Did Mitchell-Lama Landlord Properly Collect HUD Excess Rent?

Mitchell-Lama tenants brought a combined Article 78 proceeding and court action against landlord, claiming that landlord improperly increased their rents. Tenants claimed that landlord’s original mortgage was paid off and replaced with a new mortgage in April 2008, that landlord no longer participated in the Mitchell-Lama program, and that therefore their Mitchell-Lama rent increases were improper. Tenants claimed that they were also improperly charged “HUD Excess” rent. The court ruled that the building was still regulated under Mitchell-Lama but that tenants had been improperly charged monthly HUD Excess rent since July 1, 2010. Landlord appealed and won, in part. The building development remained in the Mitchell-Lama program after landlord refinanced the development’s debt with a new mortgage. But there were issues of fact as to whether landlord improperly charged monthly HUD Excess rent. A trial was needed to determine whether landlord was authorized to collect HUD Excess rent from tenants.

DeSuze v. Linden Plaza Preservation: 2016 NY Slip Op 00498, 2016 WL 313881 (App. Div. 2 Dept.; 1/27/16; Mastro, JP, Dickerson, Roman, Maltese, JJ)