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July 27, 2020 Articles
Does New York Care More than the CARES Act?
A review of COVID-19 eviction law in the Empire State.
By Ali Dehghan
New York remains at the forefront of COVID-19 and, like many states, has actively tried to protect its commercial and residential tenants from the pandemic’s hardships. The series of executive orders and legislation create a web of rules and regulations that any practitioner in the real estate industry must know and understand.
Due to job losses caused by the pandemic, backlogged unpaid rent is now a national financial epidemic. On March 27, 2020, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act by which a national moratorium on filing evictions for some affordable housing was imposed until July 25, 2020.
Beginning March 15, 2020, by the order of the New York Chief Administrative Judge of the Courts, all evictions across New York State were suspended, and the courts ceased accepting any new eviction cases. Since then, two gubernatorial executive orders went into effect, imposing moratoria on evictions.
Effective June 20, 2020, the eviction moratorium imposed by the first executive order expired, thereby permitting limited filing of some evictions to the extent that they do not violate the restrictions set by other state orders or federal laws. The eviction moratorium imposed by the second executive order remains in effect until August 20, 2020.
Considering these new state and federal laws, many in the real estate industry are wondering how they are going to come out on the other end of the COVID-19’s proverbial tunnel. This article serves as a primer on these laws and how they affect evictions in COVID-19 New York.
COVID-19 Impacts the Real Property Actions and Procedure in New York
New York State Eviction Moratoria
Governor Andrew Cuomo’s first eviction moratorium suspended all types of evictions until June 20, 2020. On the other hand, the second moratorium, dated May 7, 2020, imposes a ban until August 20, 2020, on commercial and residential non-payment actions against tenants who demonstrate financial hardship due to COVID-19. This led some attorneys to believe that all holdovers and non-payment actions, in which the tenant has not faced financial hardship due to COVID-19 or otherwise not protected by other federal or state laws, may be filed, effective June 20, 2020.
On June 18, 2020, the New York Chief Administrative Judge of the Courts issued an administrative order allowing commencement of eviction actions provided that all petitions, holdover or non-payment, accompany an affirmation from the landlord’s attorney stating that the petition and other papers filed with the court comport with the requirements of the state and federal directives.
In short, the above-mentioned attorney affirmation must state that the attorney has reviewed the relevant state and federal authorities, has consulted with the client, and that the filing of eviction comports with these state and federal laws. The fourth paragraph in the affirmation states that the attorney is aware of his or her obligations under 22 NYCCR Part 1200 and 22 NYCCR Part 300 of the New York Rules of Professional Conduct. As such, the landlord’s attorney must exercise sound discretion before commencing any new eviction case to prevent a potential disciplinary action.
Once the petition is filed (if no answer is filed) or upon filing of an answer, the actions are suspended until further order of the New York Chief Administrative Judge of the Courts. Matters in which all parties are represented by counsel shall be eligible for calendaring for virtual settlement conferences.
Tenant Safe Harbor Act Modifies the Real Property Actions and Proceedings Law
Additionally, New York’s legislature passed the Tenant Safe Harbor Act (TSHA) to help keep residential tenants in their homes following the COVID-19 pandemic by allowing only money judgments, and not evictions, for unpaid rent that becomes due while restrictions are in place on businesses, public accommodations, and nonessential gatherings.
TSHA amends Article 711 of the NYS Real Property Actions and Proceedings Law:
The Governor’s executive orders should keep New Yorkers who are feeling the financial impacts of losing their jobs or a significant amount of their income from being evicted through at least June. However, in the absence of a statewide suspension of rent, many tenants may find themselves facing several months’ worth of accrued unpaid rent at the end of the eviction moratoria. Such a scenario would put tenants at high risk of being evicted, at a time when it is unlikely that the economy and job market will have recovered from the impact of COVID-1.
TSHA was delivered to the governor for his signature on June 18, 2020. He has until June 30, 2020 to sign or veto the bill.
The CARES Act Imposes a National Non-Payment Eviction Moratorium on Some Affordable Housing
Until July 25, 2020, the landlords of “covered dwellings” across the United States are barred from filing non-payment evictions. During this period, these landlords cannot file new eviction actions for nonpayment of rent, nor can they charge late fees, penalties, or other charges related to nonpayment of rent.
Covered Dwellings
The landlord of a residential property that rents the property to a participant of a “federally assisted housing program” or has a “federally backed mortgage loan” (i.e. landlord of a “covered dwelling(s)”) is barred from filing a non-payment action until at least after July 25, 2020. Moreover, these landlords are required to provide tenants a 30-day notice to vacate.
Some, including the Congressional Research Service, interpret the CARES Act moratorium to apply additionally to holdovers because it bans sending a notice to vacate, arguably, for non-payment of rent or other grounds. On the other hand, U.S. Department of Housing and Urban Development later issued statements that clearly interpreted the CARES Act to apply exclusively to filing evictions for non-payment of rent, stating that tenants may still be evicted on other grounds.
Application of CARES Act in New York
Before the issuance of the second eviction moratorium in New York and the passage of TSHA, the general impression was that the “covered dwellings” would be the only properties shielded from eviction for non-payment of rent until at least August 24, 2020. However, it has now become clear that the CARES Act moratorium is somewhat irrelevant in New York as all commercial and residential non-payment evictions against tenants have faced financial hardship due to COVID-19 and are banned until at least August 20, 2020.
It is imperative for the landlord’s attorney to identify the tenants who potentially fall under the protection of the CARES Act, and to whom a 30-day notice should be sent before initiating an action. If TSHA is signed by Governor Cuomo, New York courts will allow only money judgments, and not evictions, for unpaid residential rent that comes due while restrictions are in place due to COVID-19 on businesses, public accommodations, and nonessential gatherings.
Emergency Rent Relief Act Directs the CARES Act Funds to Low-Income Tenants
On June 17, 2020, Governor Cuomo signed the Emergency Rent Relief Act (ERRA) of 2020. The ERRA provides rental assistance vouchers to landlords on behalf of tenants who experience an increase in rent burden because of a loss of income as a result of the COVID-19 pandemic through Homes and Community Renewal. The coverage period is April 1 through July 31. A tenant has a rent burden if their rent is more than 30 percent of their household income.
Pursuant to Section three (3) of the ERRA, “such program shall be provided up to $100,000,000 of monies that have been allocated to the state of New York by the CARES Act of 2020 (P.L. 116-136), that have not otherwise been obligated, to provide rental assistance to eligible households for their primary residence in the state of New York.”
Where Do We Stand Now?
Effective June 20, 2020, commencing new evictions is permitted in New York if it is not otherwise barred by other state or federal laws. Once a petition is filed (if no answer is filed) or upon filing of an answer, the actions are suspended until further order of the New York Chief Administrative Judge of the Courts. It is clear that New York is determined to slowly but safely resume the filing of evictions while protecting its most vulnerable citizens.
If TSHA never becomes law, no petitions for possession based on non-payment of rent may be filed for tenants, commercial or residential, who have faced financial hardship due to the pandemic until August 20, 2020. But, on the other hand, if TSHA becomes law, money judgments may be issued by courts for unpaid residential rents, although no evictions will be issued for residential non-payment of rent while restrictions are in place.
As this is a rapidly evolving area of emergency law, practitioners should pay close attention to further state and federal legislation, as well as judicial decisions construing and applying the same. Rules and conventional wisdom are subject to abrupt change.
Ali Dehghan is with James G. Dibbini & Associates, P.C., in Yonkers, New York.
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