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.