Summary
In EG Mt. Vernon Preservation LP v. Duncan, 77 Misc.3d 1226 (A) [Mount Vernon City Ct., 2023], it was held "Equity and fairness dictates that a lift of the stay is warranted for the months due and owing over the 15 months that ERAP would cover" and the intent of the legislation "was only to provide a stay of evictions for occupants eligible for coverage".
Summary of this case from Kennedy Plaza Tower, LLC v. LefflerOpinion
Index No. 0359-21
01-17-2023
EG MT. VERNON PRESERVATION LP, Petitioner, v. Nichole DUNCAN
Petitioner commenced this nonpayment proceeding in May 2021 seeking rental arrears in the amount of $5,813.00 for the period of May 2020 through March 2021. The subject premises are project-based Section 8, governed by HUD regulations. Petitioner served respondent with a fourteen day rent demand.
The respondent applied for ERAP assistance. The ERAP application is still pending review .
Importantly, the fact that it is now January 2023 cannot be emphasized enough.
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 managing agent, Manuel Felix affirms that respondent owes $13,655.00 as of August 2022. A copy of the rental breakdown for the period of January 2022 through August 2022 is attached to the motion papers. Mr. Felix maintains that ERAP will not cover all the outstanding arrears and as such, the ERAP stay is futile and should be vacated.
Petitioner's counsel, Daniel Pomerantz, affirms that this Section 8 tenancy is governed by HUD. Counsel argues that keeping the ERAP stay in place would be futile since ERAP will not cover all of the rental arrears owed by the respondent. Counsel argues that the maximum payment that ERAP would pay would be 15 months, commencing March 2020. Counsel argues that the rent ledger demonstrates that the respondent owes for months above and beyond the ERAP covered period. Counsel further argues that under ERAP's most recent guidance, applications from subsidized housing tenants, which includes Section 8, are currently not able to be paid and the law requires that applications for tenants with Section 8 be paid after all other eligible applicants have been reviewed and paid. Accordingly, the petitioner argues that an ERAP stay is futile under these circumstances.
Respondent's counsel, Michelle Sagiv, argues that the clear language of the ERAP statute provides that all summary proceedings, except for nuisance proceedings, must be stayed pending a final determination of eligibility. Counsel affirms that the respondent has been residing in the apartment for several years with her daughter and suffers from several debilitating illnesses that require medical treatments. Counsel affirms that respondent has made a recent lump sum payment, roughly equating to four months rent and intends to keep making regular monthly payments. Per the rent ledger, respondent made two payments of $1,050.00 each on June 22, 2022. Counsel further argues that if respondent owes rental arrears exceeding 15 months, counsel can assist respondent with applications to agencies to help with payment of the arrears balance owed. 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 and her daughter would be rendered homeless.
In reply, petitioner's counsel argues that 14 N. Highstreet LLC v Clowney is inapplicable because the Court never decided that a stay should remain in effect for a Section 8 tenant if more than 15 months of rent are due and owing. Relying on the court's holding in Kristiansen v Serating, 2022 NY Slip Op 22097 [Dist Ct. Suffolk Co. 2022] petitioner argues that an ERAP stay should not apply to at least the portion of rent where more than fifteen months of rent are due and owing. Counsel argues that respondent owes over 15 months of rent and thus, an ERAP stay is futile as they are not currently dispensing ERAP funds to Section 8 tenants. Accordingly, petitioner maintains that the ERAP stay should be vacated.
This Court is asked to 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. In 5th & 106th Assoc. LP v Hunt , 2022 NY Misc LEXIS 2966; 2022 NY Slip Op 22205 [Civ Ct. New York Cty 2022], petitioner commenced a holdover proceeding seeking to evict a tenant residing in a HUD subsidized project based Section 8 unit. The tenant applied for ERAP assistance. The landlord moved to vacate the ERAP stay on the bases that the tenant was not income eligible for ERAP and further, that the application was futile because she lives in subsidized housing which is a last priority under the statute. In vacating the ERAP stay, the court took judicial notice of the OTDA website notice dated June 24, 2022. The update stated in relevant part, "The following applications submitted to the ERAP portal will be denied. Households that have income over 80 percent of area median income" and "IMPORTANT NOTE: Applications from subsidized housing tenants whose rent is limited to a certain percentage of income are not currently eligible to be paid. Therefore, at this time, none of the subsidized housing applications can be paid regardless of their application". The court found that the tenant, a retired school teacher with an income of $143,113, had failed to demonstrate a financial hardship during the COVID-19 period, had been paying her rent every month from March 2020 through June 2022, and her income was neither at or below the 80% AMI income limits as required by the original statute and ERAP eligibility guidelines.
In Abuelafiya v Orena , 73 Misc 3d 576, 580, [NY Dist Ct 2021] the court found the tenants ineligible for ERAP funding as they were not experiencing housing instability by virtue of the fact that they owned a second house they could relocate to. Eligibility having been determined, the ERAP stay was vitiated; ( Actie v Gregory , 74 Misc 3d 1213 [A] ([Civ Ct. Kings Cty 2022] [ERAP stay vacated where landlord sought to use unregulated apartment in home with four or few units for personal family use]; Joute v Hinds , 2022 NY Slip Op 22150 [Civ Ct. Kings Cty 2022] [ERAP Stay vacated in unregulated tenancy with no rental obligation]; Fed.Natl Mtge Assn. v Godette , 2022 NY Slip Op 22151 [City Ct. Mount Vernon 2022] (ERAP stay vacated in a post-foreclosure holdover proceeding upon a finding that respondent was not a tenant or lawful occupant since respondent had no contractual obligation to pay rent to petitioner).
In 14 N Highstreet LLC, this Court (J.Williams) held that the above noted hodlover cases were distinguishable from the nonpayment proceeding. The found that an ERAP stay in a Section 8 nonpayment proceeding was not futile. The Court held that "the current regulations do not provide that applications from Section 8 tenants will never be paid, but that they will be processed after all other non-subsidized application" and "even if ERAP ultimately pays nothing or just a portion of what is owed, while pending, the application stays the proceeding."
Some five months after the 14 N Highstreet, LLC decision was issued by this Court, the newly updated ERAP regulations continue to provide that "applications from subsidized housing tenants whose rent is limited to a certain percentage of income (including public housing, section 8 and FHEPS) are not currently able to be paid. State law requires that these applications be paid after all other eligible applicants have been reviewed and paid. Therefore, at this time, none of the subsidized housing applications can be paid regardless of the date their application was submitted."
As petitioner points out in its motion papers, in 14 N Highstreet, LLC we did not decide whether the stay should remain in effect if the tenant owes more than 15 months. That issue was not before the Court. The trial courts have had conflicting views on whether or not a stay should be vacated where the amount of arrears due exceeds 15 months. In Crotona Holdings LLC v Santana , 76 Misc 3d 1205 (A) (Civ Ct. Bronx Co. 2022), the rent-stabilized tenant owed nine months of pre-pandemic rent and eighteen months of post LRAP (Landlord Rental Assistance Program) rent. The court denied the motion to lift the ERAP stay in a rent-stabilized tenancy nonpayment action, finding that "An approval by the ERAP program, although perhaps not satisfying the entire rental arrears owed by a respondent, would assist in preserving a tenancy." On the contrary, in Kristiansen v Serating , 75 Misc 3d 331, the district court lifted the ERAP stay in a non-regulated tenancy holdover for the uncovered arrears due to the landlord. In that case, the tenants amassed $60,000.00 or 19 months worth of rental arrears. The court continued the stay for the 15 months of arrears, $48,000, but vacated the ERAP stay for uncovered arrears.
This Court finds that equity and fairness dictates that a lift of the stay is warranted for the months due and owing over the 15 months that ERAP would cover. It must be noted that the ERAP Guidelines state when asked if a tenant could stop paying rent after an ERAP application is filed and it states "NO, rent is still due" (emphasis added) . In this regard, in consideration of the fact that the Tenants are advised to pay ongoing rent and to the extent here that the Tenant has failed to do so (more than 15 months owed over the eligibility time frame) this coupled with the protracted amount of time the landlord has had to wait for ERAP payment, this court supports a lifting of the stay as to those rental arrears that are over the 15 months that ERAP would pay, those rents above and beyond the eligibility period.
Accordingly, Petitioner's motion to vacate the ERAP stay is granted as to those amounts over the 15 months. Parties should be clear that at the continuation appearance, the Tenant should establish payment of ongoing rent or have guarantee letters from the various assisting agencies submitted indicating that the money is forthcoming.
This constitutes the Decision and Order of this Court. The parties are instructed to come for a continuation conference on February 9, 2023 - 9:30 a.m.
The court considered the following papers on this motion: Notice of Motion, dated August 2, 2022; Affirmation in Support of Motion, dated August 4, 2022; Affidavit; Exh. Affirmation in Opposition, dated August 30, 2022; Exh. A. Reply Affirmation, dated September 10, 2022.