Opinion
No. 2023-50084 Index No. 0035-22
01-31-2023
Horizon Realty of Mt. Vernon, LLC, Petitioner, v. Corey Dabbs
Patrick Jordan, Esq. Ofeck & Heinze, LLP Attorneys for Petitioner Barbara Reilly, Esq. Legal Services of the Hudson Valley Attorneys for Respondent
Unpublished Opinion
Patrick Jordan, Esq. Ofeck & Heinze, LLP Attorneys for Petitioner
Barbara Reilly, Esq. Legal Services of the Hudson Valley Attorneys for Respondent
Nichelle A. Johnson, J.
Petitioner commenced this nonpayment proceeding in January 2022 seeking rental arrears in the amount of $7,498.01. The premises are ETPA regulated. Per the Petition, petitioner served respondent with a fifteen-day rent demand.
The respondent applied for ERAP assistance on or about June 16, 2021. The ERAP application is still pending review. No provisional letter of approval has been issued.
Discussion
Under the COVID-19 Emergency Rental Assistance Program (ERAP) (Part BB, Subpart A, section 8 of Chapter 56 of the Laws of 2021, as modified by L. 2021, c 417), tenants may apply for rental assistance to satisfy their rental arrears. Once a tenant files an application, an automatic stay is imposed on nonpayment and holdover evictions pending the approval/rejection of the ERAP application (L.2021, c. 417, Part A, _4).
Petitioner now moves to vacate the ERAP stay.
Respondent opposes the motion.
In support of the motion to vacate the ERAP stay, petitioner's counsel, Ron Ofeck, affirms that he is the Managing Member of Horizon Realty of Mt. Vernon, LLC. Counsel affirms that Respondent Corey Dabbs' tenancy is subsidized through CVR Associates. He states that respondent's current monthly rent is $1,228 and has not been increased since April 2020. Counsel affirms that respondent is due for an increase in his monthly rent, once he renews his lease agreement. Counsel states that if respondent signs a one year renewal, his rent will increase to $1,253, and to $1,265 if he signs a two year renewal. Counsel argues that the ERAP regulations would preclude him from requesting the legally permitted increase in rent for one year if he accepts the ERAP funding to satisfy respondent's rental obligations. Counsel argues that the Covid-19 pandemic has created a financial hardship for both tenants and landlords. Counsel further argues that the current ERAP regulations provide that subsidized housing tenants are not currently able to get paid. Counsel argues that the petitioner cannot wait any further to receive relief from the ERAP program, especially where the release of funding will continue to be delayed or potentially denied to subsidized housing tenants.
In opposition to the motion, Respondent Dabbs affirms that he is the recipient of a Section 8 voucher administered by CVR Associates. He states that he lost his job in March 2021, applied for unemployment benefits and informed CVR of this change in his household income. He states his rent share was adjusted accordingly. Respondent affirms that when his unemployment benefits ended in September 2021, he notified CVR, however, CVR did not process his request for an interim recertification timely. As a result, his rent share remained based on his unemployment benefits income even though he had no income. Respondent maintains that his income was not properly adjusted until September 2022. Respondent states that his current rent share is $18.00 and that he has been making ongoing rental payments.
Respondent's counsel argues that the clear text and legislative intent of ERAP requires the stay to remain in effect until an ERAP determination is made and that the respondent is the type of low-income tenant envisioned by the legislators when enacting the ERAP statute. Counsel argues that respondent has resided in the premises since 2011 and is the recipient of a portable Section 8 voucher administered by CVR New York. Counsel affirms that respondent's current rent share is $18.00 per month and that respondent has paid for September, October and November 2022. Relying on the Decision and Order issued by this Court (J. Williams) in 14 N. Highstreet LLC v Clowney, 2022 NY Slip Op 22239, counsel argues that respondent's Section 8 tenancy does not render that application futile since it is possible that ERAP will pay respondent's outstanding arrears after all other non-subsidized applications. Counsel argues that if the stay is lifted prior to receiving ERAP assistance, the respondent would be rendered homeless. Finally, counsel argues that the petitioner's lament over the loss in rent increases over time for a rent stabilized tenant is not totally accurate. Counsel cites to a statement issued by DCHR on October 26, 2022 that states:
10) Can owners who receive ERAP assistance for a rent stabilized apartment increase the rent?
For rent stabilized units receiving ERAP, lawful rent increases are allowed to be preserved in the lease, but landlords must follow ERAP guidelines and agree to not increase the monthly rental amount above the monthly amount due at the time of application for ERAP assistance for months for which the rental assistance is received and for one year from receipt of the ERAP payment. Owners are advised by DHCR to send a letter to the tenant at the time ERAP payments begin and attach an explanatory rider at the time of the lease renewal. The rider should clarify that a lower rent is being charged pursuant to an ERAP directive and that the higher legal rent cannot be collected during the period of the ERAP rent freeze. The higher legal rent that was in the lease can be collected only when the ERAP rent freeze expires. It is unlawful for an owner to demand arrears from the tenant, in a lump sum or in any other manner, for the difference between the higher legal rent and the lower rent for the period that the ERAP rent freeze was in effect.(https://hcr.ny.gov/rent-increases-and-rent-overcharge)
Respondent's counsel argues that this is a political disagreement with the terms of the enacted statute and that the instant motion is the not the proper means for this grievance with the ERAP statute. Counsel argues that petitioner's grievance with the rent freeze under the statute should be taken in an action against the State attorney general or the chief administrative judge, not in a nonpayment proceeding.
In reply, petitioner's counsel continues to argue that the ERAP stay is futile and points to the ERAP FAQ's on the New York State Office of Temporary Disability's ("OTDA") website that provides "Applications from subsidized house tenants... are currently not able to be paid"... and "be paid after all other eligible applicants have been reviewed and paid". Petitioner argues that this renders the respondent's ERAP application futile. Counsel further acknowledges that petitioner may preserve its rights to a legally regulated increase but maintains that it is still prejudiced by its preclusion from receiving this increase for the year after the receipt of the funds, a date that is still not established.
The court holds that the threshold issue presented is the landlord's request to lift or vacate the ERAP stay. While the petitioner/landlord has discussed a desire to refuse to participate in the ERAP program because it does not want to forfeit a rent increase this court was not asked to make a determination on whether the landlord must participate or not. However, as to the issue of participation the Petitioner cited to 2986 Briggs LLC v Robert Evans et al., 74 Misc.3d 1224 [Civ Ct. NY 2022] and 5th & 106th Assocs. LP v Hunt, 76 Misc.3d 338 [Civ Ct. NY 2022] for the proposition that a property owner may challenge the ERAP stay in a pending proceeding and assert a claim that ERAP funds are irrelevant because the tenant does not meet eligibility criteria. "The court notes that nothing in the ERAP statute requires a landlord to participate in the program" (653 LLC v Rosa-Blanco, 2023 NY Misc. LEXIS 124 [Civ Ct. Bronx Co. 2023] (citing (Park (see Kristiansen v Serating, 75 Misc.3d 331, 333, 165 N.Y.S.3d 828 [Dist. Ct, Suffolk Co. 2022]; Harlem Congregations for Community Improvement, Inc. v. Swindell, 76 Misc.3d 487, 489, 174 Misc.3d 232 [Civ Ct, New York Co. 2022]). In consideration of the foregoing this court agrees that the ERAP guidelines seem to anticipate that a petitioner/landlord may decide not to participate in the ERAP process. Notably, however, there are consequences when a landlord refuses to participate if an applicant is found eligible which includes waiver of outstanding rent [ Id.; see also CPM Tudor Vill., LLC v Atkinson, 2022 NY Misc. LEXIS 7608 [Dist Ct., Suffolk Co 2022]. It should be noted that if the petitioner landlord does not receive any funds from ERAP for this tenant then it follows that the petitioner/landlord can do as they please with regard to their legal rent increases as they would not have "accepted funds" from ERAP as none were forthcoming.
DECISION
Now, this Court must decide whether the stay imposed by the Section 8 tenant's ERAP application is futile due to the current regulations that provide such applications will be reviewed after all applications from non-subsidized tenants have been processed. In analyzing the ERAP statute and regulations, numerous courts had found vacatur of the ERAP stay is warranted under certain circumstances to avoid inequity, fraud or futile results (See, 5th & 106th Assoc. LP v Hunt, 2022 NY Misc. LEXIS 2966; 2022 NY Slip Op 22205 [Civ Ct. New York Cty 2022]; Abuelafiya v Orena, 73 Misc.3d 576, 580, [NY Dist Ct 2021]; Actie v Gregory, 74 Misc.3d 1213 [A] ([Civ Ct. Kings Cty 2022]; Joute v Hinds, 2022 NY Slip Op 22150 [Civ Ct. Kings Cty 2022]; Fed.Natl Mtge Assn. v Godette, 2022 NY Slip Op 22151 [City Ct. Mount Vernon 2022 Johnson]; Kristiansen v. Serating 2022 NY Slip Op 22097; 75 Misc.3d 331(Suffolk Dist Ct 2022); Park Tower S.Co. LLC v. Simons 75 Misc.3d 1067 Civ. Ct. New York Cty 2022); Crotona Holdings LLC v. Santana, 2022 NY Misc. Lexis 4471 (Bronx County 2022); Robo LLC v. Matos, 168 N.Y.S.3d (Civ. Ct. Bronx County 2022);.
Here some 18 months after submitting his application, respondent's application remains pending. His eligibility has not been determined and he has not received a provisional approval letter. Based upon equity considerations, this court lifts the ERAP stay at this time. This court would be remised if it did not address Respondent's statement that this court "cannot lift the ERAP stay." (See Respondent's Opposition page 9). Respondent's language suggests that well thought out decisions by this court and others lifting the ERAP stay have been a violation of discretion at best or illegal at worst. This court and others have lifted the ERAP stay Respondent's counsel argues "could not" be lifted - based upon sound considerations, including but not limited to equity grounds which resonates with this court.
In this regard, this court is lifting the ERAP stay on equity grounds opining that the ERAP stay has been inequitable to landlords. It is a fact that the ERAP application in this case was filed in June 2021. As of October 2022, when this motion was fully submitted, there was no decision on the application. It is now late January 2023, and the application is still "pending" . The protracted amount of time that the application has been pending coupled with the realization that because of the tenant's housing status, that monies "will not be paid" and if so only "after other eligible applicants are paid", works as an injustice to the landlord who has suffered in this protracted process. Not to mention that the ERAP program as of January 20th allegedly was to end and while applications submitted before this date are still being processed, it is highly probable that the tenant herein is not going to be paid any monies. Additionally, this court is keenly aware that other agencies like the Department of Social Services of Westchester County are helping these subsidized tenancy secure rental arrears, no longer waiting for ERAP determination as they have been advised that these tenancies will NOT be getting funds from ERAP. Forcing the Petitioner to wait any longer would only exacerbate the inequity placed upon the Petitioner/landlord in this process. To reiterate, the lifting of the stay is premised at this time to the inequity suffered by the Petitioner/landlord in the protracted amount of time and the reality that the likelihood of the Respondent securing any monies from ERAP is slim to none at this point. How long does the system think a landlord should wait?
This court looked up the status of ERAP application at issue given the time which has elapsed since motion submission and discovered, as anticipated, that it is still pending.
Petitioner's motion to vacate the ERAP stay is granted.
This constitutes the Decision and Order of this Court. The parties are directed to appear for a conference of this matter on February 16, 2023 at 2:00 p.m. Additionally, the court orders the following be provided at that court appearance: 1) tenant's proof of payment of ongoing rent; 2) tenant's written proof that the tenant advised CVR of the loss of unemployment benefits and requested recertification and any response thereto from CVR; 3)if no response from CVR, any follow-up or appeal made by tenant to CVR attempting to get the rent adjusted retroactively which should have happened anyway; and 4) tenant's written proof of seeking the rental arrears from the Department of Social Services and/or any other agencies charged with helping to prevent loss of tenancy or homelessness.
The Court considered the following papers on this motion: Notice of Motion, dated October 14, 2022; Affirmation in Opposition w/ Affidavit dated October 26; Reply Affirmation/Memorandum, dated October 27, 2022.