LIEB BLOG

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Showing posts with label Commercial. Show all posts
Showing posts with label Commercial. Show all posts

Tuesday, October 26, 2021

New Law: Tax Assessments of Non-Residential Properties outside NYC

Have you ever wondered how the government assesses the value of your property for real estate tax purposes? 


Yes, there are 3 different types of appraisals, including comparable sales, income capitalization, and cost basis. However, each uses sales data of similar properties to develop a value. But, what is the legal definition of similar properties for purposes of a tax assessment? That has long been a hotly litigated. 


Now, starting on January 1, 2022, the answer will be that similar is defined as "properties located in proximate location to the subject property unless there is an inadequate number of appropriate sales or rentals within the same market." Plus, similarity refers to "age, condition, use or the sue at the time of sale, type of construction, location, design, physical features and economic characteristics including but not limited to similarities in occupancy and market rent." 


This new law, A894C, was signed into law by Governor Hochul on October 25, 2021. 




Thursday, March 11, 2021

New Law Extends Commercial Eviction Moratorium to May 1, 2021 for Small Businesses

On March 10, 2021, Governor Cuomo signed the COVID-19 Emergency Protect our Small Businesses Act of 2021 (“Act”). In summary, the Act provides some commercial tenants with an opportunity to submit a Hardship Declaration, which upon submission to the Court or landlord, stays most evictions and ejectment actions until May 1, 2021. The second part of the Act which provides for commercial mortgage foreclosure relief is discussed in a separate blog HERE.

Applicability
  • The Act applies to summary proceedings or any other judicial or administrative proceeding to recover possession of a commercial unit, including evictions and ejectment actions.
  • The Act only applies to a commercial tenant who:
    • is a resident of New York State;
    • is independently owned and operated;
    • is not dominant in its field; and
    • employs fifty or fewer persons.

Hardship Declaration
  • The Act requires the Court or the landlord (depending on the status of the eviction proceeding) to provide the tenant with the Hardship Declaration in English and in the language of the lease / tenancy agreement.
  • The tenant should complete the Hardship Declaration if the tenant is suffering a financial hardship and is unable to pay rent or other financial obligations or obtain alternative suitable commercial property because of:
    • significant loss of revenue;
    • significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19; or
    • moving expenses and difficulty securing alternative commercial property.

New Commercial Proceedings
  • If there is no pending proceeding and a tenant provides a Hardship Declaration to the landlord, the landlord is prohibited from commencing any proceeding until May 1, 2021.
  • If the tenant does not provide a Hardship Declaration, the landlord is required to file and serve the following to commence an action:
    • affidavit of service of the Hardship Declaration in English and the language of the commercial lease / tenancy agreement;
    • affidavit of service of predicate notices required by law and the lease;
    • affidavit of the landlord / landlord’s agent attesting to the following:
      • Landlord / his agent did not receive a Hardship Declaration from the Tenant; or
      • The tenant returned the Hardship Declaration but the tenant is “persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others, with a specific description of the behavior alleged.”
  • If the Court determines that the landlord failed to provide the Hardship Declaration to the tenant, the Court shall stay the proceedings for at least 10 business days to allow the tenant to complete the Hardship Declaration.

Pending Commercial Proceedings
  • Refers to proceedings commenced on or before March 7, 2020 and commenced within 30 days of March 10, 2021.
  • Stayed for at least 60 days, or to such later date the Court deems necessary to provide tenants time to complete and submit the hardship declaration.
  • Court shall issue stay and mail copy of the Hardship Declaration to the tenant.
  • If the tenant provides a completed Hardship Declaration to the Court or landlord, the matter is stayed until May 1, 2021.

Post-Warrant of Eviction
  • In any proceeding in which an eviction warrant has already been issued, execution is stayed until the court holds a status conference with the parties.
  • If the tenant provides a Hardship Declaration, the execution of the warrant is stayed until May 1, 2021.
  • For the sheriff to execute the warrant of eviction, it must now state:
    • The tenant has not submitted a Hardship Declaration and the tenant was properly served with a copy of the Hardship Declaration, listing dates of service by the petitioner and the court; or
    • The tenant is ineligible for a stay under this act because the court determined that the tenant is persistently and unreasonably engaging in behavior that infringes on the use and enjoyment of other tenants/occupants or causes a safety hazard to others with a specific description of the behavior.


New Commercial Mortgage Foreclosure Relief Law Signed

On March 10, 2021, Governor Cuomo signed the COVID-19 Emergency Protect our Small Businesses Act of 2021 (“Act”). The Act provides additional relief to commercial tenants from evictions and to owners of commercial property from foreclosure proceedings. In summary, the Act provides owners of commercial properties with an opportunity to submit a Hardship Declaration as published by the Office of Court Administration which effectively stays the enforcement or commencement of commercial foreclosure proceedings until May 1, 2021.

Applicability
  • The Act applies to owners or mortgagors of commercial properties who:
    • owns 10 or fewer commercial units (directly or indirectly; units may be in more than 1 property or building as long as total units are occupied or available for rent);
    • is a business that is a resident in New York State;
    • is independently owned and operated;
    • is not dominant in its field; and
    • employs 50 or fewer persons.
  • The Act does not apply to mortgage loans backed by a state corporate governmental agency.

Hardship Declaration
  • The Act requires the Court or the foreclosing party (depending on the status of the foreclosure proceeding) to provide the borrower with a statement of protections available under the Act in 14-point type (“Hardship Declaration”).
  • More importantly, the borrower must complete the Hardship Declaration and provide it to the foreclosing party to be afforded relief under the Act, if the borrower is suffering a financial hardship including, but not limited to:
    • a significant loss of revenue;
    • a significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19;
    • moving expenses and difficulty securing alternative property; or
    • a commercial tenants’ default on a significant amount of rent since March 1, 2020,
  • The borrower’s submission of the Hardship Declaration is a rebuttable presumption of a financial hardship for purposes of establishing a defense.

New Commercial Foreclosure Proceedings
  • If the borrower provides a Hardship Declaration to the foreclosing party/foreclosing party’s agent, the foreclosing party is prohibited from commencing any foreclosure proceeding until May 1, 2021.
  • If the borrower does not provide a hardship affidavit, the lender is required to file the following to commence a foreclosure proceeding:
    • affidavit of service of the Hardship Declaration in; and
    • affidavit of the foreclosing party / foreclosing party’s agent attesting that the foreclosing party or his agent did not receive a Hardship Declaration from the Borrower.
  • If the Court determines that the foreclosing party failed to provide the Hardship Declaration to the borrower, the court shall stay the foreclosure for at least 10 days to allow the borrower to complete the Hardship Declaration.

Pending Commercial Foreclosure Proceedings / Pre-Judgment
  • Refers to proceedings commenced before March 7, 2020 or commenced within 30 days of March 10, 2021.
  • Stayed for at least 60 days to May 9, 2021, or to such later date the Court deems necessary to provide borrower time to complete and submit the hardship declaration.
  • Court shall issue stay and mail copy of the Hardship Declaration to the borrower.
  • If the borrower provides a completed Hardship Declaration to the court or lender, the foreclosure proceedings are stayed until May 1, 2021.

Post-Judgment
  • In any foreclosure proceeding in which a judgment of sale has already been issued, execution is stayed until the court holds a status conference with the parties.
  • If the borrower provides a Hardship Declaration, the execution of the warrant is stayed until May 1, 2021.


Monday, December 14, 2020

Commercial Eviction and Foreclosure Moratoriums Extended through January 31, 2021

Through Executive Order 202.81, Governor Cuomo extended the moratoriums for the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent or a foreclosure of any commercial mortgage for nonpayment of such mortgage to January 31, 2021. This means that no eviction or foreclosure proceeding may be commenced against commercial tenants for nonpayment of rent or mortgage until such date.

In addition, New York City’s Guaranty Law, which prohibits commercial landlords from enforcing personal guaranties against natural persons for payments during the COVID-19 period, was extended and now covers payments due from March 7, 2020 through March 31, 2021. The law was recently challenged in the United States District Court in the Southern District of New York for violating the Constitution, but the law was ultimately upheld. The Court reasoned that while the law does substantially impair contracts, the law is constitutional as it advances a legitimate public interest, and the law is reasonable and necessary in advancing such interest.

While commercial landlords may still seek relief by commencing a holdover eviction, landlords may be better off commencing an action in Supreme Court where they can seek damages for breach of contract, removal of the tenant through an ejectment action, and the enforcement of personal guaranties (for non-NYC landlords), if any. Landlords are advised to consult counsel to ensure compliance with the terms of the lease and all landlord-tenant laws currently in place to avoid any delays and additional damages.

There are currently no moratoriums in place for residential evictions. Residential landlords may commence both holdover and nonpayment proceedings. However, for nonpayment proceedings, courts may not grant a judgment of possession and warrant of eviction against tenants in a nonpayment proceeding who raise the affirmative defense of a COVID-19 financial hardship and proves same. Further, tenants who submit a CDC declaration form stating their inability to pay rent, among others, to their landlords are also protected from nonpayment eviction proceedings until December 31, 2020.



Wednesday, October 21, 2020

Commercial Eviction and Foreclosure Moratoriums Extended through January 1, 2021

Through Executive Order 202.70, Governor Cuomo extended the moratoriums for the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent or a foreclosure of any commercial mortgage for nonpayment of such mortgage to January 1, 2021. This means that no eviction or foreclosure proceeding may be commenced against commercial tenants for nonpayment of rent or mortgage until such date. However, commercial tenants may still be evicted through holdover eviction proceedings or sued under breach of contract theories for missed rent.

There are no moratoriums in place for residential properties by Executive Order but residential evictions based on non-payment are governed by the Tenant Safe Harbor Act. Courts may be prohibited issuing a warrant of eviction or judgment of possession against a residential tenant experiencing COVID-19-related financial hardship, if the tenant raises it as an affirmative defense and the Court determines that the tenant is suffering such hardship. Listen to our podcast HERE for what this means to residential landlords.


Monday, October 12, 2020

Residential Eviction Suspension Being Lifted Today (October 12, 2020)

Effective October 12, 2020, residential evictions are back in NYS with suspensions being lifted.

Specifically, Chief Administrative Judge Lawrence K. Marks issued Administrative Order 231/20, which permits the prosecution of residential evictions commenced after March 17, 2020.

As of October 12, 2020, here are the rules are in place for residential and commercial proceedings:

Residential Eviction Proceedings
  • Proceedings Commenced Prior to March 17, 2020:
    • The court must conduct a status or settlement conference wherein the court reviews the procedural history of the case, any effect of the COVID-19 pandemic, if any, upon the parties, any other relief or protection available to the tenant, among others. Thereafter, the court may take further steps it deems appropriate, including allowing the matter to proceed and allowing the enforcement of warrants of eviction. 
  • Proceedings Commenced After March 17, 2020: 
    • All residential eviction matters (nonpayment and holdover) may proceed subject to: 
        • Current or future federal and state laws affecting evictions; 
          • For evictions based on nonpayment of rent: 
          • FHAFannie MaeFreddie Mac borrowers are prohibited from starting nonpayment evictions and are encouraged to seek forbearance and other options with their lenders; 
          • The CDC also halts evictions for nonpayment of rent until December 31, 2020. You can read more about it and the penalties HERE
        • The individual court’s scheduling requirements as affected by health and safety concerns due to COVID-19. 
          • Courts are prohibited from issuing a warrant of eviction or judgment of possession against a residential tenant or other lawful occupant who suffered a financial hardship during the COVID-19 period and is being evicted for non-payment of rent due during such period. 
          • Currently, the COVID-19 period runs from March 7, 2020 to January 1, 2021, as extended by Executive Order 202.66 and subject to any further extensions. This means that courts will only issue money judgments (no warrants of evictions and judgments of possession) on eviction proceedings based on nonpayment of rent due during the COVID-19 period. 

Commercial Eviction Proceedings

  • Proceedings Commenced Prior to March 17, 2020:
    • May proceed in the normal course subject to:
        1. Any existing prohibition on the prosecution or enforcement of evictions (as of this writing, there are none); and
        2. The suspension of statutory deadlines until November 3, 2020 per Executive Order 202.67.
  • Proceedings Commenced After March 17, 2020:
    • Eviction proceedings for nonpayment of rent are prohibited until October 20, 2020 per Executive Order 202.64 and subject to any further extensions.
    • Holdover eviction proceedings may be commenced but remain suspended until further order of the court per Administrative Order 160A/20. This means the petition may be filed and the tenants may file an answer, but the proceedings shall remain suspended. However, if all parties are represented by counsel, the matter may be eligible for calendaring virtual settlement conferences with the court.

All Evictions
  • All proceedings will be conducted remotely whenever appropriate.
  • Mediation and other alternative dispute resolution methods are encouraged where either all parties are represented by counsel; or all parties are unrepresented by counsel.
  • All petitions must include the Notice to Respondent Tenant.
  • Filing and service may be done through NYSCEF, if available and by mail, if not.

Landlords should immediately file their evictions and preserve their rights.


Friday, August 21, 2020

Commercial Eviction and Foreclosure Nonpayment Proceedings Stayed Until September 20, 2020

On August 20, 2020, Governor Cuomo signed Executive Order 202.57 which, among others, extended Executive 202.48 and 202.28. Per the Executive Order, the following are stayed until September 20, 2020: 

  1. Commencing a commercial eviction proceeding against any commercial tenant for the nonpayment of rent;
  2. Commencing a foreclosure of any commercial mortgage for nonpayment of such mortgage; and
  3. Enforcing of such eviction or foreclosure.

As to #3, the Executive Order is unclear as to what is actually prohibited in terms of enforcing an eviction or foreclosure, but it could mean that executing a warrant of eviction or conducting a foreclosure sale are currently prohibited. Stay tuned should future Executive Orders or Court Administrative Orders provide clarification.

As to holdover eviction proceedings, the Executive Order does not specifically address them, thus residential and commercial holdover eviction proceedings may be commenced but they remain suspended per Administrative Order 160/20.

As a reminder, for proceedings commenced prior to March 17, 2020, the execution of the warrant of eviction for residential properties is stayed until October 1, 2020. For properties outside New York City, you can read more about the current eviction rules HERE.

In New York City, the execution of the warrant of eviction for residential properties is stayed until October 1, 2020 and until September 4, 2020 for commercial properties. For properties in New York City, you can read more about the current eviction rules HERE and HERE.


Thursday, August 20, 2020

NYC Residential Evictions Stayed until October 1, 2020

In addition to the directives set by the Court in Administrative Order 160/20 which we discussed in our blog HERE, New York City evictions are also governed by the following directives found in DRP 213:

  • Only in New York City, residential evictions are prohibited until October 1, 2020 and until September 4, 2020 for commercial evictions. This means eviction proceedings may be commenced but the Marshall cannot evict residential tenants until October 1, 2020 or until September 4, 2020 for commercial tenants.

  • Beginning August 20, 2020, NYC Courts will begin accepting requisitions who have obtained judgments of possession issued before March 17, 2020. Such requisitions must be presented by motion on notice to the respondent and such motion must include the Notice to Respondent-Tenant and be served by mail and email, if possible. Trials for commercial evictions will also be conducted and virtual trials are strongly encouraged whenever possible. See DRP 214.

  • Beginning August 20, 2020, landlords seeking to enforce a warrant of eviction issued before March 17, 2020 must request permission from the court through a motion on notice to respondent-tenant. Such motion must also include the Notice to Respondent-Tenant and be served by mail and email, if possible.

  • In all matters where all parties have appeared, the judge has discretion to address any unexcused absence for noticed virtual or in-person appearances / conferences. The judge may reschedule with a “final” marking, resolve issues against such non-appearing party, impose sanctions, or issue a judgment of contempt.

  • For deadlines to file an answer in residential eviction proceedings, no adverse action shall be taken based on the failure to file an answer in an eviction proceeding or failure to submit responsive papers to a motion submitted through the Electronic Document Delivery System (EDDS). All other rules contained in AO 160/20 and 121/20 remain in effect.




Thursday, August 13, 2020

Evictions Resume, But New Eviction Rules Stay Residential Evictions Until October 1, 2020

On August 12, 2020, Judge Lawrence K. Marks published a memorandum and an Administrative Order on the filing and prosecution of residential and commercial evictions in New York State. Landlords and property managers should take note of the following, effective August 13, 2020:

1.      Evictions commenced prior to March 17, 2020 may continue but it is subject to the following rules:
a.   Proceedings continue to be governed by the suspension of filing deadlines as per Executive Order 202.8 as extended to September 4, 2020 by Executive Order 202.55. This means that the deadline to file an Answer to the Landlord-Tenant Petition or appear, among others, is suspended until September 4, 2020.
b.   Commercial Matters:
  • Commencement and enforcement against tenants facing financial hardship due to the COVID-19 pandemic is stayed until August 19, 2020 pursuant to Executive Order 202.28.
  • Commercial eviction matters may otherwise proceed in the normal course, subject to the tolling of statutory deadlines by Executive Order 202.8, as extended by Executive Order 202.55, as explained above.
c.   Residential Matters:
  • For all eviction matters commenced prior to March 17, 2020, including those with a warrant of eviction that has been issued but not yet executed, courts must hold a status or settlement conference to address a range of subjects related to the case and COVID-19 concerns.
  • After such conference, the court may take whatever steps it deems appropriate, such as deciding pending motions, entertaining new applications, or allowing the matter to move forward in its normal course.
  • No residential eviction may take place prior to October 1, 2020 or such later date or dates set by law.

2.      Evictions commenced on or after March 17, 2020 are suspended, regardless of whether it is commercial, residential, nonpayment, or a holdover. They may be commenced but will remain suspended until further order of the court. Nonetheless, eviction matters in which all parties are represented by counsel shall be eligible for virtual settlement conferences.

3.      Filing and service in eviction proceedings requires represented parties to commence new matters electronically through NYSCEF, if available, and by mail if not. Unrepresented parties may file papers in person. See AO/121/20

4.      Eviction proceedings should be conducted remotely whenever appropriate.


5.      Commencement papers in commercial and residential evictions proceedings must continue to include the form notice indicating that respondent-tenants may be eligible for an extension of time to respond to the complaint. You can find the notice HERE

6.      New York City eviction matters shall be governed by AO/160/20 and DRP 213


7.      Administrative Order AO/127/20 is superseded and is no longer in effect. Thus, the form affidavit / affirmation from the landlord / landlord’s counsel regarding the tenant’s COVID-19 hardship is no longer required, among others.







Wednesday, June 24, 2020

New Rules for Residential and Commercial Foreclosure Proceedings

Effective June 24, 2020, the following rules apply to residential and commercial foreclosure proceedings as per Administrative Judge Lawrence K. Marks memorandum dated June 23, 2020:

Like eviction proceedings, commencement documents must be filed only by NYSCEF or by mail and commencement papers for residential and commercial foreclosure proceedings are required to include:
  • A form plaintiff’s attorney affirmation, indicating that counsel has reviewed the various state and federal restrictions and qualifications on foreclosure proceedings and believes in good faith that the proceeding is consistent with those restrictions and qualifications; and
  • A form notice to defendants-tenants (in English and Spanish), informing them that they may be eligible for an extension of time to respond to the complaint in light of legal directives related to the COVID-10 pandemic, and directing them to a website link for further information.

In addition, regardless of whether an answer is filed, further hearing of the case shall be stayed until Executive Orders suspending deadlines for the prosecution of legal matters expire. However, the following may proceed:
  • Foreclosure matters wherein all parties are represented by counsel may be calendared for both initial and follow-up virtual settlement conferences;
  • Lenders may move for a judgment of foreclosure and sale on the ground that a property is vacant and abandoned; and
  • Lenders may also move to discontinue a pending case.

No motions shall be entertained or decided, except for motions to discontinue and motions for judgments of foreclosure for vacant and abandoned property only.

Stay tuned as Administrative Judge Lawrence K. Marks is expected to issue further directives on foreclosures at or before the Executive Orders suspending deadlines expire.


Friday, June 19, 2020

Courts to Reopen for Eviction Proceedings, New Forms Required


Beginning June 20, 2020, courts will accept new eviction matters – statewide eviction moratorium expires (Executive Order 202.28).

To facilitate this, the Chief Administrative Judge released a memorandum setting the procedures for residential and commercial eviction proceedings in New York State.

Now, commencement documents in eviction proceedings must be filed with the court by NYSCEF or mail. Further, until further order, petitions in commercial and residential eviction proceedings based on nonpayment of rent or on other grounds must include the following:
  1. Form petitioner’s attorney affirmation or petitioner’s affidavit (for self-represented petitioners), indicating that counsel / petitioner has reviewed the various state and federal restrictions and qualifications on eviction proceeding and believes in good faith that the proceeding is consistent with those restrictions and qualifications; and
  2. Form notice to respondent-tenants (in both English and Spanish), informing them they may be eligible for an extension of time to respond to the petition in light of legal directives related to the COVID-10 pandemic, and directing them to a telephone number and/or website link for further information.

As a reminder, eviction proceedings based on non-payment of rent by a tenant who is eligible for unemployment insurance or benefits under federal or state law or is otherwise facing financial hardship due to COVID-19 are prohibited until August 20, 2020 per Executive Order 202.28. In addition to the above forms, NYC currently has directives requiring good faith affidavits to be filed with the petition. You can read more about it HERE. Stay tuned should the Civil Court of New York City update their directives in light of the Chief Administrative Judge’s memorandum.

The memorandum further stays the hearing of the eviction matter until the Executive Orders suspending statutory time periods for legal matters expire. However, eviction matters commenced on or before March 16, 2020 in which all parties are represented by counsel shall be eligible for calendaring for virtual settlement conferences.

Also, the New York State Courts Electronic Filing System (NYSCEF) will accept New York City Housing Court matters later this summer.