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.

• 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.

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. 

The Department of Financial Services' Circular No. 5 (2020) is making its rounds and requires all entities regulated by DFS to submit a COVID-19 Preparedness Plan. All regulated entities are required to submit the plan on or before Thursday, April 9, 2020.

Effective 5:00 pm on March 16, 2020, no eviction orders shall be signed and no foreclosure auctions shall be held in all Nassau and Suffolk Courts. The hold is in effect until rescinded and it is in accordance with the protocol put into place by the Chief Administrative Judge of New York State Courts due to COVID-19.

You can see the Nassau County Administrative Order here and the Suffolk County Administrative Order here.