New Law Extends Commercial Eviction Moratorium to May 1, 2021 for Small Businesses

On March 10, 2021, Governor Cuomo signed the COVID-19 Emergency Protect our Small Businesses Act of 2021 (“Act”). In summary, the Act provides some commercial tenants with an opportunity to submit a Hardship Declaration, which upon submission to the Court or landlord, stays most evictions and ejectment actions until May 1, 2021. The second part of the Act which provides for commercial mortgage foreclosure relief is discussed in a separate blog HERE.

Applicability

• The Act applies to summary proceedings or any other judicial or administrative proceeding to recover possession of a commercial unit, including evictions and ejectment actions.
• The Act only applies to a commercial tenant who:
• is a resident of New York State;
• is independently owned and operated;
• is not dominant in its field; and
• employs fifty or fewer persons.

Hardship Declaration

• The Act requires the Court or the landlord (depending on the status of the eviction proceeding) to provide the tenant with the Hardship Declaration in English and in the language of the lease / tenancy agreement.
• The tenant should complete the Hardship Declaration if the tenant is suffering a financial hardship and is unable to pay rent or other financial obligations or obtain alternative suitable commercial property because of:
• significant loss of revenue;
• significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19; or
• moving expenses and difficulty securing alternative commercial property.

New Commercial Proceedings

• If there is no pending proceeding and a tenant provides a Hardship Declaration to the landlord, the landlord is prohibited from commencing any proceeding until May 1, 2021.
• If the tenant does not provide a Hardship Declaration, the landlord is required to file and serve the following to commence an action:
• affidavit of service of the Hardship Declaration in English and the language of the commercial lease / tenancy agreement;
• affidavit of service of predicate notices required by law and the lease;
• affidavit of the landlord / landlord’s agent attesting to the following:
• Landlord / his agent did not receive a Hardship Declaration from the Tenant; or
• The tenant returned the Hardship Declaration but the tenant is “persistently and unreasonably engaging in behavior that substantially infringes on the use and 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 to the tenant, the Court shall stay the proceedings for at least 10 business days to allow the tenant to complete the Hardship Declaration.

Pending Commercial Proceedings

• Refers to proceedings commenced on or before March 7, 2020 and commenced within 30 days of March 10, 2021.
• Stayed for at least 60 days, or to such later date the Court deems necessary to provide tenants time to complete and submit the hardship declaration.
• Court shall issue stay and mail copy of the Hardship Declaration to the tenant.
• If the tenant provides a completed Hardship Declaration to the Court or landlord, the matter is stayed until May 1, 2021.

Post-Warrant of Eviction

• In any 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.
• For the sheriff to execute the warrant of eviction, it must now state:
• The tenant has not submitted a Hardship Declaration and the tenant was properly served with a copy of the Hardship Declaration, listing dates of service by the petitioner and the court; or
• The tenant is ineligible for a stay under this act because the court determined that the tenant is persistently and unreasonably engaging in behavior that infringes on the use and enjoyment of other tenants/occupants or causes a safety hazard to others with a specific description of the behavior.

New Commercial Mortgage Foreclosure Relief Law Signed

On March 10, 2021, Governor Cuomo signed the COVID-19 Emergency Protect our Small Businesses Act of 2021 (“Act”). The Act provides additional relief to commercial tenants from evictions and to owners of commercial property from foreclosure proceedings. In summary, the Act provides owners of commercial properties with an opportunity to submit a Hardship Declaration as published by the Office of Court Administration which effectively stays the enforcement or commencement of commercial foreclosure proceedings until May 1, 2021.

Applicability

• The Act applies to owners or mortgagors of commercial properties who:
• owns 10 or fewer commercial units (directly or indirectly; units may be in more than 1 property or building as long as total units are occupied or available for rent);
• is a business that is a resident in New York State;
• is independently owned and operated;
• is not dominant in its field; and
• employs 50 or fewer persons.
• The Act does not apply to mortgage loans backed by a state corporate governmental agency.

Hardship Declaration

• The Act requires the Court or the foreclosing party (depending on the status of the foreclosure proceeding) to provide the borrower with a statement of protections available under the Act in 14-point type (“Hardship Declaration”).
• More importantly, the borrower must complete the Hardship Declaration and provide it to the foreclosing party to be afforded relief under the Act, if the borrower is suffering a financial hardship including, but not limited to:
• a significant loss of revenue;
• a significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19;
• moving expenses and difficulty securing alternative property; or
• a commercial tenants’ default on a significant amount of rent since March 1, 2020,
• The borrower’s submission of the Hardship Declaration is a rebuttable presumption of a financial hardship for purposes of establishing a defense.

New Commercial Foreclosure Proceedings

• If the borrower provides a Hardship Declaration to the foreclosing party/foreclosing party’s agent, the foreclosing party is prohibited from commencing any foreclosure proceeding until May 1, 2021.
• If the borrower does not provide a hardship affidavit, the lender is required to file the following to commence a foreclosure proceeding:
• affidavit of service of the Hardship Declaration in; and
• affidavit of the foreclosing party / foreclosing party’s agent attesting that the foreclosing party or his agent did not receive a Hardship Declaration from the Borrower.
• If the Court determines that the foreclosing party failed to provide the Hardship Declaration to the borrower, the court shall stay the foreclosure for at least 10 days to allow the borrower to complete the Hardship Declaration.

Pending Commercial Foreclosure Proceedings / Pre-Judgment

• Refers to proceedings commenced before March 7, 2020 or commenced within 30 days of March 10, 2021.
• Stayed for at least 60 days to May 9, 2021, or to such later date the Court deems necessary to provide borrower time to complete and submit the hardship declaration.
• Court shall issue stay and mail copy of the Hardship Declaration to the borrower.
• If the borrower provides a completed Hardship Declaration to the court or lender, the foreclosure proceedings are stayed until May 1, 2021.

Post-Judgment

• In any foreclosure proceeding in which a judgment of sale has already been issued, execution is stayed until the court holds a status conference with the parties.
• If the borrower provides a Hardship Declaration, the execution of the warrant is stayed until May 1, 2021.

Expect New Federal Sex Discrimination Laws & Regulations by the End of 2021

President Biden just established a Council to coordinate the Federal Government's efforts to advance gender equity and equality. 

In plain English, this counsel's mission is to combat sex discrimination by providing legislative and policy recommendations by September 24, 2021.

Stay tuned. Equality is happening now. 

Are you ready?

 

Why You Shouldn't Try to Convince Your Tenants to Leave Without a Lawyer

To all the landlords “embarking on a campaign” to end a tenancy, you might want to reconsider this tactic. The case of Negron v. Foster is the reason why.

In the case, the court found that the owner harassed the tenant with the intention of causing the tenant to leave the apartment.

During the time of tenancy, the tenant claimed to be verbally, mentally, and physically harassed by the owner. There were insulting and intimidating text messages from the owner demanding rent. Other repeated acts included physically attacking the tenant and her children, putting the heat on in the summer, and turning off the hot water that “substantially disturbed petitioners comfort, repose, peace or quiet.”

The court awarded civil penalties and compensatory damages to the tenant concluding that the owner harassed the tenant “with the intent of causing the petitioner to vacate the subject apartment.”

The landlord had to pay the tenant 3,000.00.

Do you have a tenant that you’ve been trying to convince to leave? Have you thought of seeking advice from a lawyer?

The Pitfalls of a Guaranty on your Next Commercial Lease

Andrew Lieb advises why and what you should consider when you are negotiating a quaranty on your next commercial lease.

The article was published by the Long Island Business News. HERE is a direct link to download the PDF. 

A Commercial Landlord is Liable for its Tenant's Trademark Infringement - Be Warned

If you know that your tenant is engaging in illegal activity at your property, you better do something about it. That's the message from the Federal Appellate Courts in Omega SA v. 375 Canal, LLC. 

In the case, a jury awarded $1.1 MM against a landlord for contributory trademark infringement for its willful blindness in identifying potential trademark infringing vendors at its premises where a counterfeit Omega watch was sold. According to the Court, liability follows if the landlord "or its agents had reason to suspect that trademark infringing merchandise was being offered or sold but deliberately failed to investigate or looked the other way to avoid seeing such activity." 

To prevail, a plaintiff does NOT need to prove that the landlord "continued to lease space to a specific, identified vendor that it knew or should have known was selling counterfeit [] goods." Instead, the plaintiff only needs to prove that a landlord had "reason to suspect" it's tenant counterfeiting goods "but deliberately failed to investigate or looked the other way to avoid seeing such activity." That is not to say that a landlord has an affirmative duty to police trademarks on its premises, just that it can't ignore them either. 

Landlords - 

Do you have video surveillance at your property? 

Do you have security guards? 

Do you accept complaints about your tenants from their customers?

What do you do to protect yourself from criminal tenants leasing space from you?