Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion:

This is a summary nonpayment eviction proceeding which 1451 Associates LP (hereinafter "Petitioner") commenced on August 13, 2024, against Lisa Jordan (hereinafter "Respondent"). The petition alleges that Respondent owes rental arrears in the amount of $6,172.00 across the following months: $1,218 for June 2024; $1,268 for May 2024; $1,268 for [*2]April 2024; $1,045 for March 2024; $1,045 for February 2024; and $328 for January 2024. (NYSCEF Doc. 1 at ¶ 6). The petition also states that the subject premises is located in a building that is "subject to a mortgage held by HUD ^[FN1] and/or a federally insured mortgage under Section 226 ^[FN2] of the National Housing Act and, as such, [is] operated under the Federal Section 8 Program administered and regulated by the Housing Development Corporation (HDC)." (Id. at ¶ 7). The proceeding is predicated on service of a fourteen (14) day rent demand on the Respondent. (NYSCEF Doc. 3). Respondent filed a pro se answer on October 21, 2024, in which she raised a traverse defense, asserted a general denial, and received a first court date of April 10, 2025. (NYSCEF Doc. 7).

After an initial adjournment by the court, and another adjournment stipulated to on consent, Respondent, while pro se, settled the proceeding via a stipulation on June 23, 2025 (the "June Stipulation"). Respondent agreed to pay $7,871 "representing all rent due through June 30, 2025" with a payment of $1,617 due by July 10, 2025, and the remaining $6,704 due by August 23, 2025, along with current rent as it came due. (NYSCEF Doc. 9 at ¶¶ 2-3, 5). The June Stipulation was without a judgment for the Petitioner, but provided that upon Respondent's default of any payment deadline, Petitioner may move for a final judgment against the Respondent (Id. at ¶ 7).

On July 22, 2025, the Petitioner filed its motion which seeks to amend the petition to date, a final judgment against Respondent in the amount of $7,860, and for issuance of the warrant of eviction forthwith. (NYSCEF Doc. 10; NYSCEF Doc. 11 at ¶¶ 7-8). Respondent subsequently retained counsel, who filed a cross-motion requesting the court to: 1) vacate the June Stipulation based upon mutual mistake; and 2) to grant summary judgment pursuant to CPLR §3212 on the grounds that the predicate rent demand is defective.

Specifically, Respondent argues that the June Stipulation should be vacated by the court because the amount that Respondent agreed to pay includes lump sum retroactive charges resulting from Respondent's Section 8 recertification, and those charges cannot be the basis for a possessory judgment. Respondent further argues that, if the court vacates the June Stipulation, the proceeding requires dismissal as the predicate rent demand does not provide a good faith approximation of the rent owed and violated the thirty (30) day notice requirement contained in 15 U.S.C. § 9058(c) (the "CARES Act")^[FN3] . The motions were deemed fully briefed and submitted after argument on October 6, 2025.

The June Stipulation

The first question presented to the court is whether vacatur of the June Stipulation is appropriate?

It is axiomatic that stipulations of settlement "are favored by the courts and not lightly cast aside." (Hallock v State of New York, 64 NY2d 224, 230 [1984]). The strict enforcement of open court stipulations "not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process." (Id. at 230). That being said, scenarios arise in which a party can show good cause for a stipulation to be set aside in order to prevent injustice. (Avenue D Props. v Springer, 62 Misc 3d 1209[A] [Civ Ct, Kings County 2019], citing In re Estate of Frutiger, 29 NY2d 143, 150 [1971]). When that occurs, courts can exercise their discretionary power to set aside a stipulation "where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident." (Hallock, 64 NY2d at 230; Bond v Bond, 260 AD 781, 782 [2d Dept 1940] ["It is well settled that the court has power to relieve a party from a stipulation which is unjust or harsh even when fully understood and authorized."]). This is especially true where a party to a stipulation is a pro se litigant as "[t]he Appellate Term in both the First and Second Judicial Departments has routinely held that stipulations should be vacated where a previously unrepresented tenant obtains counsel and demonstrates potentially meritorious defenses." (Tatum v Jack, 82 Misc 3d 1206[A], *1, *4 [Civ Ct, Kings County 2024] [emphasis in original], citing Chauncey Equities, LLC v Murphy, 62 Misc 3d [A] [App Term, 2d Dept 2019] [additional citations omitted]).

Respondent argues that vacatur of the June Stipulation is required as the Respondent unknowingly and improvidently agreed to a stipulation where the majority of what Respondent agreed to pay constitutes retroactive rent increases resulting from Respondent's HUD Section 8 recertifications. Respondent concludes that those sums cannot be subject to a possessory judgment that may ultimately result in Respondent's eviction. In support of this argument, Respondent directs the court to the HUD Handbook ^[FN4] , which governs the policies and procedures the parties must follow regarding the Respondent's HUD administered Section 8 tenancy. (Manhattan Ave. Assocs. v Payano, 2016 NYLJ Lexis 5017, *3 [Civ Ct, NY County 2016] ["The provisions of the HUD handbook mandate procedures for project-based Section 8 tenancies and are applicable in Housing Court proceedings."]). The Petitioner concedes that subject premises is "regulated subject to HUD rules and regulations." (NYSCEF Doc. 23 at ¶ 4).

A tenant with a Section 8 subsidy pays a portion of their rent calculated to a certain percentage of their household income, minus allowable expenses, with the subsidy covering the remaining amount of rent. (HUD Handbook Chp. 5-1[A]). To that end, tenants receiving a project-based Section 8 subsidy must submit annual income certifications, or interim certifications if there is a change of income within twelve months of the last annual recertification. (HUD Handbook Chp. 5-4; Chp. 5-5). If there is a change in the household income that is reported in an annual or interim income recertification that resulted in an overpayment of the subsidy, then the HUD Handbook requires that the "tenant must reimburse the owner for the difference between the rent the tenant should have paid and the rent he/she was actually charged . . . " (HUD Handbook Chp. 8-21[A]).

The HUD Handbook draws an important distinction between tenant error and fraud with respect to tenant reported income during annual or interim recertifications. (HUD Handbook Fig. [*3]8-3). Fraud constitutes a basis for a landlord to terminate a Section 8 tenant's lease agreement. (HUD Handbook, Chp. 8-13[A][3]). A subsidy overpayment as a result of tenant error, on the other hand, may result in retroactive lump sum rent increases charged to the tenant. The HUD Handbook states that a landlord's recourse for recovering those sums is a repayment program with the tenant. (HUD Handbook at Chp. 8-18[E][2]; Chp. 8-23). While a tenant has an obligation under the HUD Handbook to repay the retroactive sums resulting from a subsidy overpayment, HUD regulations are also clear that a tenant's failure to repay the landlord for those amounts cannot be the basis for an eviction. (HUD Handbook, Fig. 8-3 ["Tenants who were not eligible for assistance because they mistakenly provided incorrect information must reimburse the owner for the difference between the rent the tenant should have paid and the actual rent the tenant was charged. This circumstance constitutes a tenant error and is not a basis for eviction."] [emphasis in original]).

With that said, housing courts have routinely held that lump sum retroactive rent increases resulting from recertification cannot form the basis of a possessory judgment. (Clinton Arms Assocs. v Robinson, 2020 NYLJ Lexis 771 *11 [Civ Ct, Bronx County 2020] ["[T]he Petitioner failed to offer a repayment plan as required by the HUD Handbook after determining that the Respondents underreported income . . . Petitioner instead has attempted to circumvent this requirement by seeking the undercharged rent in the form of a possessory judgment: an action it is prohibited from undertaking."]; Riverdale Osbourne Towers Hous. Assoc. LLC v Martinez, 30 Misc 3d 1228[A] [Civ Ct, Kings County 2011] [holding that with respect to the lump sum rent adjustments resulting from an income recertification "the [P]etitioner is relegated to pursue a non-possessory judgment; a repayment plan; or a holdover proceeding alleging material non-compliance with the [R]espondent's lease . . . "]); Remeeder HDFC, Inc. v Robertson, 16 Misc 3d 1133[A] [Civ Ct, Kings County 2007]; Payano, 2016 NYLJ Lexis 5017 [Civ Ct, New York County 2016]).

Petitioner argues that the repayment agreement prescribed by the HUD Handbook is permissive in nature only, and that because HUD regulations allow a landlord to recoup the retroactive rent adjustments in a civil proceeding, Petitioner is then within its rights to sue the Respondent under RPAPL §711(2) for the retroactive adjustments and receive a judgment in housing court for those amounts. In addition, the Petitioner states that it "can only offer repayment agreement to tenants otherwise in good standing. For . . .Ms. Jordan who ha[s] arrears not resulting [in] retro-adjustments, programs do [not] permit us to offer a repayment agreement until she comes current on the non-retro charges." (NYSCEF Doc. 23 at ¶ 13). The Respondent confirms that the Petitioner has never offered her a HUD-sanctioned repayment plan for the retroactive rent increases. (NYSCEF Doc. 28 at ¶ 3).

The Court does not find Petitioner's argument compelling. Petitioner provided no section of the HUD Handbook or other provision of law substantiating that a tenant who has rental arrears is barred from receiving a repayment plan. Even after the court's own review of the HUD Handbook, it could not find any section of the regulations which states a repayment plan is limited to a tenant in good standing. While the HUD Handbook does state that retroactive rent increases arising from an annual or interim income recertification can be subject to collection in a civil action, the Handbook also makes clear that they cannot be the basis of an eviction. (HUD Handbook Fig. 8-3). This presents a problem for Petitioner as housing court can only issue a monetary judgment that is concomitant with a possessory judgment. (615 Nostrand Ave. Corp v Roach, 15 Misc 3d *1, *4 [App Term, 2d Dept 2006] ["[I]n a summary proceeding, a monetary [*4]award in favor of landlord can only be made concomitant with an award of possession."]; see also RPAPL § 749[1] ["Upon rendering a final judgment for petitioner, the court shall issue a warrant."]).

Turning to the June Stipulation, the Respondent agreed to pay $7,871.00 representing all rent due through June 30, 2025. (NYSCEF Doc. 9 at ¶ 2). A review of Petitioner's rent ledger shows that the stipulated amount includes $7,553.00 in total lump sum charges which constitutes retroactive rent increases arising from Respondent's annual and interim income recertifications. (NYSCEF Doc. 25 at pgs. 3-4; NYSCEF Doc. 23 at ¶ 11). Therefore, the Respondent, while pro se, entered into a stipulation where almost 96% of the amount agreed upon constituted retroactive rent increases, for which the Petitioner cannot receive a possessory judgment. Nonetheless, Petitioner now moves for a final judgment in an amount which includes these charges and for issuance of a warrant of eviction. (NYSCEF Doc. 10; NYSCEF Doc. 11 at ¶¶ 7-8). In deciding whether vacatur of a stipulation is appropriate "there are circumstances where equity and fairness must intervene." (Jack, 82 Misc 3d 1206[A] at *11). It is clear to the court that, in these circumstances where the Respondent was unrepresented and over 90% of the amount stipulated to cannot be the basis of a possessory judgment, vacatur of the June Stipulation is warranted. The court accordingly vacates the June Stipulation.

The Rent Demand

After vacating the June Stipulation, the court turns to the next branch of Respondent's motion: whether the proceeding requires dismissal due to an allegedly defective rent demand? Respondent argues that the rent demand is defective because it does not contain a good faith approximation of the rent owed and violates the CARES Act.

The court will first address Respondent's CARES Act argument. Service of a proper rent demand is the foundation of a summary nonpayment proceeding. (EOM 106-15 217th Corp. v Severine, 62 Misc 3d 141[A] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]. A rent demand is a statutorily required predicate notice that must be served on a tenant before a nonpayment proceeding can commence. (RPAPL §711(2); Moniaci v Kelly, 73 Misc 3d 127[A] [App Term, 2d Dept 2021]). As predicate notices may not be amended, a defective predicate notice destroys the viability of a summary RPAPL proceeding. (Chinatown Apts. v Chu Cho Lam, 51 NY2d 786, 788 [1980]).

In 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act in response to the COVID-19 pandemic. The law included increased protections for tenants and provides that "[t]he lessor of a covered dwelling unit may not require the tenant to vacate the covered dwelling unit before the date that is 30 days after the date on which the lessor provides the tenant with a notice of vacate." (15 U.S.C. §9058[c]). The CARES Act established two eviction-related requirements:

The first, which applied for 120 days beginning on March 27, 2020, created a temporary moratorium against initiating a legal action against a tenant to recover possession for nonpayment of rent. The second, which commenced at the end of the 120-day temporary moratorium with no expiration date, prohibits a landlord from requiring a tenant to vacate a 'covered dwelling' without first issuing a 30-day notice to vacate.

(Andrews Plaza Hous. Assocs. LP v Juan Rodriguez, LT-310838-23/BX [Civ Ct, Bronx County 2023] [Lutwak, J.]).

Here, there is no dispute that the subject premises is a dwelling covered by the CARES [*5]Act. (NYSCEF Doc. 22 at ¶ 28). Instead, Petitioner contends that it "has already complied with [the 30-day notice requirement] by serving the Respondent with a 30-day notice on February 9, 2022, in conjunction with a prior proceeding." (Id.). Petitioner then concludes that it has no obligation to serve another CARE Act notice in any subsequent nonpayment proceeding. Petitioner argues that there are other federal statutes and regulations that provide the only notice required is what is prescribed by state law, and that if Congress had intended to create a permanent requirement it would have explicitly said so. This is an argument that has already been advanced, and rejected, at least once in housing court. (Navy Green PACC LLC v Toni Miguel, LT-316562-23/KI, [Civ Ct, Kings County 2024] [Golden, J.]). Petitioner provides no case law to support its position that because it already served a 30-day rent demand in a prior proceeding, it has no obligation to do so in any subsequent proceeding. The court declines to adopt this interpretation of the CARES Act and its interplay with the other federal statutes and regulations that Petitioner puts forth in its opposition.

Petitioner further attacks Respondent's CARES Act defense on two other fronts. Petitioner argues that the "defense was not raised in the answer and is a jurisdictional defect that is subject to waiver." (Id. at ¶26). Respondent, however, placed a general denial in her answer. (NYSCEF Doc. 3). Even a general denial "places the sufficiency of a predicate notice into issue and requires [a] Petitioner to prove that an effective notice has been served." (Riverdale Osborne Towers Hous. Assoc. LLC v Berrian, 2023 NY Misc. LEXIS 77112, *1, *2 [Civ Ct, Kings County 2023] [dismissing a petition due to Petitioner's failure to serve a CARES Act compliant rent demand.]). Petitioner also cites to case law from courts in other states which have interpreted and narrowed the CARES Act to apply only to causes of action arising during the COVID-19 moratorium period. This court however elects to follow the case law developed in New York, in which housing courts have routinely held that for summary nonpayment proceedings for premises which are covered by the CARES Act, a 30-day rent demand is required. (Belplain Realty Co. Inc. v Caro, 85 Misc 3d 1278[A] [Civ Ct, Bronx County 2025]; GO HPS LLC v Harris, 86 Misc 3d 1082* [Civ Ct, Queens County 2025]; HP Tyler's Bronx HDFC, Inc. v De La Cruz, 2025 NY Misc LEXIS 538 *3, *4 [Civ Ct, Bronx County 2025]; Berrian, 2023 NY Misc. LEXIS 77112 at *2; Juan Rodriguez, LT-310838-23/BX.) Considering that the court has determined that a 30-day rent demand was required to be served on the Respondent, the court does not address Respondent's arguments regarding the sufficiency of the content of the rent demand.

Accordingly, it is:

ORDERED that Petitioner's motion (seq. 1) is denied, it is further

ORDERED that Respondent's cross-motion (seq. 2) is granted in its entirety. The June Stipulation (NYSCEF Doc. 9) is vacated, and the petition is dismissed without prejudice.

This constitutes the decision and order of the court.