Legal Analysts

Showing posts with label Holdover. Show all posts
Showing posts with label Holdover. Show all posts

Friday, December 10, 2021

Owners & Landlords Are No Longer Able to Recover Legal Fees Unless Given Authority by the Court

A new law on landlord's ability to collect legal fees was signed by Gov. Hochul on December 21, 2021 and is effective immediately. The law, S2014, means a lot to owners and landlords in New York. The Bill prohibits owners and landlords from charging lessees any legal fee, surcharge, or other charges for legal services in connection to operating or renting a residential unit, unless the owner/landlord has the legal authority to do so. A lessee is only responsible to pay legal fees if directed by a court order. However, you only get a court order if you go to court and do not resolve issues beforehand. As a result, legal fees for out-of-court negotiations, lease drafting, amendments, and the like are no longer recoverable.

Do you think that owners and landlords will be less likely to resolve disputes without going to court if they can't recover their legal fees? 

It’s no secret that legal work can be costly. So, it is typical for landlord-petitioners to try and recoup the money that they spend retaining an attorney and all of the expenses that come with legal work and legal actions. Aside from legal representation, additional legal fees can include court fees, notary public charges, and administrative charges, to name a few. This bill is aimed at the costs of lease preparation, pre-litigation negotiations, and all the work that landlords need in order to avoid a court case. 

Co-ops are technically landlords to their residents and as a result, all legal fees imposed by the Board for sales, document review, and the like may no longer be recoverable based on this law.  There is no carveout for Co-ops and that needs to be addressed. Perhaps, Governor Hochul should have told the legislature to get it right before she signed the Bill into law.

This is just another obstacle for owners and landlords, which increases the cost of business, and eventually, the rent paid by tenants.

Thursday, December 31, 2020

New Eviction Law Extends Residential Eviction Moratorium to May 1, 2021

On December 28, 2020, Governor Cuomo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“Act”). Essentially, the Act provides tenants with an opportunity to submit a Hardship Declaration, which stays most evictions until May 1, 2021. The second part of the Act which provides for mortgage foreclosure relief is discussed in a separate blog HERE.

The Details:

  • Essentially, once a tenant provides a Hardship Declaration, the eviction is stayed until May 1, 2020.
  • The Act applies to residential nonpayment AND holdover eviction proceedings.
  • The Act does not apply to tenants of seasonal rentals with a primary residence to return to and tenants who infringe on other tenants' use and enjoyment of the premises or pose a substantial safety hazard to others, but only upon the landlord proving same.
  • To qualify, a tenant must provide the Hardship Declaration and must declare that they are suffering a financial hardship, such as:
      • Significant loss of income
      • Increase in necessary out-of-pocket expenses due to COVID-19
      • Childcare responsibilities or care for the elderly, disabled, or sick family member
      • Moving expenses and difficult relocating
      • Other circumstances negatively affecting the ability to find meaningful employment
      • Vacating the premises and moving into new permanent housing poses a significant health risk
  • Sample hardship declarations will be available on the Office of Court Administration website.
  • New Eviction Proceedings - upon a Tenant's submission to the landlord of the Hardship Declaration, the landlord is prohibited from commencing any eviction proceeding until May 1, 2021. The landlord can commence an eviction proceeding if the landlord files the following:

    • Affidavit of service of the Hardship Declaration in English and tenant’s primary language.
    • Affidavit of Service of predicate notices pursuant to RPAPL and the lease; and 
    • Affidavit of the Petitioner/Petitioner’s agent attesting to the following:
      • Petitioner or his agent did not receive a Hardship Declaration from the Tenant 
      • The tenant returned the Hardship Declaration but the tenant is “persistently and unreasonably engaging in behavior that substantially infringes on the use & 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, the court shall stay the eviction for at least 10 days for the tenant to complete the declaration. 
  • Pending Eviction Proceedings - proceedings commenced before 12/28/20 and commenced within 30 days of 12/28/20 are stayed for at least 60 days, or to such later date set by the Court. If the tenant submits the Hardship Declaration, the eviction proceedings are stayed until May 1, 2021. 
  • Post Warrant of Eviction - in any eviction 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.

What is most important to both tenants and landlords is that while the law stops most evictions in NYS until May 1, 2021, it does not affect the tenants' obligation to pay rent. No payments are canceled. 

Unfortunately, despite the law's intentions, it is still lacking. Inevitably, tenants will continue to incur insurmountable debt and small landlords will eventually find themselves in the middle of the looming foreclosure tsunami. 

What do you think?

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.

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.