitations. Under the Code, a tenant challenge to
the initial stabilized rent is limited to the ninety day period
after service of a DC-2 notice. The owner had fulfilled the legal
requirement of mailing the notice and the tenant should not be
permitted to object to the first stabilized rent some twelve years
later. Moreover, in finding that the DC-2 notice was defective, the
Administrator had erred in dealing with the substance of the notice
which was a closed issue under the statute of limitations and not to
be considered on the merits. Furthermore, the owner contends that
the 1974 MBR is relevant only for apartments which were vacancy
decontrolled between June 1, 1974 and June 30, 1975. The owner
further contends that the owner should be credited with a rent
increase of 1/40th the cost of individual apartment improvements
made during the vacancy period before the tenant took occupancy.
After careful consideration, the Commissioner is of the opinion
that this appeal should be denied.
Pursuant to Section 2522.3 of the Rent Stabilization Code, the
tenant's right to file a fair market rent appeal was limited to 90
days after the DC-2 notice was served on the tenant by certified
mail. This provision of the Code presupposes that the notice will
meet the requirements of the law, to properly advise the tenant of
his right to file a fair market rent appeal. In the instant case,
the owner nominally complied with the mailing requirements of the
Code and such service would have precluded the FMRA, even though the
mailing was unclaimed by the tenant, had there been no defect in the
notice itself. However, the owner omitted the 1974 MBR from the
notice and included a statement that the 1974 Maximum Base Rent was
based on the 1974 MBR as amended, comparables and an allowance for
individual apartment improvements. The omission of the 1974 rent
coupled with the improper misleading statement is sufficient to
render the DC-2 notice invalid. Further, the owner checked off the
box stating that there was currently pending a protest or court case
against the rent control order which established the 1974 maximum
rent. However, DHCR rent records do not disclose the existence of
any such protest or court case. Accordingly, the Commissioner finds
that proper service of a valid DC-2 notice was not made. Therefore,
the tenant was not precluded from filing a fair market rent appeal.
With respect to the relevance of the 1974 MBR, the Commissioner
notes that the 1974 MBR as adjusted by appropriate guidelines
provides the basis for the initial legal regulated rent even for
apartments vacancy decontrolled after that period.
Code Section 2529.6 limits the Scope of Review of an appeal to
the facts or evidence which were before the Rent Administrator
unless the petitioner establishes that certain facts or evidence
could not reasonably have been offered in the proceeding prior to
the issuance of the Administrator's order. Review of the record
reveals that on August 11, 1993 the owner was sent an answering
packet which afforded the owner the opportunity to submit proof of
equipment and improvements furnished for the challenged apartment.
Yet the owner did not submit any proof of improvements in the
proceeding before the Rent Administrator. The owner's statement
that the records were unavailable until recently retrieved from
remote archive storage does not establish that such evidence could
not be produced before the issuance of the Administrator's order.
Therefore, the initial legal rent is correct as determined by the
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
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 credit the excess rent collected by the owner
against the next month(s) rent until fully offset.
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
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