Rent Limits Set by Federal Law After Landlord Prepays Mortgage

Landlord sued to evict tenant for nonpayment of rent. Landlord and tenant signed a settlement agreement in court. Tenant later asked the court to vacate the agreement. The court ruled against tenant, who appealed and won. The appeals court found that the agreement was unenforceable because it didn’t comply with federal laws governing low-income housing. Tenant’s apartment was located in a building with a HUD Housing Assistance Program (HAP) contract providing project-based Section 8 rent subsidies to most building tenants. Tenant was ineligible to receive the subsidy based on her income. But landlord had prepaid the HAP Program mortgage in 2004. By federal law, under these circumstances, rents and rent increases were set at specific levels even for tenants who didn’t receive rent subsidies. Neither landlord nor tenant were aware of this when they signed the settlement agreement. The agreement and judgment of possession for landlord were vacated.

Bridgeview II, LLC v. Marks: 2015 NY Slip Op 25398, 2015 WL 7906171 (App. T. 2 Dept.; 12/1/15; Pesce, PJ, Weston, Solomon, JJ)