BBG News

Supreme Court Orders Holdover Tenants To Pay Ongoing Use and Occupancy Notwithstanding Pending ERAP Applications

Jan 7, 2022

By Scott Loffredo

In a New York County Supreme Court declaratory judgment action filed by tenants claiming that their tenancies are subject to rent stabilization, Owner moved for an order compelling the payment of interim use and occupancy. Tenants opposed the application alleging that: (i) Owner had waived any claim to use and occupancy as a result of representing it would not be accepting Emergency Rental Assistance Program (“ERAP”) monies from Tenants because to do so would prevent Owner from continuing separately commenced lease expiration holdover proceedings filed after the service of termination notices which had expired February 29, 2020—just before the onset of the COVID-19 pandemic; and (ii) any application for use and occupancy should be made within the separately commenced Civil Court holdover proceedings, and not within the Supreme Court action.

Owner argued that since its termination notices expired February 29, 2020, the Tenants did not owe Owner “rent” as is defined under the statutory framework creating ERAP, but rather owed Owner “use and occupancy” since the monies were not incurred pursuant to any written or oral agreement from March 2020 to the present. As such, Owner argued that it was free to reject any ERAP monies without any reasonable argument for Tenants to allege such rejection amounted to a “waiver” of the right to collect the monies.

While the Court did not reach the issue of whether it would compel payment of monies for the time period covering Tenants’ ERAP application, it did find that neither the commencement of separate holdover proceedings, nor the Tenant’s potential eligibility under the ERAP program precluded the Court from compelling Tenants to pay use and occupancy during the pendency of the action or from compelling Tenants to immediately pay to Owner use and occupancy (calculated at their last leasehold rates) for the time period which otherwise would not be covered under the Tenant’s ERAP application.

The Court gave Tenants’ thirty (30) days to pay Owner the outstanding use and occupancy incurred during the “non-ERAP period” and further directed prospective use and occupancy to be paid to Owner by the first day of each month commencing January 1, 2022 until otherwise directed by the Court.

For further information on this case please refer to the attached decision or if you need creative proactive thinking to handle tenant disputes, please contact your BBG attorney.

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