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THE LOW AND MODERATE INCOME APARTMENT BUILDING WAS SUBJECT TO FEDERAL HUD REGULATION UNTIL THE HUD MORTGAGE WAS PAID OFF IN 2011, AFTER THAT THE BUILDING WAS SUBJECT TO THE NYC RENT STABILIZATION LAW (FIRST DEPT).

The First Department, in this suit against the landlord by the tenant’s association, determined the apartment building for low and moderate income tenants was subject to federal Housing and Urban Development (HUD) regulation until the HUD mortgage was paid off in April, 2011. Once the mortgage was paid off, the building became subject to the Rent Stabilization Law (RSL):

While we find that the RSL was preempted as to the subject building through April 11, 2011, defendant owner is not entitled to a declaration that the RSL is preempted for the duration of the Use Agreement. Owner fails to demonstrate how HUD had the authority to extend preemption of the RSL beyond April 11, 2011, to 2016 and again to 2026. Accordingly, we limit the declaration in defendant owner’s favor to April 11, 2011, and declare in plaintiffs’ favor that the building was subject to the Rent Stabilization Law as of April 12, 2011.

As long as the building was a project financed by a HUD mortgage, it was subject to the HUD Handbook, based on that loan and the terms of the related Regulatory Agreement. However, once the loan was paid off and the Regulatory Agreement terminated, the building ceased to be such a project. Plaintiffs failed to identify any continuing basis for applying the HUD Handbook to a building that had since been regulated pursuant to the terms of the Use Agreement requiring the preservation of low-income housing.  435 Cent. Park W. Tenant Assn. v Park Front Apts., LLC, 2018 NY Slip Op 05625, First Dept 8-2-18

LANDLORD-TENANT (MUNICIPAL LAW, THE LOW AND MODERATE INCOME APARTMENT BUILDING WAS SUBJECT TO FEDERAL HUD REGULATION UNTIL THE HUD MORTGAGE WAS PAID OFF IN 2011, AFTER THAT THE BUILDING WAS SUBJECT TO THE NYC RENT STABILIZATION LAW (FIRST DEPT))/MUNICIPAL LAW (LANDLORD-TENANT, THE LOW AND MODERATE INCOME APARTMENT BUILDING WAS SUBJECT TO FEDERAL HUD REGULATION UNTIL THE HUD MORTGAGE WAS PAID OFF IN 2011, AFTER THAT THE BUILDING WAS SUBJECT TO THE NYC RENT STABILIZATION LAW (FIRST DEPT))

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