"Rent" Payable by OTDA under ERAP Includes Mitchell-Lama Co-op Maintenance Fees

In 2022, the NY State Office of Temporary and Disability Assistance (OTDA) found tenant ineligible for funds awarded from the ERAP program and sought the return of $20,285 it claimed were disbursed on tenant's behalf in error. Tenant then sued OTDA in a NY County court. The court transferred the case to Albany County and stayed enforcement pending a court ruling. The court ruled for tenant, finding that OTDA's ruling that tenant wasn't eligible for ERAP funds was arbitrary and capricious. Tenant was a shareholder-tenant in a Mitchell-Lama limited equity cooperative apartment complex subject to Article II of the Private Housing Finance Law. On Aug. 20, 2021, OTDA updated the "Frequently Asked Questions" section of its ERAP website to state that, "Co-op shareholders are not eligible for ERAP to cover monthly co-op/maintenance fees." But on Aug. 26, 2021, OTDA awarded tenant $20,285 to cover rent for July 2020 through October 2021. 

On Aug. 31, 2021, the co-op landlord called the ERAP hotline to ask how it should apply the ERAP funds since it already had applied charity funds received by the tenant to some of the arrears included in the ERAP award. OTDA treated landlord's inquiry as an appeal regarding ERAP overpayment. In October 2021, tenant and landlord received OTDA's notice that an appeal had been filed and landlord called ERAP to withdraw the "appeal." In March 2022, OTDA advised landlord and tenant that it had overpaid ERAP funds and was seeking to recoup the entire amount based on tenant's ineligibility.

Tenant then filed her lawsuit. OTDA argued that the court  lacked jurisdiction over the question of whether ERAP benefits extended to co-op shareholders. But the court found that OTDA misstated the issue. The court said that the question was whether the definition of "rent" under RPAPL Sections 702(1) and (2) included monthly maintenance charges paid by certain co-op shareholders. The court interpreted the law to provide that a landlord may recover "rent" in an eviction proceeding against either a tenant in a traditional landlord-tenant relationship or against a tenant shareholder residing in a "a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law," such as a Mitchell-Lama cooperative.  So OTDA couldn't get the ERAP funds back. The court also awarded tenant attorneys' fees against OTDA.

Levitt v. Tietz: Index No. 901512-23, 2023 NY Slip Op 23266 (Sup. Ct. Albany; 8/23/23; Connolly, J)