DHCR Decisions
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
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IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: EB 410347-RO
:
DRO DOCKET NO.: 49302
MELOHN PROPERTIES,
PETITIONER : TENANT: MICHELE TEICHNER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND MODIFYING DISTRICT RENT ADMINISTRATOR'S ORDER
On February 28, 1990, the above-named petitioner-owner filed a Petition
for Administrative Review of an order issued on January 24, 1990 by the
District Rent Administrator, 92-31 Union Hall Street, Jamaica, New York,
concerning housing accommodations known as Apartment 5C at 200 West 15th
Street, New York, New York, wherein the District 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.
Subsequent thereto, the tenant filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules, in the nature
of mandamus, for a judgment directing the Division to render a
determination of the owner's administrative appeal. By stipulation of the
parties, the Article 78 proceeding was settled on condition that the DHCR
render an expeditious determination of the owner's petition for
administrative review.
The Commissioner has reviewed all of the evidence in the record and has
carefully considered that portion of the record relevant to the issues
raised by the administrative appeal.
This proceeding was originally commenced by the filing by the tenant of an
objection to the apartment registration, including a fair market rent
appeal. The tenant took occupancy pursuant to a lease commencing October
1, 1982 and expiring September 30, 1983 at a monthly rent of $625.00.
By notice dated October 26, 1987, the owner was served with a copy of the
tenant's objection and was advised that it was required to submit copies
of leases or rent ledgers from June 30, 1974, or the date of decontrol, if
later.
By answer dated December 7, 1987 the owner advised that it purchased the
subject building on September 15, 1982. The owner also stated that it had
entered into an Assurance of Discontinuance with the office of the
Attorney General which resulted in an adjustment of the tenant's rent as
calculated from April 1, 1980. The owner submitted leases for the subject
DOCKET NUMBER: EB 410347-RO
apartment from April 1, 1980; a copy of the Assurance of Discontinuance
indicating adjustment of the tenant's initial rent from $625.00 to
$612.75, adjustment of the rent for the tenant's renewal lease commencing
November 1, 1983 from $662.50 to $649.52, and a refund to the tenant of
overcharges in the amount of $392.89 through April 30, 1985;and a copy of
a letter to the tenant dated April 22, 1985 indicating adjustment of the
tenant's rent to $649.52 and advising the tenant that a rent credit would
appear on the May 1985 bill. The owner requested that if DHCR decided to
process the tenant's case and supersede the Assurance of Discontinuance,
the owner be so notified and given an opportunity to submit any further
information that might be necessary.
By notice dated April 10, 1989, the owner was advised that the fact that
the Attorney General's office had investigated the building did not
relieve the DHCR from processing an individual tenant's complaint. The
owner was requested to send an account of any refund given the tenant
together with leases requested.
By answer, dated April 12, 1989, the owner submitted copies of rent
control Maximum Base Rent information for the subject building and stated
that it was trying to locate copies of leases signed by the previous two
owners. The owner also stated that the information regarding the refund
to the tenant was previously submitted with its December 1987 submission.
On November 27, 1989, a Summary Notice was sent to the parties indicating
the calculation of the fair market rent pursuant to the special fair
market rent guideline.
In the order under appeal herein, the District Rent Administrator adjusted
the initial legal regulated rent by establishing a fair market rent of
$274.85 effective October 1, 1982, the commencement date of the tenant's
initial lease, and directed the owner to refund to the tenant excess rent
in the amount of $31,447.36 for the period from October 1, 1982 through
September 30, 1989.
In this petition, the owner contends that it took possession of the
subject building on September 15, 1982; that rent control documents on
file with the DHCR establish that the complainant tenant was not the first
rent stabilized tenant to occupy the subject apartment; that the owner was
prejudiced by the Administrator's failure to search DHCR's own records;
that a search for and consideration of such records would have put the
Administrator on notice that the tenant was not the first stabilized
tenant; that recent lease information obtained by the owner, together with
DHCR's rent control information, indicates that the first rent stabilized
tenant took occupancy on June 1, 1975 at a free market rent of $235.00 per
month; that the Administrator was duly notified of the owner's good faith
efforts to obtain a complete rent history for the subject apartment from 2
prior owners; that the owner should not be penalized for its good faith
reliance on the Assurance of Discontinuance; and that the owner was
unaware that it was required to submit additional lease information in the
absence of a DHCR request for same and the owner was unaware that such
data could be used in a fair market rent appeal application. The owner
further states that subsequent to the issuance of the Administrator's
order it has undertaken a careful search of its records and now submits
with its
DOCKET NUMBER: EB 410347-RO
petition for administrative review leases for the period from June 15,
1975 to December 31, 1979. The June 15, 1975 lease contains a rider
stating that the apartment was vacancy decontrolled. The owner states
that, utilizing these leases, the June 1975 initial stabilized rent
exceeded the fair market rent and the lawful stabilized rent for the
complainant tenant's initial lease term is $475.08. The owner also
asserts that the Administrator failed to take into account the rent
reduction and refund made pursuant to the Assurance of Discontinuance and
that the owner was never afforded an opportunity to submit comparability
data pursuant to the requirements of the current Rent Stabilization Code.
The owner also advised that the tenant vacated the subject apartment on
July 31, 1989.
In response to the petition, the current tenant of the subject apartment
stated, in substance, that a thorough review of all documents should be
made in this case.
The Commissioner is of the opinion that this petition should be granted in
part.
Section 2529.6 of the Rent Stabilization Code provides that administrative
review shall be limited to facts or evidence before a Rent Administrator
as raised in the petition.
The record in this case, including DHCR records and rent records submitted
by the owner with its petition, indicates that the owner failed to submit
complete rent records from the base date for the subject apartment during
the proceeding before the Administrator although afforded an opportunity
to do so. The owner contends in its petition that it made good faith
efforts to obtain a complete rental history for the subject apartment from
2 prior owners and that it relied in good faith on the Assurance
Discontinuance. Regarding the owner's first contention, it is noted that
the owner submitted no documentation of its alleged efforts to obtain
rent records from prior owners and that the owner offers no explanation
for its ability to submit rent records for the first time on
administrative appeal other than to state that it undertook careful search
its records subsequent to the issuance of the Administrator's order. This
does not excuse the owner's failure to make such a search and submit such
records in a timely fashion prior to the issuance of the Administrator's
order. Regarding the owner's second contention, the owner's reliance on
the Assurance of Discontinuance was not justified inasmuch as the owner
was specifically advised by notice dated April 10, 1989 that the
Assurance of Discontinuance would not bar processing of the tenant's
complaint and that rent records for the subject apartment were still
required. The owner responded to this notice by stating that it was
attempting to locate rent records for earlier leases, but the owner failed
to submit such records. The Commissioner therefore finds that the rent
records submitted by the owner for the first time on administrative
appeal will not be accepted.
Regarding the owner's assertion that it was prejudiced by the
Administrator's failure to search its own records, DHCR records which were
available to the Administrator consisted of a Master Building 1974 and
1975 Maximum Base Rent and Maximum Collectible Rent Schedule filed by the
owner with the Office of Rent Control dated May 15, 1975 which listed the
DOCKET NUMBER: EB 410347-RO
subject apartment as rent controlled and a subsequent corrected copy of
this schedule filed by the owner dated October 30, 1975 which did not list
the subject apartment as rent controlled. Based on this information
alone, without further documentation, it would have been appropriate to
apply the default procedure, including freezing the rent and imposing
treble damages. Therefore the Commissioner finds that the owner was not
prejudiced by the Administrator's failure to search DHCR records.
Similarly, the Commissioner finds that, while the record indicates that
the owner was not afforded an opportunity to submit comparability data
under the current Code, any further processing of the proceeding at this
time would result not in additional processing as a fair market rent
appeal but in the application of the default procedure. Therefore the
Commissioner finds that there has been no prejudice to the owner and there
is no basis for disturbing the Administrator's order on the owner's
appeal.
The Commissioner finds that the owner is correct in its assertion that the
Administrator failed to take into account a rent reduction and refund
given to the tenant pursuant to the Assurance of Discontinuance. The
record indicates that the tenant's leases commencing with the November 1,
1985 lease reflect the rent reduction. The Administrator also misstated
the tenant's lease terms. The corrected lease terms with adjusted rents
and corrected total amount of excess rent are indicated as follows:
Lease Term Rent Charged Lawful Stabilized Refund Due
Rent
9/30/82-10/31/83 $625.00 $274.85 $4551.95
11/1/83-10/31/85 $662.50 $294.09 $6631.38
---------------------------------------------------------
$649.52 $294.09 $2132.58
(commencing
5/1/85)
11/1/85-10/31/87 $691.74 $328.21 $8724.72
11/1/87-10/31/89 $736.70 $349.54 $8130.36
(tenant vacated $30,170.99
7/31/89) Refund to tenant - $ 392.89
Total Refund Due $29,778.10
Because this determination concerns lawful rents only through July 31,
1989, the owner is cautioned to adjust subsequent rents to an amount no
greater than that determined by this order plus any lawful increases, and
to register any adjusted rents with this order and opinion being given as
the explanation for the adjustment. A copy of this order and opinion is
being sent to the current occupant of the subject apartment.
DOCKET NUMBER: EB 410347-RO
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be and the same hereby is granted in part and
the District Rent Administrator's order be and the same hereby is modified
to the extent hereinabove indicated.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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