Landlord & Tenant

Section 8 Benefits

Matter of Banos v. Rhea; Matter of Dial v. Rhea

NYLJ 5/13/15, p. 20., col. 1

Court of Appeals

(4-3 decision; majority opinion by Stein, J; dissenting opinion by Fahey, J.)

In two article 78 proceedings brought by tenants challenging termination of their Section 8 benefits, the New York City Housing Authority (NYCHA) appealed from Appellate Division determinations that the proceedings were not barred by the statute of limitations. A divided Court of Appeals reversed and held that the permissions should have been dismissed as time-barred because more than four months had passed between the time the NYCHA sent a T-3 notice and the time tenants brought their proceedings.

NYCHA administers the federal Section 8 rent subsidy program pursuant to a consent judgment that requires the NYCHA to send three separate notices ' a warning letter, a T-1 notice of termination and a T-3 notice of default ' before terminating any tenant's Section 8 benefits.

Tenant Banos brought an article 78 proceeding challenging termination more than 18 months after NYCHA sent out the last of these notices, the T-3 notice. Tenant Dial brought an article 78 proceeding more than three years after NYCHA sent out the T-3 notice. In each case, tenant denied receiving any of the notices required by the consent judgment. Also in each case, NYCHA moved to dismiss the proceedings as time-barred, submitting proof that the T-3 notice had been sent to the tenant as required by the consent judgment. In the Banos case, the proof included a United States Postal Service track and confirm report; in Dial , the track and confirm report was unavailable because the Postal Service only retains those records for two years, so NYCHA submitted affidavits from its employees, together with its mail logs.

In both cases, Supreme Court denied NYCHA's motion to dismiss, and in both cases, the Appellate Division affirmed. In both cases, the courts below relied on the absence of proof that the warning letter and the T-1 letter had been properly sent to the respective tenants. NYCHA appealed.

In reversing, the Court of Appeals majority relied on paragraph 22(f) of the consent judgment, which provides that for purposes of an article 78 proceeding, “the determination to terminate a [Section 8] subsidy shall, in all cases, become final and binding upon receipt of the Notice of Determination pursuant to paragraph '22(a) hereinabove, or the Notice of Default ' ” The Notice of Default mentioned in paragraph 22(f) is the T-3 notice. Hence, the Court of Appeals held that tenants' claims were time-barred because not brought within 4 months of receipt of the T-3 notice. The majority distinguished between what the consent judgment required to commence the statute of limitations and what the consent judgment required to establish the merit of a termination. While full compliance with all three notice requirements is essential to establish that the termination was meritorious, the statute of limitations runs from receipt of the T-3 notice, regardless of whether the other notices were ever served. As a result, tenants' claims in both cases were time-barred.

Judge Eugene M. Fahey's dissent, in which Chief Judge Jonathan Lippman and Judge Jenny Rivera argued that the three separate notice requirement was an essential element of the consent judgment, and that reading section 22(f) to trigger the statute of limitations without regard to whether the other two notices were sent “eviscerates [the consent judgment's] obvious ameliorative purpose of standardizing the termination of Section 8 benefits through a trinity of notices.”

Guarantor Relieved of Obligations

504 Associates LLC v. Nason

NYLJ 4/8/15, p. 21, col. 1

Supreme Ct., Kings Cty.

(Lewis, J.)

In landlord's action on a guaranty of a lease, landlord and guarantor both moved for summary judgment. The court granted guarantor's motion, holding that when the original lease expired and tenant became a month-to-month tenant, the guarantor was relieved of his obligations under the guaranty, even though the guaranty extended to “future renewals” of the lease.

Landlord's predecessor rented the subject apartment to Ruth Rogin for a one-year term beginning May 1, 2002. Guarantor Gilbert Rogin signed a guaranty of the lease which provided that guarantor would be “liable to the owner for rent due that is not paid by the tenant, including future renewals.” The guaranty also provided that it would be attached to each copy of the lease executed by landlord and tenant. In December 2002, landlord's predecessor and tenant modified the lease to extend the tenancy through Nov. 30, 2005. At that point, the lease was not extended or renewed, and Rogin became a month-to-month tenant until she entered into a new lease for the period from Aug. 1, 2006 through July 31, 2007. The guaranty was not attached to the new lease.

At the expiration of that lease, Rogin again became a month-to-month tenant. In 2008, current landlord bought the building and, on Aug. 1, 2010, sent Rogin a letter including what was deemed a lease renewal at a monthly rent of $3,800 ' far higher than the rent Rogin had previously been paying. Landlord also sent guarantor a letter informing him that landlord was exercising its right to collect under the guaranty. Landlord later brought a nonpayment proceeding against Rogin, which was settled by a stipulation of settlement that permitted Rogin to remain in the apartment until March 30, 2012. Landlord then brought this action against guarantor on the guaranty. Both parties moved for summary judgment.

In awarding summary judgment to guarantor, the court started by noting that a guaranty should be construed strictly in favor or a private guarantor, and suggested that if an original lease is modified without the guarantor's consent, the guarantor is relieved of its obligation under the guaranty. In this case, the court indicated that the December 2002 modification, made without the guarantor's consent, might well have nullified the guaranty but, in any event, the expiration of the modified lease on Nov. 30, 2005 terminated guarantor's obligation under the guaranty. Under no circumstances could guarantor be liable for rent for the month-to-month tenancy that began on Aug. 1, 2007 and continued until Ruth Rogin was evicted.

No Summary Proceeding Available

Tello v. Dylag

NYLJ 5/6/15

AppTerm, 2nd Dept.

(memorandum opinion)

In a summary nonpayment proceeding brought by purported landlord, occupant appealed from Justice Court's award of possession and back rent. The Appellate Term reversed and dismissed the proceeding, holding that the relationship between the parties was not that of landlord and tenant, and as a result, landlord was not entitled to maintain the summary proceeding.

In 2005, the parties entered into an agreement describing the purported landlord as “purchaser” and the occupant as “joint venture.” The agreement specified that the parties were attempting to form a union to repair and occupy the premises for the purpose of selling and sharing the profits. The agreement entitled occupant to reside in the premises for one year, and provided that occupant could continue living in the premises after the first year with the permission of “purchaser.” Subsequently, “purchaser” brought this summary proceeding against occupant, and Justice Court awarded possession and back rent to purchaser.

In reversing, the Appellate Term held that the agreement established a joint venture, and not a landlord tenant relationship. As a result, “purchaser” had no basis to bring a summary proceeding. The court also noted that even if there had been a landlord-tenant relationship, the petition was defective because it failed to allege that the agreement had expired before commencement of the proceeding, and did not set forth any facts giving rise to a subsequent tenancy ' defects that would require dismissal of the proceeding.

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Section 8 Benefits

Matter of Banos v. Rhea; Matter of Dial v. Rhea

NYLJ 5/13/15, p. 20., col. 1

Court of Appeals

(4-3 decision; majority opinion by Stein, J; dissenting opinion by Fahey, J.)

In two article 78 proceedings brought by tenants challenging termination of their Section 8 benefits, the New York City Housing Authority (NYCHA) appealed from Appellate Division determinations that the proceedings were not barred by the statute of limitations. A divided Court of Appeals reversed and held that the permissions should have been dismissed as time-barred because more than four months had passed between the time the NYCHA sent a T-3 notice and the time tenants brought their proceedings.

NYCHA administers the federal Section 8 rent subsidy program pursuant to a consent judgment that requires the NYCHA to send three separate notices ' a warning letter, a T-1 notice of termination and a T-3 notice of default ' before terminating any tenant's Section 8 benefits.

Tenant Banos brought an article 78 proceeding challenging termination more than 18 months after NYCHA sent out the last of these notices, the T-3 notice. Tenant Dial brought an article 78 proceeding more than three years after NYCHA sent out the T-3 notice. In each case, tenant denied receiving any of the notices required by the consent judgment. Also in each case, NYCHA moved to dismiss the proceedings as time-barred, submitting proof that the T-3 notice had been sent to the tenant as required by the consent judgment. In the Banos case, the proof included a United States Postal Service track and confirm report; in Dial , the track and confirm report was unavailable because the Postal Service only retains those records for two years, so NYCHA submitted affidavits from its employees, together with its mail logs.

In both cases, Supreme Court denied NYCHA's motion to dismiss, and in both cases, the Appellate Division affirmed. In both cases, the courts below relied on the absence of proof that the warning letter and the T-1 letter had been properly sent to the respective tenants. NYCHA appealed.

In reversing, the Court of Appeals majority relied on paragraph 22(f) of the consent judgment, which provides that for purposes of an article 78 proceeding, “the determination to terminate a [Section 8] subsidy shall, in all cases, become final and binding upon receipt of the Notice of Determination pursuant to paragraph '22(a) hereinabove, or the Notice of Default ' ” The Notice of Default mentioned in paragraph 22(f) is the T-3 notice. Hence, the Court of Appeals held that tenants' claims were time-barred because not brought within 4 months of receipt of the T-3 notice. The majority distinguished between what the consent judgment required to commence the statute of limitations and what the consent judgment required to establish the merit of a termination. While full compliance with all three notice requirements is essential to establish that the termination was meritorious, the statute of limitations runs from receipt of the T-3 notice, regardless of whether the other notices were ever served. As a result, tenants' claims in both cases were time-barred.

Judge Eugene M. Fahey's dissent, in which Chief Judge Jonathan Lippman and Judge Jenny Rivera argued that the three separate notice requirement was an essential element of the consent judgment, and that reading section 22(f) to trigger the statute of limitations without regard to whether the other two notices were sent “eviscerates [the consent judgment's] obvious ameliorative purpose of standardizing the termination of Section 8 benefits through a trinity of notices.”

Guarantor Relieved of Obligations

504 Associates LLC v. Nason

NYLJ 4/8/15, p. 21, col. 1

Supreme Ct., Kings Cty.

(Lewis, J.)

In landlord's action on a guaranty of a lease, landlord and guarantor both moved for summary judgment. The court granted guarantor's motion, holding that when the original lease expired and tenant became a month-to-month tenant, the guarantor was relieved of his obligations under the guaranty, even though the guaranty extended to “future renewals” of the lease.

Landlord's predecessor rented the subject apartment to Ruth Rogin for a one-year term beginning May 1, 2002. Guarantor Gilbert Rogin signed a guaranty of the lease which provided that guarantor would be “liable to the owner for rent due that is not paid by the tenant, including future renewals.” The guaranty also provided that it would be attached to each copy of the lease executed by landlord and tenant. In December 2002, landlord's predecessor and tenant modified the lease to extend the tenancy through Nov. 30, 2005. At that point, the lease was not extended or renewed, and Rogin became a month-to-month tenant until she entered into a new lease for the period from Aug. 1, 2006 through July 31, 2007. The guaranty was not attached to the new lease.

At the expiration of that lease, Rogin again became a month-to-month tenant. In 2008, current landlord bought the building and, on Aug. 1, 2010, sent Rogin a letter including what was deemed a lease renewal at a monthly rent of $3,800 ' far higher than the rent Rogin had previously been paying. Landlord also sent guarantor a letter informing him that landlord was exercising its right to collect under the guaranty. Landlord later brought a nonpayment proceeding against Rogin, which was settled by a stipulation of settlement that permitted Rogin to remain in the apartment until March 30, 2012. Landlord then brought this action against guarantor on the guaranty. Both parties moved for summary judgment.

In awarding summary judgment to guarantor, the court started by noting that a guaranty should be construed strictly in favor or a private guarantor, and suggested that if an original lease is modified without the guarantor's consent, the guarantor is relieved of its obligation under the guaranty. In this case, the court indicated that the December 2002 modification, made without the guarantor's consent, might well have nullified the guaranty but, in any event, the expiration of the modified lease on Nov. 30, 2005 terminated guarantor's obligation under the guaranty. Under no circumstances could guarantor be liable for rent for the month-to-month tenancy that began on Aug. 1, 2007 and continued until Ruth Rogin was evicted.

No Summary Proceeding Available

Tello v. Dylag

NYLJ 5/6/15

AppTerm, 2nd Dept.

(memorandum opinion)

In a summary nonpayment proceeding brought by purported landlord, occupant appealed from Justice Court's award of possession and back rent. The Appellate Term reversed and dismissed the proceeding, holding that the relationship between the parties was not that of landlord and tenant, and as a result, landlord was not entitled to maintain the summary proceeding.

In 2005, the parties entered into an agreement describing the purported landlord as “purchaser” and the occupant as “joint venture.” The agreement specified that the parties were attempting to form a union to repair and occupy the premises for the purpose of selling and sharing the profits. The agreement entitled occupant to reside in the premises for one year, and provided that occupant could continue living in the premises after the first year with the permission of “purchaser.” Subsequently, “purchaser” brought this summary proceeding against occupant, and Justice Court awarded possession and back rent to purchaser.

In reversing, the Appellate Term held that the agreement established a joint venture, and not a landlord tenant relationship. As a result, “purchaser” had no basis to bring a summary proceeding. The court also noted that even if there had been a landlord-tenant relationship, the petition was defective because it failed to allege that the agreement had expired before commencement of the proceeding, and did not set forth any facts giving rise to a subsequent tenancy ' defects that would require dismissal of the proceeding.

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