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CAROUSEL PROPERTIES, Petitioner(s), v. Santiago VALLE Sr. and Melissa Schmidt, Respondent(s).
Read upon the following papers numbered 1 read on this motion by petitioner to, in effect, vacate the automatic stay of eviction based upon the filing of an application for ERAP benefits
Notice of Motion/Order to Show Cause and Supporting Papers 1
Notice of Cross Motion and Supporting Papers
Answering Affidavits and supporting papers
Replying Affidavits and supporting papers
and after due deliberation it is hereby
ORDERED, that petitioner's motion to vacate the automatic stay granted by state law to tenants who file for rental assistance benefits pursuant to the Emergency Rental Assistance Program (“ERAP”) is denied. Petitioner made this application to the court orally on January 26, 2022, which was orally opposed by counsel for respondents. The court denied the motion but granted petitioner leave to file a written motion seeking the same relief. That motion was submitted to the Court on February 9, 2022. Counsel for respondents again orally opposed the motion for the same reasons that the court now denies the motion on the same grounds the oral motion was denied on January 26, 2022.
This is a holdover petition. Petitioner avers that he seeks to occupy the subject property as his principal residence. The respondent has applied for ERAP funds. The application is pending. Petitioner states that he does not want any ERAP money nor any money from respondent. As stated, he seeks only to regain possession of the property for the purpose of residing there as his primary residence. While acknowledging that in general there is a stay of evictions in effect for all residential evictions where an application for ERAP is pending, petitioner claims that there is an exception to the ERAP automatic stay for owners of one to four single family homes where the owner or an immediate family member intends to reside in the unit in issue.
Any pending summary proceeding against a tenant is stayed once that tenant has applied for ERAP benefits. The stay remains in effect pending a final determination of eligibility. L.2021, c. 417, Part A, § 4. A landlord does not possess the right to dissolve the stay be refusing to accept ERAP funding and/or refusing to provide required input for the application to be complete. If the landlord refuses to accept tendered payment of ERAP funds, the tenant would be entitled to a credit for the ERAP grant that the landlord refused to accept. See Harbor Tech LLC v. Correa, 73 Misc.3s 1211(A), 2021 N.Y.Slip Op. 50995(U)(Kings Co. Civil Court). See also Sea Park East L.P. v. Foster, 74 Misc 3d 213, 2021 NY Slip Op. 21347 (Civ. Ct.N.Y.Co.).
Upon acceptance of ERAP funds, the landlord becomes bound to certain conditions. The law provides as follows:
(d) Acceptance of payment for rent or rental arrears from this program or any local program administering federal emergency rental assistance program funds shall constitute agreement by the recipient landlord or property owner: (i) that the arrears covered by this payment are satisfied and will not be used as the basis for a non-payment eviction; (ii) to waive any late fees due on any rental arrears paid pursuant to this program; (iii) to not increase the monthly rent due for the dwelling unit such that it shall not be greater than the amount that was due at the time of application to the program for any and all months for which rental assistance is received and for one year after the first rental assistance payment is received; (iv) not to evict for reason of expired lease or holdover tenancy any household on behalf of whom rental assistance is received for 12 months after the first rental assistance payment is received, unless the dwelling unit that is the subject of the lease or rental agreement is located in a building that contains 4 or fewer units, in which case the landlord may decline to extend the lease or tenancy if the landlord intends to immediately occupy the unit for the landlord's personal use as a primary residence or the use of an immediate family member as a primary residence; and (v) to notify the tenant of the protections established under this subdivision. L.2021, c. 417, Part A, § 5.
A plain reading leads to the inescapable conclusion that this exception only applies to continued occupancy after payment of ERAP funds. Simply stated, a tenant who is approved for ERAP rent benefits which the landlord accepts may not be evicted due to an expired lease or as a holdover but is entitled to continue the tenancy for a period of 12 months following the tender of ERAP rent payment to the landlord at the same rent that was previously due. If the tenant defaults in these payments then a non-payment proceeding may be commenced. After expiration of the 12 months, the landlord is under no obligation to continue the tenancy but may seek eviction as provided by law. In all cases, pre and post ERAP, the landlord can seek to evict based upon the nuisance exception (intentionally causing substantial damage or for persistent and unreasonable behavior that infringes on the use and occupancy of others or which causes a substantial safety hazard to others). L.2021, c. 417, Part A, § 6. The exception relied upon by the petitioner is available only after a tender of ERAP funds. A landlord of a one to four family dwelling who intends to occupy the unit at issue (either personally or by an immediate family member) is not required to allow the tenants the additional 12 months occupancy but can seek to evict immediately upon payment of the ERAP benefits. There is nothing in the statute that authorizes the Court to disregard the automatic stay of eviction triggered by a pending ERAP application and grant a judgment of possession and warrant of eviction before a final determination of eligibility for ERAP funds.
It is important to note that the ERAP law does not require a landlord to accept the funding. In that case, the landlord would not be bound by the conditions of acceptance noted above with respect to continued occupancy. The Court finds nothing in the legislation that mandates a landlord to accept tendered ERAP money. Therefore, any landlord regardless of their intention to personally occupy the leased premises as their primary residence would be able to continue with eviction proceedings in the event they refused to accept proffered payment. The only landlord who may both accept the ERAP funds and evict forthwith after acceptance of the payment are those who desire to occupy the demised premises as their primary residence (either personally or by an immediate family member), which would have to be proven as part of the landlord's case. Furthermore, in such case the landlord's pending petition could be the vehicle for a hearing on the petition. In such instance, the petition would not be subject to dismissal because of the acceptance of ERAP funds. The petition would only be dismissed if they failed to prove at the hearing that they truly intended to occupy the premises as their primary residence (either personally or by an immediate family member), or if the tenant had another valid defense as provided by law. Again, as noted, the landlord who refuses the tendered ERAP funds may seek immediate eviction based upon the pending petition without any intention to occupy the premises as their primary residence.
Furthermore, a petitioner may not request a hearing challenging the eligibility of a tenant for ERAP benefits. There is a statutory procedure for making this determination without any provision for the courts to make such determinations. There is a procedure established for application and determination of eligibility. The Court in Harbor Tech LLC, supra, analyzed the due process issues that petitioner makes now. The Court agrees with this analysis. The ERAP stay is distinct from the hardship stay in effect, which was struck down by the United States Supreme Court in Chrysafis v. Marks, 141 S.Ct. 2482 (2021). The Court ruled that landlords' due process rights were violated because they were not able to request a hearing to challenge the tenant's self-certification of a covid-related hardship. The New York legislature responded to this ruling in September of 2021 by enacting amendments that provided for the right of landlords to challenge the tenant's declaration of financial hardship. The ERAP mandatory stay presents an entirely different scenario. The purpose of ERAP is to provide compensation to landlords for past rent. This burden of the time necessary to make an eligibility determination is outweighed by the financial benefit that ERAP is designed to provide directly to landlords.
The Court is of the opinion that in the event of a credible allegation of fraud, a landlord could request a hearing. It would be at the discretion of the court to determine whether the allegation rises to the level of intentional fraud that would permit the court to proceed with a hearing on the merits of the petition notwithstanding the pendency of an ERAP application. The petitioner would have to prove respondent's fraud by clear and convincing evidence. In Abuelafiya v. Orena, 73 Misc 3d 576, 155 N.Y.S.3d 715, 2021 NY Slip Op. 21247 (Dist.Ct.Suffolk Co.), the court found that the evidence established the tenants had a second home that was available for them to occupy. While the court did not explicitly ruled that the tenant had engaged in conduct with the intent to defraud, the evidence was of that nature. There was no dispute that the tenant had a second home that was available for their occupancy. Further, the evidence established that the intent of the tenants to remain in the demised premises was so their children could graduate from the local high school.
Examples of fraud requiring a hearing could be the intentional falsification of information and/or documents submitted to obtain the ERAP benefits or the filing of an ERAP application with the sole intention of harassing the landlord and/or without any intention on the part of the tenant to occupy the premises. The court could also grant a judgment of possession in the event a tenant has voluntarily vacated the premises.
Petitioner's oral application on February 9, 2022 for a hearing on the eligibility of the respondents to receive ERAP benefits is denied for the reasons set forth herein. This Court does not possess the jurisdiction to make this determination absent clear and convincing evidence of fraud. Without such proof, the court can neither issue a ruling denying or granting ERAP benefits. To do so would upend a state-wide process put in place pursuant to statutory authorization.
A status conference is set for April 13, 2022 at 10:30 a.m.
James F. Matthews, J.
Response sent, thank you
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Docket No: Index No. LT-0496-2021/BR
Decided: February 16, 2022
Court: District Court, New York,
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