Opinion ID: 2350316
Heading Depth: 1
Heading Rank: 5

Heading: Units occupied by relatives.

Text: Determining that Revithes had procedurally defaulted on a claim of exemption, see Part IIB, infra, the agency made no findings on whether or not an uncle lived in Unit 2 after Hand vacated. Nor did it determine whether or not that uncle paid some form of rent for the use of the unit. Consequently, the agency came to no legal conclusions about whether and under what conditions units occupied by relatives are to be counted in determining the aggregate number. On remand, the agency may be constrained to do so, depending upon whether Unit 3 was permanently removed  rather than merely vacant  on or after June 25, 1980. [25]
The agency declined to evaluate whether the uses Revithes claimed for Units 2 and 3 after Hand left excluded those units from the aggregate number. Instead, the agency relied on procedural default. The agency determined that Revithes' claim of exemption was ineffective until October 1982, when she filed, at the RAO, a Claim of Exemption Statement accompanied by a Certificate of Occupancy reflecting the permanent conversion of two units from residential to commercial. The agency neither mentioned nor addressed the validity of the Claim of Exemption Statements Revithes allegedly filed on June 25, 1980, and May 3, 1982. A landlord, of course, bears the burden of proving qualification for exemption. Bernstein v. Lime, 91 A.2d 841, 843 (D.C. 1952). A landlord's mere assertion that a unit is not a rental unit contained in a claim of exemption will be insufficient to satisfy a landlord's burden of proof of exemption. See Blacknall, supra, T/P Nos. 11,632-33 at 7. There is no question that the filing of a Certificate of Occupancy reflecting the valid conversion of two residential units to commercial units satisfies a landlord's burden of proving an exemption by credible, reliable evidence. The hearing examiner, however, did not make a finding that Revithes failed to satisfy her burden of proof of exemption until October 1982. Rather, the examiner applied a per se rule disallowing an exemption until the date of the filing of a Claim of Exemption Statement and a new Certificate of Occupancy. The agency could properly determine that, as a matter of law, a landlord's attempt to change his or her status does not become valid by mere recharacterization of the use of a building or unit. Specifically, every Rental Housing Act since the November 10, 1976 amendments to the 1975 Act has required small landlords to file Claim of Exemption Statements under the small landlord provision. See notes 13 and 14, supra, and accompanying text. Thus, to the extent the RHC invalidated Revithes' claim of exemption based on a per se rule that following a period of a bad faith claim of exemption, a change in status from non-exempt to exempt will become effective only upon the filing of a valid Claim of Exemption Statement, the conclusion is supported by the rental housing laws in effect then and now by sound administrative policy. [26] Since June 25, 1980 was the first time Revithes filed a Claim of Exemption Statement subsequent to Hand's tenancy, the agency's imposition of damages up to that date is supported by substantial evidence and otherwise in accordance with the law. See D.C.Code § 1-1510(a)(3) (1981). However, we perceive no basis in either the 1977 Act or the regulations accompanying it, for a conclusion that landlords who changed the status of their rental units were on notice that a Claim of Exemption Statement had to be accompanied by a Certificate of Occupancy in order to satisfy the procedural requirements of an exemption claim. [27] Indeed, a change in status due to owner occupancy (for example) would not be reflected on a new Certificate of Occupancy since residential occupancy would not be affected. And, while requiring a Certificate of Occupancy to prove a permanent removal of a vacant residential rental unit from the market might greatly facilitate administration, the RHC has recently rejected such an approach. [28] Blacknall, supra, T/P Nos. 11,632-33 at 7-8. In Blacknall, the Commission held that a new Certificate of Occupancy was only one method by which a landlord could prove the permanent removal of a unit from residential use: We do not hold that [a Certificate of Occupancy] is the only method [of proof of exemption], but certainly a landlord claiming an exemption will be required to demonstrate by this method or other evidence that a unit is not in fact a rental unit within the meaning of the exemption section. Id. at 7-8. Obviously, the practice of applying for and obtaining new Certificates of Occupancy in order to prove a permanent removal is strongly encouraged. Furthermore, a prospective rule requiring at least the filing of an application for a changed Certificate of Occupancy as proof that a unit is no longer merely vacant but rather, permanently withdrawn, is certainly within the power of the Rental Housing Commission. At the time of the change in status here, however, no such requirement was in effect, and it was erroneous as a matter of law to elevate a form of proof to a substantive pre-condition for exemption. We are aware, of course, that a per se rule requiring the filing of a valid Certificate of Occupancy reflecting a permanent removal of a rental unit from residential rental use should perhaps be invoked where bad faith is involved. Indeed, if it were clear from this record that Revithes' bad faith extended through October 1982, we would undoubtedly affirm the RHC's decision and order (subject to our disposition in Part IV, infra ). In this case, however, the agency did not make sufficient findings to support a claim of bad faith for the entire post-June 25, 1980 period, and it is not otherwise clear to us that Revithes' effort to circumvent the requirements of the rental housing laws was unabated until October 1982. Of course, it may well be that, on remand, Revithes' substantial credibility problems will prevent her from satisfying her burden of proof regarding the period preceding the October 1982 filing of the Certificate of Occupancy. We direct the agency to make a finding on that question, however, rather than apply a per se rule requiring the filing of a Certificate of Occupancy. Since the earliest possible date of Revithes' good faith filing of a valid Claim of Exemption Statement is June 25, 1980, we affirm the finding of non-exemption and the damages imposed thereon through that date. We reverse and remand for further findings subsequent to that date. The RACD and RHC are directed to determine the point in time, if ever, in which Revithes proves by credible, reliable evidence that, consistent with this opinion, the uses of two of her units at 235 Pennsylvania Avenue, were such that neither were to be counted in determining the aggregate number of units subject to Revithes' control. [29]