The respondent moves to dismiss this nonpayment proceeding on various grounds including, inter alia, this Court's determination in Remeeder HDFC, Inc. v. Robertson, 2007 NY SlipOp 51684(U), that such a proceeding cannot be maintained to recoup monies from a tenant who resides in an apartment subsidized by HUD Section 8 and fails to meet the requirements for recerification.

According to the Petition, the respondent, who resides in a HUD Section 8 premises, is being sued for rent arrears from July 2008 through April 2010, for a total of $7111.00, as set forth in the Petition dated April 14, 2010.

This matter first appeared on the calendar, before another judge, on May 10, 2010 and was adjourned to June 1, 2010 for trial. On June 1, 2010, it was further adjourned to June 17, [*2]2010 "for assigned counsel". On June 17, 2010, the respondent's attorney made the instant motion and a stipulated schedule was entered into for opposition and reply papers. The matter was then adjourned to July 29, 2010. It was further adjourned by stipulations to September 16, 2010, October 28, 2010, January 4, 2011 and February 1, 2011. On February 1, 2011, the respondent's motion was before this Court for the first time and after argument the Court reserved decision.

The respondent is seeking leave to serve an amended answer and deeming the annexed proposed amended answer served; granting summary judgment pursuant to CPLR §3212 on respondent's first, second and third affirmative defenses dismissing all claims to rent barred pursuant to the doctrine of laches and stale rent; and dismissing all claims to rent based on the respondent's late recertification.

The petitioner opposes the motion and contends that the Court should not allow the respondent to file the proposed amended answer because it lacks merit; that the Court should not entertain the summary judgment motion simultaneously with the motion to file an amended answer; and that summary judgment should be denied.

The petitioner avers that "assuming arguendo that Respondent can establish the equitable defense of laches, the Respondent would not be entitled to dismissal of the petition because Petitioner is not only seeking a final judgment of possession, but also a money judgment for the owing rental arrears." (P Atty Aff in Opp ¶ 11) "At the minimum, the within action would not be dismissed but the Petitioner would be entitled to a money judgment..." (P Atty Aff in Opp ¶ 12) The petitioner further maintains that there are issues of fact regarding the respondent's assertions that the Petitioner did not follow notice requirements prior to Respondent's annual recertification date and provides copies of the notices sent. Finally, the petitioner argues that the respondent has "unclean hands" in that she did not report all of her income and attempted to benefit from not having to pay a higher amount of rent and as a result "committed fraud". (P Atty Aff in Opp ¶ ¶ 29, 60)

As the respondent resides in a HUD unit, the Petitioner is mandated to adhere to and follow the specific regulations regarding the termination of a tenancy. Chapter 8 [Termination] in the HUD Occupancy Handbook ("Handbook") contains a detailed explanation of the grounds upon which a tenancy may be terminated and the procedure to be utilized in order to do so. (Handbook 8-13)

The regulations state that if a tenant becomes ineligible for assistance because he or she mistakenly provided incorrect information on their recertification documents then he or she must reimburse the owner for the difference between the rent paid and the actual rent the tenant was charged. This situation is deemed a "tenant error" and is not a basis for termination. On the other hand, owners may terminate a tenant who commits fraud by knowingly providing inaccurate or incomplete information. (Handbook Fig. 8-3 [Tenant Errors vs. Fraud])

As this Court held in Remeeder, supra, "the petitioner cannot proceed to collect the reimbursement amount that the respondent is required to pay via the instant nonpayment proceeding. HUD regulations do not permit the commencement of nonpayment proceedings on [*3]penalty of lease forfeiture. (See, Inwood Assoc. v. Sample, 2001 NY SlipO[p 50108(U))

Where a tenant fails to recertify timely, or mistakenly provides incorrect information, that results in a denial of their subsidies, the landlord must negotiate a repayment plan to recoup the monies due and owing. The only remedy available to landlords in Housing Court is the commencement of a holdover proceeding alleging material noncompliance with the tenant's lease, which includes, but is not limited to:

1. Failure of the tenant to submit all required information on household income and composition.;

3. Fraud, which is when a tenant knowingly provides inaccurate or incomplete information (Emphasis in original);

5. Nonpayment of rent due under the lease

a) the tenant is obligated to pay all amounts due under the lease or repayment agreement, including any portion thereof. (Handbook 8-13)

"In the event that the respondent refuses to enter inter a repayment agreement, or defaults on such agreement if entered into between the parties, then the petitioner may commence a holdover proceeding on the ground of noncompliance. In the alternative, the petitioner may seek to terminate the lease agreement if it can establish that the respondent's failure to properly recertify was fraudulent' as opposed to tenant error'." ( Remeeder, supra )^[FN1]

In the case at bar, the petitioner asserts that he properly served upon the respondent all the required notices pursuant to the HUD Handbook, Ch.7, ¶ 7-7, thus creating an issue of fact to be determined at trial. (P Amended Aff, Ex "B")

While the Court agrees that a factual issue in this regard exists to deny summary judgment, the Court is, nonetheless, constrained to dismiss this proceeding for the reasons enunciated above.

Assuming arguendo, that the petitioner did properly serve all the requisite notices, the HUD regulations must be strictly adhered to and a nonpayment proceeding under these circumstances, as in Remeeder, supra, cannot be sustained. The only penalty for a tenant who is out of compliance with recertification is to raise the subsidized rent to market rent. (Handbook, ¶ 7-8.D.3)

Therefore, the petitioner is relegated to pursue a non-possessory judgment ; a repayment plan; or a holdover proceeding alleging material non-compliance with the respondent's lease for the reasons set forth above.^[FN2]

Accordingly, the respondent's motion for summary judgment is deemed a motion to dismiss and, as such, is granted. The Petition is dismissed. The remaining branches of the [*4]respondent's motion are denied as moot.

This constitutes the Decision and Order of the Court.

Dated: March 1, 2011____________________________

GEORGE M. HEYMANN, JHC