Eviction and Foreclosure Stay Continued for Commercial Properties Not Residential

On July 6, 2020, Governor Cuomo signed Executive Order 202.48 which affects the validity of many existing executive orders but most notable of which, is that it extends the stay on evictions and foreclosures proceedings to August 5, 2020 for commercial properties, but not for residential properties.

Essentially, Executive Order 202.48 extends the validity of Executive Order 202 up to 202.14, as continued and contained in Executive Order 202.27, 202.28, and 202.38 for another thirty (30) days through August 5, 2020 with some exceptions.

Real estate professionals should be aware that it does not extend the eviction and foreclosure moratorium in place as ordered in Executive Order 202.28 for all residential tenants and mortgagors. However, for commercial properties, an eviction and foreclosure stay is still in place until August 5, 2020.

As such, landlords and lenders should take note of the following:

• Residential evictions may now be commenced but courts are prohibited from awarding warrants of eviction and judgments of possession for tenants experiencing financial hardship for non-payment of rent that accrues or becomes due during the COVID-19 period pursuant to the Tenant Safe Harbor Act. Money judgments may be awarded. For more information, read our blog HERE;
• Residential foreclosure proceedings based on nonpayment due to COVID-19 are prohibited until August 20, 2020 pursuant to Executive Order 202.28;
• Commercial foreclosure proceedings based on nonpayment due to COVID-19 are prohibited until August 5, 2020 pursuant to Executive Order 202.48;
• Commercial evictions based on nonpayment are prohibited until August 5, 2020 pursuant to Executive Order 202.48; and
• Commercial holdover proceedings may be commenced beginning June 21, 2020 pursuant to Executive Order 202.8.

Landlords and lenders are advised to contact counsel to ensure that all laws, executive orders, and court directives in place due to the coronavirus pandemic are followed. As noted in our recent blog HERE, eviction and foreclosure proceedings now require that the petitioner/plaintiff file additional forms with the commencement documents pursuant to recent directives from Administrative Judge Lawrence K. Marks dated June 18, 2020 and June 23, 2020.

Statute of Limitations Tolled until August 5, 2020 by Executive Order

Governor Cuomo signed Executive Order 202.48 which extends most Executive Orders due to the coronavirus pandemic. Among others, Executive Order 202.48 specifically extends the tolling of statute of limitations until August 5, 2020 as provided by Executive Order 202.28. As we’ve previously noted in our blog, the Executive Order does not toll all deadlines in pending and ongoing actions. A copy of Executive Order 202.48 and 202.28 can be found HERE and HERE.

Stay tuned to our blog for changes to the current commercial eviction landscape pursuant to Executive Order 202.48.

5 Step Process For Employers/Landlords to Protect Against Disability Discrimination Lawsuits for Failure to Accommodate

A recent New York State, Appellate Division case (Hosking v. Memorial Sloan-Kettering Cancer Center) serves as a reminder to employers and landlords that they may be exposed to disability discrimination lawsuits if they do not engage in an "interactive process" prior to denying a reasonable accommodation request, even if the ultimate decision denying the accommodation is legal. As detailed in the above referenced case, a court will not even reach the step of determining whether the denial of the accommodation is legal if the employer/landlord fails to follow the proper process in evaluating the request.

To mitigate exposure to disability discrimination lawsuits (for failure to accommodate), employers/landlords should follow these steps:

1) Disseminate Policy: Employers/landlords should inform employees/tenants, in writing, that reasonable accommodations are provided to qualified individuals and of the process to request a reasonable accommodation. Employers should include its reasonable accommodation policy in its employee handbook and landlords should include its reasonable accommodation policy in its application and/or make the policy available onsite.

2) Provide Reasonable Accommodation Request Form: Employers/landlords should prepare a form for individuals requesting an accommodation to complete. Questions on the request form should include:

• General information of employee/tenant (i.e. name, contact information)
• Nature of the disability
• Requested/suggested accommodation(s) 

3) Review and Discuss with Employee/Tenant:

• Review accommodation request
• Request supporting medical documentation if necessary from employee/tenant to properly evaluate request 
• Discuss effectiveness/feasibility/reasonableness of potential accommodation(s) with employee/tenant  

4) Analyze Whether an Undue Hardship Exists: Employers/landlords are not required to provide an accommodation if providing such accommodation would present an undue hardship. Elements an employer/landlord should analyze include:

• Cost of the accommodation
• Resources of the employer/landlord
• Impact on operation of workplace/facility

5) Draft Determination Letter and Submit to Employee/Tenant: The letter should include:

• A summary of the interactive process
• The accommodation provided
• If an accommodation is denied, provide a detailed explanation (e.g. absence of an accommodation that would permit employee to perform essential functions of position, undue hardship)
• If accommodation request is granted, a date to follow up on effectiveness of accommodation

To learn more, listen to this podcast by CLICKING HERE.

Landlord’s New World – Sue for Money Judgment, Not Eviction

Effective June 30, 2020, the Tenant Safe Harbor Act (“Act”) was signed into law by Governor Cuomo. Essentially, the Act prohibits courts from issuing a warrant of eviction or judgment of possession against a residential tenant for non-payment due to financial hardship during the COVID-19 covered period, but it allows landlords to obtain a money judgment for rent in a summary proceeding. Alternatively, landlords can simply commence a plenary action for the money judgment in district, county, or supreme court as jurisdictionally appropriate.

The Act defines “COVID-19 covered period” as March 7, 2020 until the date executive orders which closed or restricted public or private businesses, or required the postponement or cancellation of non-essential gatherings for any size for any reason expire. This means that until all businesses are allowed to be 100% open, a tenant may claim financial hardship and not be evicted.

As a result, A landlord who starts a summary proceeding to evict a tenant or lawful occupant for non-payment of rent will not be able to get a warrant of eviction or judgment of possession if the tenant or lawful occupant claims that he suffered financial hardship during the COVID-19 covered period. Tenants and lawful occupants are also allowed to raise it as a defense in the summary proceeding.

To determine whether a tenant suffered a financial hardship, courts shall consider the following, among other relevant factors:

1. Tenant’s or lawful occupant’s income prior to the COVID-19 period;
2. Tenant’s or lawful occupant’s income during the COVID-19 period;
3. Tenant's or lawful occupant's liquid assets; and
4. Tenant’s or lawful occupant's eligibility for and receipt of cash assistance, supplemental nutrition assistance program, supplemental security income, the New York State disability program, the home energy assistance program, or unemployment insurance or benefits under state or federal law.

The Act, however, does not prohibit landlords from obtaining a money judgment for rent if successful in a summary proceeding. Landlords are advised to contact counsel to discuss the best strategy to manage their tenants while complying with the various executive orders and laws in place due to the coronavirus pandemic.

NY's Eviction Moratorium is Constitutional - Read What Else the Court Tells Us

If you are a NYS landlord, you MUST read the decision from the case Elmsford Apartment Associates LLC v. Cuomo if you want to be on the top of your game.

We aren't going to discuss the results, beyond saying the Court ruled that Governor Cuomo can legally suspend evictions and more during a pandemic.

We focus on these other gems given to us by the Court - Every property investor (landlord, property manager, broker, flipper, etc.) should read and accept this reality before getting into the investment game:

Evicting a tenant – especially a residential tenant – in New York is a slow, cumbersome and extremely tenant-favorable process, especially when compared to analogous procedures in other states.

Governor Cuomo did nothing to impede the commencement of holdover proceedings… Nor does EO 202.28 suspend[] the landlords’ right to initiate a common law breach of contract action in the New York State Supreme Court to redress a tenant’s failure to perform its payment obligations under his or her lease.

Tenants will continue to accrue arrearages, which the landlord will be able to collect with interest once the Order has expired.

One who chooses to engage in a publicly regulated business… by so doing surrenders his right to unfettered discretion as to how to conduct same.

The expected costs of foreseeable future regulation are already presumed to be priced into the contracts formed under the prior regulation

New York landlords do not enjoy a constitutional right to realize a profit from their rental properties – let alone all the profits contemplated in each of their individual rental agreements.

If the tenant uses the security deposit to pay a month’s rent, and the tenancy ends before the deposit is fully replenished, the landlord can obtain a judgment for the amount expended in repairs.

A special shout-out to the eviction explanation -

To secure an eviction warrant from the housing courts, a New York landlord must serve the tenant a notice of nonreceipt of payment, and give the tenant one final chance to pay by making a demand of payment within 14 days. If the landlord is still owed payment after two weeks have passed, he may commence what is known as a summary proceeding by filing a petition in the civil court, returnable by the tenant within 10 days. If the tenant does not respond in ten days, the court may (but rarely does) issue an eviction warrant immediately. However, if the tenant does respond, however, a trial is set for eight days hence. The trial may be adjourned up to ten additional days if the parties so require in order to produce their witnesses. If, after trial, a judgment is entered for the landlord and the court issues a warrant for eviction, the Sheriff must give the tenant 14 days’ notice in writing prior to execution. There are the usual provisions for appeal and stays issue routinely so that non-defaulting tenants are not evicted before their cases are fully reviewed. But even if the evidence supports a judgment for the landlord, the housing court is not required to order the tenant’s immediate eviction. A tenant may obtain a stay of the issuance of the warrant for up to one year by showing that ‘it would occasion extreme hardship to the tenant or the tenant’s family if the stay were not granted’. Such stays are far from uncommon.

Still think that being a landlord is for you?

This hasn't diminished our motivation to invest in real estate, but as the Court makes clear - we respect the rules and adjust our prices / reserves to account for more rules in the future.

Some years there are less rules and other years there are more, but we know that a keen understanding of the rules will make us profitable as property investors.

If you want profitability too, you need to increase your compliance budget immediately and respect the rules of the game because, as you can see, fighting the governor's office is a losing battle.

EEOC Guidance on Antibody Tests and COVID-19 Tests

The Equal Employment Opportunity Commission (EEOC) published guidance concerning business practices that are both safe and compliant with anti-discrimination laws during the COVID-19 pandemic. The guidance discusses various relevant practices but most notable of which is the EEOC’s guidance on medical examinations prior to employees re-entering the workplace. According to the EEOC, antibody tests may not be required by employers for employees to re-enter the workplace, but employers may require employees to undergo a COVID-19 test to re-enter.

The EEOC advised that antibody tests should not be used to make decisions about returning to the workplace and currently does not meet the Americans with Disabilities Act (ADA)’s “job related and consistent with business necessity” standard for medical examinations for current employees. This standard applies to any mandatory medical test for employees. Thus, an antibody test may not be required for an employee to enter the workplace and employers should be aware that requiring antibody tests could be the basis of a discrimination claim.

On the other hand, tests which determine if someone has an active case of COVID-19 are permissible under the ADA and employers may use it to make decisions on whether an employee should return to the workplace. The distinction is that an employee who is currently infected with COVID-19 poses “a direct threat to the health of others.” However, employers should still be aware of the possibility of an employee testing false-positive or false-negative and employers should ensure that tests are accurate and reliable.

Nonetheless, employers are encouraged to practice social distancing, regular handwashing, and the wearing of PPE’s as there is no certainty that employees will not be infected with COVID-19 after the test is administered. In addition, employers should contact counsel to have a tailored COVID-19 safety plan compliant with federal anti-discrimination laws and regulations while ensuring a safe workplace for employees.