Applicant for Mitchell-Lama Apartment Required to Pay Past Arrears Owed on Another Apartment as Condition for Approval
Is Housing Company permitted to reject an applicant who applied with brother as co-occupant, where brother owes back rent (use and occupancy) on another unit where he was denied succession rights?
Yes, a Mitchell-Lama housing company can generally reject an applicant if a proposed co-occupant family member owes outstanding rent or carrying charges to the housing company, even if the debt is tied to a different unit.
The Mitchell-Lama Rules
Mitchell-Lama developments are governed by strict regulations. When a housing company reviews an applicant, they are legally permitted to evaluate the entire household’s financial history, stability, and character. If a prospective co-occupant has a history of rent arrears, the housing company may view this as a financial risk to the company.
Co-Applicant’s family member owes back rent
In this case, the brother (co-applicant) was previously denied succession rights in another apartment.
The Mitchell-Lama rules permit an applicant to continue in occupancy pending determination by the agency of his succession application, but he is required to pay use and occupancy for the apartment in an amount equal to the monthly rental paid by the vacating cooperator. § 3.02 (p)(8)(iii).
In the event the agency denies the succession application, the applicant is required to vacate the apartment immediately. The occupant is still financially responsible for any accrued use and occupancy up to the date they eventually vacate the apartment
The housing company would be entitled to bring an action to recover the unpaid rent, plus legal fees.
Here, no action was commenced at the time the apartment was vacated and the arrears are still owed.
Assuming there is no statute of limitations or other legal impediment, the housing company can still bring an action in Civil Court for the arrears, and legal fees incurred.
The application
· By being included on the application, the co-occupant is tied to the household’s financial and legal obligations. Any active debt would serve as valid grounds to reject a new occupancy application.
· Because the brother would potentially have succession rights if he co-occupied the apartment for the requisite two years before the primary occupant vacated, the fact that the brother owes significant rental arrears on another unit would be additional justification to deny the application.
· If the housing company rejects the application due to past-due rent from the co-occupant, the applicant will receive a written denial stating the specific reason. The housing company must report this rejection, along with the reasoning, to the overseeing agency (HPD or DHCR) for final processing.
· This could be resolved if the brother paid off the outstanding balance prior to the application review or hearing.
Bonnie Berkow represented Adam Leitman Bailey, P.C. in this matter.