Mitchell-Lama Apartments Pricing
Mitchell-Lama apartments are classified as income-restricted housing, meaning that the market value of the apartment or the surrounding neighborhood does not dictate the prices of the co-ops or rentals.
Furthermore, because of the tax benefits associated with these apartments, the monthly maintenance costs for Mitchell-Lama co-op apartments are significantly lower than those of similar market-value units.
Mitchell-Lama Apartment Qualification Requirements
To qualify for a spot on the waiting list for a Mitchell-Lama apartment, applicants must meet three eligibility criteria: income level, family size, and apartment size. The number of residents in the apartment must correspond to the number of bedrooms available.
Additionally, your income cannot exceed a specific limit. For Mitchell-Lama co-op apartments, income limits can reach up to $149,000, while rental restrictions can go as high as $95,000. However, each Mitchell-Lama development sets its own income limits.
If you currently reside in a Mitchell-Lama apartment and your household income surpasses the maximum limit, you must pay a surcharge to maintain your residency.
Applying for a Mitchell-Lama Apartment
1. Find a Mitchell Lama Building
The first step to obtaining Mitchell-Lama housing is to find a building that participates in the program.
2. Apply to Join the Waitlist
To live in a Mitchell-Lama building, you first need to find one that interests you and then apply to be added to the waitlist. You can submit your application through the HPD website. Some Mitchell-Lama apartments have open waiting lists, while others have closed lists.
When a building opens its waiting list, it must announce this in the media. Please note that being on this list only gives you a chance to enter a lottery for a spot on the building’s waiting list.
3. Check Your Application Status
After applying, you can check the status of your applications through Mitchell-Lama Connect. Once registered in the system, you can view the waiting list number, date, and last approved application for each Mitchell-Lama development.
4. Wait For Your Application to Be Approved
Once you are on a waiting list, be prepared for a lengthy wait. It can take anywhere from a couple of years to as long as 15 years before an apartment becomes available. When an apartment becomes available, and provided that you still meet the income and family size requirements, you have the option to accept the apartment or wait for the next available one.
However, please note that if you decline the offer for the second apartment, you will typically be returned to the bottom of the waiting list or removed from the list entirely.
Mitchell-Lama Apartment Search Tips
1. Be Prepared to Downsize
One-bedroom apartments become available more frequently than two- or three-bedroom units. This is primarily because residents can upgrade to a larger apartment if their family size increases.
However, they are not required to downsize if their family size decreases (for example, if a child moves away to attend college). Therefore, applicants should apply for the smallest unit for which they qualify to improve their chances. Additionally, please note that Mitchell-Lama residents have priority when vacant apartments become available.
2. Verify Your Income
Verify your income and the building’s eligibility requirements, especially if you have been on the waiting list for an apartment for over a year or if your family size changes during that time.
Technically, if you no longer qualify for the apartment(s) on your waiting list, you must remove yourself from the list. However, many applicants find ways to adjust their income to maintain their eligibility if they are selected from the waiting list.
3. Don’t Depend on Getting a Mortgage
Even though Mitchell-Lama apartments are affordable, qualifying for a mortgage can be challenging. Securing a mortgage for a Mitchell-Lama apartment is both complex and uncommon.
Although there is no specific regulation prohibiting buyers from borrowing against their Mitchell-Lama co-op shares, most banks are reluctant to do so. This hesitation primarily stems from the unclear foreclosure process under state law if a buyer stops making payments. To address this issue, some Mitchell-Lama buildings have established their internal lending programs to assist buyers.
4. Be Ready to Pay a Surcharge if Your Income Is Too High
After you secure a Mitchell-Lama apartment, you must update your income information every year using the annual income affidavit form. If your total income, along with that of any other occupants, exceeds the income limit for your apartment, you will need to pay a surcharge. This surcharge is usually no more than 50% of your monthly rent or maintenance fees.
5. Understand That Your Mitchell Lama Apartment Is Not Part of Your Estate
In Mitchell-Lama cooperative apartments, shareholders are tenants, and the corporation and state law regulate the sale of an apartment. This means that when a shareholder passes away, their next of kin or executor cannot sell the apartment on their behalf.
According to New York City Mitchell-Lama regulations, the proprietary lease and the shares for the apartment must be surrendered by the decedent’s estate or survivors upon their death.
Once the shares are returned, the development will manage the sale of the apartment by Mitchell-Lama rules.
Consequently, the next of kin or executor must promptly inform the management team about the owner’s death and arrange for the removal of any property within the apartment. The estate is responsible for maintenance payments for up to three months after the property is available for resale.
In summary, individuals should avoid buying a Mitchell-Lama apartment if they intend to pass the asset down to their children or heirs. This is not permitted.
6. Learn the Mitchell Lama Apartment Laws & Regulations Regarding Family Members
Even though a Mitchell Lama apartment does not qualify as part of your estate when you die, that doesn’t mean that your family has to move out immediately upon your death. To continue residing in a Mitchell Lama apartment, the purported successor must show that they primarily lived in the apartment for at least two years contemporaneously with the tenant of record. (unless they’re older than 62 or disabled, then it’s only one year).
Additionally, they must meet the required financial criteria to succeed in the shareholders’ rights. Lastly, it will greatly help the successor’s case if they were listed as a co-applicant on the tenant’s annual income affidavit during the same two-year period.
Mitchell-Lama Waiting List Lawsuits
A recent lawsuit alleges that individuals on the waiting list for Mitchell-Lama apartments have been improperly removed and replaced with wealthy candidates who essentially bought their spots. The plaintiffs in this lawsuit claim they were never notified or contacted about the changes, and as a result, their positions on the list were given to others who paid substantial fees.
An audit conducted by state Comptroller Thomas DiNapoli revealed that this unfair practice is not uncommon. The audit discovered that applicants have paid hundreds of thousands of dollars to be on affordable housing waiting lists, such as those for Mitchell-Lama developments. Yet, they have little to no chance of actually securing an apartment.
In addition to several other issues, investigators found that “weak oversight” is a significant concern regarding the Mitchell-Lama developments and the application process.
New Increased Oversight of Mitchell-Lama Developments
The Mitchell-Lama program will still have a waiting list, but there will be enhanced oversight of the application and selection process. The agency has established a dedicated unit to provide information for applicants and plans to hire new management companies to oversee Mitchell-Lama buildings.
These proposed changes aim to rectify the flawed system caused by the Department of Housing Preservation and Development (HPD) and its inability to effectively supervise the Mitchell-Lama program.
Mitchell-Lama Apartments Bottom Line
Mitchell Lama apartments offer extremely affordable housing to New Yorkers. However, availability is limited, and securing a Mitchell Lama apartment can take years of waiting. Therefore, it makes sense to apply for Mitchell Lama housing if you plan to live in NYC for an extended period.
Affordable housing was virtually nonexistent, as seen in areas such as Chelsea, the Upper East Side, and the Upper West Side.
