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New York’s highest court has considered whether a landlord’s acceptance of a Section 8 rent subsidy required the landlord to continue accepting the vouchers for future lease renewals.
Sonia Rosario (“Tenant”) lived in a rent-stabilized apartment leased from Diagonal Realty, LLC (“Landlord”) for over 30 years. For most of the rental period, the Tenant received Section 8 housing benefits from the New York City Housing Authority (“Housing Authority”). In February 2003, the Landlord told the Tenant that it would no longer accept Section 8 vouchers and when the Tenant was unable to pay the full rent, the Landlord began eviction proceedings against her.
Section 8 is a federal housing program that gives subsidies to landlords when they lease housing to eligible low-income tenants. The program requires tenants to pay the percentage of the rent that they can afford with their income and the Housing Authority pays the remaining balance. When an eligible tenant and a willing landlord agree to participate in the program, the Housing Authority requires the landlord to sign a “Housing Assistance Payments” contract (“Section 8 Agreement”). The Section 8 Agreement contains the terms for landlords who are participating in the Section 8 program and the Section 8 Agreement must exactly match the terms prescribed by the U.S. Department of Housing and Urban Development.
The Tenant filed a lawsuit against the Landlord, arguing that the Landlord cannot opt out of the Section 8 program once the Landlord begins accepting Section 8 vouchers. New York’s “Rent Stabilization Code” (“Code”) imposes certain limits on the abilities of landlords to alter lease terms upon lease renewal. The trial court ruled in favor of the Tenant, and the appellate court affirmed. The Landlord appealed.
The Court of Appeals of New York affirmed the lower court. The Code requires landlords to provide lease renewals to rent-stabilized tenants and the renewal “shall be on the same terms and conditions as the expired lease” unless the landlord can show extenuating circumstances, such a zoning change. The Tenant argued that the Section 8 Agreement was a term of her prior lease and so the Landlord could not remove the Section 8 Agreement from the renewal lease requested by the Tenant. The Landlord argued that the Tenant had not received Section 8 assistance at the beginning of her tenancy and so it had no obligation to continue offering this to her. The Landlord also argued that the Code was preempted by federal law.
The court ruled that the Section 8 Agreement had become a term of the lease and so the Landlord had to continue its participation in the Section 8 voucher program. The court first stated that it was irrelevant that the Tenant had not received a Section 8 voucher at the beginning of her tenancy; instead, all that mattered was that the Section 8 Agreement had been a term in her prior lease and so was now a required part of her lease renewal.
Turning to the Landlord’s preemption argument, federal law only preempts state law if: first, Congress has expressly stated that it was preempting state law; second, federal law is so comprehensive in its scope that it implicitly preempts state laws because Congress intended for federal law to occupy the entire field on this particular subject matter; or, state law directly conflicts with federal law.
In this case, the court found no evidence to support the Landlord’s preemption argument. First, the legislative history of the Section 8 program stated that Congress intended for the federal to not interfere with the tenant protections found in many state laws; therefore, there was no explicit stated intent to preempt the Code. Second, the Section 8 was not so comprehensive in scope that it had to preempt all state protections; indeed, Congress designed the federal law so that states had the power to regulate landlord-tenant relationships. Finally, there was no conflict between federal and state law, as a landlord could follow both the Code and participate in the Section 8 program without their being any conflict. Because there was no preemption, the Section 8 Agreement was part of the Tenant’s lease renewal and so the court affirmed the lower court’s rulings in favor of the Tenant.
Rosario v. Diagonal Realty, LLC, 8 N.Y.3d 755 (N.Y. 2007)