Did they get a 1099-G? Did they have to apply for this? And, is this considered a Grant (which will have a specific name and purpose)?

In general, taxable grants are part of Other Income on the entity's filing form (Form 1040, 1065) unless this is their activity/purpose (file Schedule C, C-EZ, E, or F or Form 4835). In such situations, the taxpayer would instead report the taxable or deductible amount allocable to the activity on that schedule or form.

For instance, there is a WI farmer grant that the landlord would not be entitled to, and might have applied in error.