United States: What's In A Name? Albany Supreme Court Determines That "Rent" Under ERAP Includes Cooperative Maintenance

The Emergency Rental Assistance Program ("ERAP") was created in order to provide economic relief to help low- and moderate-income households at risk of homelessness due to the pandemic. The Commissioner of the Office of Temporary and Disability Assistance ("OTDA") is charged with establishing the eligibility standards for the distribution of funds under ERAP, which includes households in which the tenant or occupant has an obligation to pay rent in their primary residence.

Whether called maintenance, carrying charges, or rent, ERAP eligibility guidelines incorporate the payment obligation as defined in RPAPL 702. However, a few months into the program, the OTDA further narrowed eligibility, stating that "Co-op shareholders are not eligible for ERAP to cover monthly maintenance fees" in the "FAQ" on the website under the heading "Benefits Available and Who is Eligible." This change took both landlords and tenants by surprise, as shareholders have a landlord-tenant relationship with the cooperative corporation, subjecting them to the same eviction proceedings as rental tenants, and cooperative maintenance has been considered the equivalent of rent in nearly 100 years of legal proceedings. Indeed, significant ERAP sums had already been paid to cooperatives to cover shareholder arrears.

In recent months, several appeals have been filed where OTDA determined an applicant to be ineligible and demanded the return of payments made for cooperative arrears on the grounds that "maintenance" is not "rent." One Albany court recently reiterated at length that the OTDA must abide by the definition it identified would be used in its program: RPAPL 702.

In the Article 78 appeal before the Albany Court, the petitioner in Levitt v. Tietz, a shareholder in a Mitchell-Lama cooperative (which is specifically designed to provide housing for low- and middle-income families), asked "only that the program be effected in the manner that it was legislated." In its August 23, 2023 decision, the Court found that the legislative intent could be discerned from the language of the program itself – which invoked the definition of rent as defined in RPAPL 702. Under RPAPL 702, "rent" shall mean "the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement." The statute limits the actual charges that may be sought in a summary proceeding, exempting only market-rate cooperatives from that limitation.

The Court's decision reflects the proper application of the very definition of rent described in RPAPL 702 and incorporated by ERAP. The decision further recognizes the distinction that the legislature has made between market rate and low- and moderate-income housing cooperatives, creating statutory exceptions for the former but not the latter. The OTDA's exclusion of all cooperatives from ERAP was contrary to the purpose of low- and middle-income cooperatives which house the very families it is designed to protect.

Based on the legislative history and its clear intent to include, at a minimum, maintenance charges in low- and middle-income cooperatives, the Court refused to dismiss the Article 78 appeal, finding that "the definition of rent in RPAPL includes maintenance paid by certain cooperative shareholders," and that "OTDA's determination that petitioner was not eligible for ERAP funds [was] arbitrary and capricious."

Just as the legislature modified the Housing Stability and Protection Act to carve out cooperatives from many of its statutes, but with the exception of low- and middle-income cooperatives, it should modify the ERAP provisions in the same way. Otherwise, if the OTDA is successful in clawing back funds already paid to cooperatives to cover maintenance arrears, the only result will be increased evictions and homelessness – defeating ERAP's very purpose.