COVID-19: New York Implements Landlord Rental Assistance Program

Practical Law Legal Update w-033-0145 (Approx. 4 pages)

COVID-19: New York Implements Landlord Rental Assistance Program

by Practical Law Real Estate

Background

On September 2, 2021, New York Governor Kathy Hochul signed into law a modified eviction and foreclosure moratorium to extend relief to tenants and property owners suffering economic hardship due to the ongoing COVID-19 pandemic. The residential eviction moratorium continues through January 15, 2022.

The law also allocated $125 million in additional state funding to fund LRAP, which is aimed at assisting residential landlords who are unable to participate in the federally funded ERAP because their tenant either:

Vacated the residence with past due rent owed.
Declined to complete an application for ERAP.

Under ERAP, tenants must participate in the application process for the landlord to receive rental assistance.

For more information on New York's residential eviction moratorium, see Legal Update, New York Modifies and Extends Eviction and Foreclosure Moratorium.

Landlord Rental Assistance Program (LRAP)

Landlords must apply for LRAP assistance through the OTDA website. All landlords can apply when the program opens on October 7, 2021, but for the first 45 days of the program, priority is given to landlords who own a building with 20 or fewer units. Approved landlords may receive up to 12 months of rental arrears payments for rents accrued on or after March 1, 2020.

Landlords that rent out one or more residential units in New York State are eligible for LRAP if the landlord:

Has a tenant who:
- has left an apartment in New York State with unpaid rental arrears; or
- continues to reside in an apartment in New York State but refuses to apply for ERAP and the landlord has reached out to encourage the tenant's participation in ERAP at least three times, including twice in writing.
Leases the unit(s) at or below 150% of fair market rent for its location.
Provides documented rental arrears owed for the tenant at their residence for rent costs accumulated on or after March 1, 2020. Required documentation includes:
- W-9 tax form;
- proof of ownership;
- a copy of the executed lease showing at least the unit address, tenant name(s), monthly rental obligation, and signature page, or if there is no written lease, a cancelled check, evidence of funds transfer, or other documentation of the last full monthly rent payment;
- documentation of unpaid rent due, such as a monthly rent confirmation form or ledger showing the monthly rental amount due;
- banking information; and
- an owner affidavit or signed agreement designating a property management company or agent as the authorized recipient of LRAP funds, if applicable.

By accepting rental arrears payments under LRAP, the property owner or authorized property management company agrees to:

Receive the LRAP payment in full satisfaction of the tenant's rental obligations during the covered period.
Waive any late fees due on the rental arrears covered by the LRAP payment.
Freeze the current rental rate if the tenant currently resides in the unit and not increase the monthly rent above the monthly amount due at the time of application for LRAP assistance for:
- the months when the landlord receives rental assistance under LRAP; and
- one year from receipt of the LRAP payment.
Certify that the landlord contacted the current tenant at least three times to encourage participation in ERAP, including twice in writing.
Not evict the tenant for reasons of an expired lease or holdover tenancy for one year from receipt of the LRAP payment if the tenant currently resides in the unit. An exception applies if the dwelling unit contains four or fewer units and the property owner or owner's immediate family members intend to immediately occupy the unit for use as a primary residence.

Practical Implications

Residential landlords continue to suffer financial hardship caused by the extended eviction moratorium in New York. While property owners and landlords have received up to $804 million in assistance under ERAP, the federal requirement for tenants to be involved in the application process creates issues for landlords seeking to receive necessary financial assistance. Many landlords are left without recourse after tenants move out of their units to avoid paying past due rent or refuse to participate in the ERAP application process.

While LRAP attempts to bridge the gap for these residential landlords, the LRAP payment only provides up to 12 months of assistance for unpaid rental arrears. LRAP does not pay for future rental assistance or utility arrears. Landlords of small to medium sized properties should apply early to ensure their application is complete, accurate, and offered priority during the application review process. After the first 45 days, OTDA will process applications for eligible landlords on a first come, first served basis, as long as funds remain available.

For updated information on residential eviction moratoriums in select states, see COVID-19: Commercial and Residential Eviction Moratoriums Select State and Local Laws Tracker (US).

For a continuously updated collection of resources addressing COVID-19, see Practical Law's Real Estate Global Coronavirus Toolkit.

COVID-19: New York Implements Landlord Rental Assistance Program | Practical Law