Sketchy landlords beware! 

New York's Real Property Actions and Proceedings Law Article 7-C has been added by A3241 to give tenants and municipalities a new tool in their arsenal to address persistent unsafe conditions that are neglected by their landlords. 

Applicable in both residential and commercial mixed use properties, the new law, which is immediately effective, allows for receivership proceedings where a landlord has failed to remedy “conditions dangerous to life, health, or safety.” Basically, this means a court may appoint an independent “receiver” who is empowered to manage and redirect rent deposits towards fixing an issue that a landlord has neglected to sufficiently address.

However, what's interesting is the flip side of the law. It's yet another reminder that tenants should not unilaterally withhold rent or make repairs, outside of their rights in their specific lease, when there are habitability issues at the premises. Instead, they should follow the law and have their rental money deposited with the Court. Doing it otherwise is technically a grounds for eviction. Simple stated, there is a procedure when a landlord doesn't fix property and you, as a tenant, can't decide to just not pay when it's not being fixed. 

This procedure of depositing rent into Court and having a receiver appointed was formerly available only in New York City, but now applies statewide. 

With the foreclosure and eviction moratoriums coming to an end in January 2022, New Yorkers are about to feel pinched in their housing costs, which may turn into utility billing issues.

 

New Yorkers just received increased rights and beginning on December 8, 2021, utility companies are prohibited from engaging in harassment, oppression, or other abuses towards residential customers in connection with deferred payment agreements and the collection of unpaid balances.

 

Bill A3359 was signed by Governor Hochul on November 8, 2021 and amends §53-a of the Public Service Law.

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.

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.

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: 
• FHA, Fannie Mae, Freddie 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. 

• Nonpayment proceedings are subject to the Tenant Safe Harbor Act: 

• 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.

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.

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.

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:

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.

• 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.

• 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.

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.

Senate Bill S8192B / Assembly Bill 10290B passed both the Assembly and Senate and is currently on the Governor’s desk for signature. The legislation will prohibit the eviction of residential tenants who suffered financial hardship during the COVID-19 pandemic.

Specifically, the bill covers the period from March 7, 2020 until various Executive Orders which placed restrictions requiring closure of and restriction on businesses and establishments, or postponement or cancellation of non-essential gatherings continue to apply in the county of the tenant’s residence (“COVID-19 Covered Period”). Further, the bill allows residential tenants to raise a defense of financial hardship during such period in a summary proceeding and courts shall consider the tenant’s income prior to and during the COVID-19 Covered Period, liquid assets, and eligibility for cash assistance, disability, unemployment insurance, and state or federal programs.

This legislation expands Executive Order 202.8 which imposed a statewide eviction moratorium until June 18, 2020 and Executive Order 202.28 which extended the moratorium to August 20, 2020 for tenants facing financial hardship due to the COVID-19 pandemic. Unlike the previous Executive Orders, the legislation does not prohibit the initiation of summary eviction proceedings, it merely prohibits the courts from issuing judgments of possession and warrants of eviction. It does not prevent landlords from obtaining money judgments for unpaid rent.

While this legislation is a softer blow to landlords than a complete prohibition on the initiation of eviction proceedings, the main concern for landlords is that the COVID-19 Covered Period can last well up to 2021. Further, as landlords can only get a money judgment and not an eviction, the judgment does not stop the bleeding and would eventually require landlords to go back to court to obtain another judgment for rent prior to the tenants vacating the property.

A lawsuit has already been filed by landlords to nullify provisions of Executive Order 202.28 which prohibit landlords from pursuing eviction proceedings until August 19, 2020 and which allow tenants to use the security deposit toward rent payments. The landlords argue the Executive Order allows tenants to withhold rent without immediate repercussion and precludes landlords from utilizing security deposits as compensation for damages caused to the unit by the tenant. It is expected that if the bill is enacted into law, litigation will surely follow.

In the meantime, landlords should consult counsel for strategies on how to mitigate their risk due to tenants’ nonpayment.

On May 28, 2020, Governor Cuomo signed Executive Order 202.34, which authorized business operators and building owners to exercise their own discretion in denying entry to individuals who fail to comply with Executive Order 202.17 requiring face-coverings when in a public place.

Specifically, EO 202.34 allows business operators and building owners to use their discretion in denying entry and requiring or compelling removal of persons not wearing a face-covering, unless they are under the age of two or are not able to medically tolerate it as per EO 202.17. More importantly, EO 202.34 exempts such business operators and building owners from a claim of violation of the covenant of quiet enjoyment or frustration of purpose. However, the directive must still adhere to the Americans with Disabilities Act or any provision of either New York State or New York City Human Rights Law, or any other provision of law.

While businesses and building owners can now restrict entry, they should contact counsel to create a policy that ensures compliance with the anti-discrimination laws and mitigate exposure to discrimination claims.