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August 19, 2021 Practice Points

Tenants’ Self-Certification of COVID Financial Hardship Is Insufficient, SCOTUS Rules

This ruling enables landlords to contest the truthfulness of some claims.

By Ali Degan

On August 12, 2021, the U.S. Supreme Court granted an extraordinary form of relief to New York landlords by enjoining a portion of COVID Emergency Eviction and Foreclosure Act (CEEFPA) in Chrysafis v. Marks, 594 U.S. ____ (2021).

This ruling, in essence, enables landlords to contest the truthfulness of self-certified COVID financial hardship declarations which tenants file in courts to prevent commencement or resumption of eviction proceedings, which CEEFPA had previously prohibited. In its unsigned order, the Court relied on its “longstanding teaching that ordinarily ‘no man can be a judge in his own case’ consistent with the Due Process Clause. In re Murchison, 389 U.S. 133, 136 (1955); see United States v. James Daniel Good Real Property, 510 U. S. 43, 53 (1993) (due process generally requires a hearing).” Chrysafis, 594 U.S. at ___ (slip op., at 1).

In addition to CEEFPA, New York has enacted the Tenant Safe Harbor Act (TSHA), which applicants did not challenge. Among other things, TSHA instructs New York courts to entertain a COVID-related hardship defense in eviction proceedings, assessing a tenant’s income prior to COVID, income during COVID, liquid assets, and ability to obtain government assistance. If the court finds that the tenant “has suffered a financial hardship” during a statutorily prescribed period, then it “shall [not] issue a warrant of eviction or judgment of possession.” The injunction did not enjoin the enforcement of TSHA.

Justice Breyer, dissenting, with whom Justices Sotomayor and Kagan joined, stated that given the fact that the protection under CEEFPA will expire by August 31, 2021, that the lower courts have denied the request for an injunction, and the court of appeals has yet to issue a substantive ruling, such extraordinary form of relief “would only be appropriate if ‘the legal right at issue [we]re indisputably clear and, even then, sparingly and only in the most critical and exigent circumstances.’” Chrysafis, 594 U.S. at ___ (slip op., at 3) (Breyer, J., dissenting), quoting South Bay United Pentecostal Church v. Newsom, 590 U. S. ___, ____(2020) (Roberts, C. J. concurring) (slip op., at 2) (internal quotation marks omitted).

Justice Breyer argued that such drastic remedy was not warranted for the following three reasons. First, CEEFPA only delays the exercise of the right to due process, rather than depriving the applicant of it permanently. Id. Second, the applicants had not shown that critical or exigent circumstances justified the Court’s intervention as CEEFPA’s pause on eviction proceedings will expire in less than three weeks, alleviating the hardship to New York landlords. Id. (slip op., at 4). “Third, the public interest weighs in favor of respecting New York’s ‘especially broad’ latitude ‘to act in areas fraught with medical and scientific uncertainties." Id. (slip op., at 5), quoting Marshall v. United States, 414 U. S. 417, 427 (1974). Justice Breyer also noted that if CEEFPA is extended in its current form, applicants will have to renew their application.

Landlords (and others subject to CEEFPA, such as financial institutions and lenders) must continue to abide by the requirements of the law not enjoined by the Supreme Court. However, the Court’s ruling in this case indicates that it might consider other targeted challenges to the law or others like it. Practitioners should be aware of the ever-changing scope of pandemic-related eviction laws, both on the legislative and judicial sides.

Ali Degan is an associate with Stern & Eisenberg, P.C., in New York City, New York.

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