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Withholding Rent While On Welfare

by Emily Jane Goodman, May 26, 2004
 

New York’s highest court, the Court of Appeals, has determined that a tenant whose rent is paid in whole or in part by New York City’s Human Resources Administration – welfare -- cannot withhold payment to her landlord even if there are dangerous violations in the building.

In the case entitled Matter of Notre Dame Leasing, LLC v Alexandria Rosario, the tenant, Alexandria Rosario, lives with her husband and young children in a Queens apartment building owned by Notre Dame Leasing. In January 2000, Notre Dame, the landlord, commenced a Civil Court summary nonpayment proceeding, claiming that $1,454.43 in rent was due for October 1999 through January 2000. The amount demanded was Rosario’s portion of the rent for four months; the balance had been paid by the city. The tenant’s defense to the nonpayment was that she withheld rent because of conditions that were “dangerous, hazardous or detrimental to life or health.”

Rosario was relying on a 1962 Social Services law known as the Spiegel Law (named for Sam Spiegel, a lower East Side Assemblyman who sponsored the legislation). Records of New York City’s Department of Housing Preservation and Development showed that there were 33 Class B (hazardous) and C (immediately hazardous) violations in the building. The landlord established that some of these had been dismissed, but there were still leaks, electrical wiring violations, and broken windows, according to the tenant’s attorney, Carl Callender of New York Legal Services in Queens, who argued the appeal. Attorney Denise May, of Pennisi Daniels & Norelli, LLP, a firm that represents landlords throughout the city, says the violations were either corrected but not removed from the city agency’s computer, or they were tenant-generated violations such as gates on windows or refusal to grant access to the apartment.

However, none of that was addressed by the Court of Appeals. The single issue decided by the court’s majority was that Rosario could not avail herself of the protection of the Spiegel Law, because the tenant herself had withheld rent, rather than the Human Resources Administration having withheld it, even though the agency has the power to do so. Judge Albert Rosenblatt, writing for the majority of judges, agreed with the landlord’s attorneys, saying, “The tenant contends that she should be able to invoke this defense [the Spiegel Law] whenever there is a qualifying violation in her building, regardless of whether the ‘appropriate social services agency’ -- here the HRA -- has first withheld rent on that basis. We conclude that the structure, language, history and legislative intent of the Spiegel Law negate the tenant’s interpretation.”

According to Judge Rosenblatt’s opinion, “The legislature did not intend to make this defense available to individual tenants when public welfare officials themselves recognized no imperative to suspend payment.” The judge wrote, “In an action for eviction or unpaid rent, tenants claiming a breach of warranty of habitability... or who seek an abatement of rent ... for a “rent impairing” violation must nevertheless deposit with the court the amount of rent sought to be recovered.”

All of the Court of Appeal judges agreed that the legislature’s intent in enacting the Spiegel law was to end the state’s “subsidizing of landlords who abuse and exploit welfare tenants, but nevertheless receive guaranteed monthly rent checks,” and to “attack the ‘jugular vein’ of the slumlord by temporarily withholding payments of rent until hazardous and dangerous violations are cleared.” The Spiegel law was to “establish that public funds should not be used to further the continuance of any building which is substandard,” and “to correct the anomalous condition wherein one municipal department seeks to prevent slum and dangerous conditions from being maintained at the same time that another governmental unit is financially rewarding such maintenance.”

But dissenting Judges Carmen Beauchamp Ciparick and George Bundy Smith, who were both judges in New York City before being appointed to the Court of Appeals, disagreed with the majority. “There is nothing in the provision requiring that the agency must act first to withhold rent on the tenant’s behalf,” they wrote. “The plain language of the statute permits a tenant to invoke the Spiegel law defense for nonpayment of rent, regardless of whether there has been a prior withholding of rent by the public welfare agency, here the New York City Human Resources Administration.” Going back to the Spiegel law’s history, the dissenters quoted, “[t]he legislature hereby finds and declares that certain evils and abuses exist which have caused many tenants, who are welfare recipients, to suffer untold hardships, deprivation of services and deterioration of housing facilities because certain landlords have been exploiting such tenants by failing to make necessary repairs and by neglecting to afford necessary services in violation of the laws of the state.... Allowing tenants to withhold rent themselves continues to further the purpose of the statute, especially in light of the present situation where public welfare officials apparently are not using their statutory power to withhold rent when violations are present. “

Still, May, counsel to the landlord, says “Social services or welfare will withhold the rent if they find dangerous conditions. But they never meant to give tenants a sword to control the money.” Tenants, she says, “now have more protections and can negotiate the system, which they couldn’t do in 1962 when Housing Court didn’t even exist. It’s Legal Services reawakening a statute that everybody had forgotten about.”

But the result of this opinion, says, Andrew A. Scherer, executive director of Legal Services of New York City, and the author of Residential Landlord-Tenant Law in New York, is that “people on public assistance in unsafe, unhealthy buildings, are not going to be able to avail themselves of a law designed to protect them.” Most low-income tenants do not have lawyers, and Scherer says “can neither negotiate the system nor assert sufficient pressure to obtain necessary repairs. The Court of Appeals decision ignores the plain language of the law and its statutory intent and guts a powerful tool for addressing deplorable housing conditions. Because Spiegel Law defenses specifically exempt rent from the deposit requirement of the Rent Regulation Reform Act of 1997, it was revived by the rent deposit law which forces tenants to deposit rents in order to litigate defenses to eviction proceedings. It makes it impossible for tenants to take advantage of something that was created for them.”

Both sides agree that tenants who receive welfare will not be able to withhold rent regardless of their housing conditions, but will have to rely on the city to do it for them.

Emily Jane Goodman is a New York State Supreme Court Justice


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