60-Day Moratorium on Foreclosures and Evictions for FHA, Fannie Mae, and Freddie Mac Mortgages

On March 18, 2020, the U.S. Department of Housing and Urban Development (HUD) authorized the Federal Housing Administration (FHA) to implement a 60-day moratorium on foreclosures and evictions for single family homeowners with FHA-backed mortgages. Similarly, the Federal Housing Finance Agency (FHFA) also directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for single family mortgages for at least 60 days. These moratoriums were intended to curb the effects of the coronavirus (COVID-19) on homeowners and in connection with the proclamation of the COVID-19 outbreak as a national emergency.

The 60-day moratorium for FHA, Fannie Mae, and Freddie Mac mortgages took effect on March 18, 2020. For FHA mortgages, the moratorium applies to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (reverse) mortgage programs and covers the initiation of foreclosures up to completion of foreclosures in process. Evictions from properties secured by FHA, Fannie Mae and Freddie Mac single family mortgages are also on hold for 60 days.

In addition to HUD and FHFA moratoriums, all evictions and foreclosures are indefinitely suspended in the counties of Nassau County and Suffolk County.

Coronavirus Family/Sick Leave Bill Signed Into Law

On March 18, 2020, President Trump Signed The Families First Coronavirus Response Act into law. The new law contains several modifications from the original bill passed by the House. Employers must immediately draft policies and train human resources employees to implement the new law. In addition, Employers must post a Notice in the workplace as detailed below.

Here is a summary of key provisions of the new law that apply to employers/employees:

1) Emergency Family and Medical Leave Expansion Act

Effective Dates: April 2, 2020 – December 31, 2020.

Qualified Employers/Employees: Applies to employers with less than 500 employees for all employees who have been employed for at least 30 calendar days.

Reason for Leave: The qualifying reason for leave is limited to an employee who is "unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable due to a "public health emergency."

Amount of Pay (tax credits are available to employers): The first 10 days of leave are unpaid (employee may substitute accrued vacation, personal or sick leave). For the following 10 additional weeks, the employer must compensate the employee at a rate of no less than two-third's of the employee's regular rate of pay. However, such pay is capped at $200 per day and $10,000 total.

Job Protection: Position is protected until return from leave unless employer, who employs 25 or fewer employees, eliminates position due to a downturn in economic conditions as a result of the Coronavirus. However, employers would still have to make "reasonable efforts" to restore employee to the same or equivalent position.

Exemptions: The Act provides authority to the Department of Labor to exclude health care providers, emergency responders and employers with less than 50 employees where the "viability of the business as a going concern" would be jeopardized.

2) Emergency Paid Sick Leave Act

·         Effective Dates: April 2, 2020 – December 31, 2020

·         Qualified Employer/Employee: Covers all employers with less than 500 employees for all employees regardless of length of employment.

·         Reasons for Leave: Employee may take leave under this Act, if unable to work (or telework) for any of the following reasons:

• The employee is subject to federal, state or local quarantine as a result of the Coronavirus;
• The employee has been advised by a health care provide to self-quarantine as a result of the Coronavirus;
•  The employee is experiencing symptoms of the Coronavirus and is seeking a medical diagnosis;
•  The employee is caring for an individual who is subject to an order described in Section 1, or advised as described in Section 2;
• To care for a child whose school is closed or his/her regular child care provider is unavailable;
• The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor. 

Amount of Pay (tax credits are available to employers): Employers must pay all employees who qualify under reasons 1-3 above at the employee's regular rate of pay, capped at $511 per day and $5,110 total. However, if employee's leave is a result of reasons 4-6 above, employer must only compensate employee at 2/3 of his/her regular rate of pay, capped at $200 per day and $2,000 total.

Exemptions: Health care providers and emergency responders.

Coronavirus Frustrates the Purpose of a Sit Down Restaurant's Lease, No?

Can a tenant terminate a lease because their purpose was frustrated?

We are getting contacted by restaurateurs who want to get out of their lease because they have to close their sit down / dine in operation and only offer delivery / take out, but can they?

The appellate courts have held that "[i]n order to invoke this defense, 'the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.'"

On that holding, the doctrine of frustration of purpose seems like it may get a restauranteur out of their lease.

In that holding, an office was able to terminate their lease because the CO didn't permit office use. Through analogizing to where an office tenant utilized frustration of purpose to get out of a lease because of an "inability to lawfully use the premises" based upon the CO, it's possible that a restaurateur can utilize the doctrine of frustration of purpose to terminate the lease where the purpose of the lease was to offer sit-down dining and now the same is not allowed as a matter of law.

However, appellate courts have also held that "a frustration of purpose defense 'is not available when the event preventing performance was foreseeable.'"

Expect a lot of restaurants to make this argument going forward and the issue of foreseeability will be everything if it gets to a trial.