Owner's Termination Notice Deemed Defective

Facts: An owner sought to evict a Section 8 resident. The resident asked the court to dismiss the case based on an allegedly defective termination notice. In the 10 Day Notice to Terminate, the owner notified the resident that it “elects to terminate your tenancy” on the grounds that the resident was both: (1) violating a substantial obligation of his tenancy that he failed to cure, constituting “material non-compliance” with his lease agreement; and (2) “permitting and/or committing a nuisance” or “maliciously, or by reason of gross negligence, substantially damaging the accommodation,” or engaging in conduct which was “such as to interfere substantially with the comforts and safety of other tenants, thereby creating an objectionable tenancy.”

The notice went on to list the following three bases or sub-grounds for eviction: (1) assignment and/or sublet of the premises without the owner’s prior written permission to unauthorized occupants; (2) failure and/or refusal to report all occupants and their income on annual and/or interim income recertification forms in violation of specific paragraphs of the tenant’s lease agreement and the building rules and regulations; and (3) creation of a nuisance in the building, in violation of specific paragraphs of the tenant’s lease agreement and the building rules and regulations, due to the unauthorized occupants’ “anti-social, disruptive and dangerous behavior in and around the building which has caused a substantial disturbance to other tenants and building employees.”

Ruling: A New York civil court granted the resident’s request to dismiss the case.

Reasoning: The court found that of the owner’s two broad claims, “material non-compliance with the lease,” is one of the four permissible bases for eviction listed in HUD regulations. However, the second, “permitting and/or committing a nuisance” etc., is not. While a prohibition on permitting or committing a nuisance may be found in various provisions of the lease between the parties, the court found that it’s not one of the four grounds listed in the federal regulations and the HUD Handbook and therefore isn’t a stand-alone basis upon which an owner may bring a holdover petition against a project-based Section 8 tenant. Accordingly, the court dismissed this element of the owner’s case.

The court also stated that the owner failed to state a cause of action for either an illegal assignment or an illegal sublet, as both require the alleged transfer of the interest. In this case, the resident would have to have entered into an agreement with an assignee or sublessee. Here, the owner’s examples show that the owner’s allegations, if proven, might establish only that the resident gave the alleged unauthorized occupants permission or a license to reside with him in the premises, without first securing the owner’s permission as required by the applicable federal regulations. Accordingly, to the extent the case is based on alleged illegal assignment or sublet, the notice is defective and the lawsuit must be dismissed.

The court also found that the owner’s notice is also defective with regard to the second and third of the three sub-grounds for eviction—failure to report all occupants and their income and creation of a nuisance by the allegedly unauthorized occupants—because they lack the specificity required by federal and state law. Despite the HUD Handbook’s requirement that owners undertake and document an elaborate investigation before terminating a tenancy and commencing an eviction proceeding, the owner’s Notice to Terminate references no such investigation having taken place, which left the court wondering whether it even occurred, as the notice refers to no time frames or dates of the allegedly incomplete income recertifications and instances of objectionable conduct and no indication other than “John Doe” and “Jane Doe” of the identity, income, or relationship to the resident of the unauthorized occupants the resident allegedly allowed to reside in his unit and who allegedly created a nuisance in the building.

• Concourse Green Assoc. LP v. Patterson, October 2016