A federal eviction moratorium issued by the Centers for Disease Control and Prevention (CDC) that was scheduled to expire on July 31, 2021, has recently been extended, but faces some serious challenges and is causing continuing headaches for residential and commercial landlords.
Of course, the extension of the federal moratorium was of little concern to New York landlords, who remain obligated to support defaulting tenants pursuant to State legislation, including the COVID Emergency Eviction and Foreclosure Prevention Act (CEEFPA) and the COVID-19 Emergency Protect Our Small Businesses Act of 2021 (EPOSBA). Tenant-protections under those acts are set to expire on August 31, 2021. These protections are so far-reaching that they apparently extend to the absurd situations of commercial properties which have been effectively abandoned by their business tenants, but not voluntarily surrendered. In such instances, landlords are left with no legal recourse to regain possession of their properties; although the landlord’s obligation to carry the expenses associated with such property continues unabated.
With the expiration of federal tenant protections on the horizon, the CDC and the legislative and executive branches of the federal government were under pressure from tenant advocates to extend the CDC eviction moratorium. That said, the CDC had previously cited its lack of legal authority to take such action, particularly in light of a June 2021 U.S. Supreme Court decision, wherein Justice Brett Kavanaugh offered in his concurring opinion that the CDC would have required “clear and specific congressional legislative authorization in order to extend the moratorium.”
Notwithstanding this self-acknowledged lack of authority, an emergency order was nonetheless issued by the CDC and announced by President Joe Biden, as a new CDC moratorium, apparently prohibiting certain evictions through October 3, 2021. This is limited to areas of the country with “high or substantial” transmission of COVID-19.
The CDC and the President are admittedly counting on the time it will take to challenge this latest moratorium in court, in order to provide continuing tenant protections for as long as possible. However, such protections come at the expense of small landlords who are ill-equipped to absorb any further losses.
On another front, as many New York state landlords and tenants are acutely aware, CEEFPA is itself set to expire on August 31, 2021. In the interim, a decision by the U.S. Supreme Court, rendered on August 12, 2021 (found here) enjoins the enforcement of Part A of CEEFPA, which automatically rewarded any tenant with protection from eviction who was willing to self-certify their own financial hardship by merely checking a few boxes on a form which required no submission of proof, thereby easily thwarting eviction. To make matters worse, CEEFPA made no provision for a landlord to contest a tenant’s self-serving hardship declaration and therefore, the entitlement to the Act’s significant protections.
Perhaps unsurprisingly, a bill intended to extend CEEFPA through the end of October was recently introduced in the State Legislature; and New York’s incoming Governor, Kathy Hochul, has expressed support for the Legislature’s efforts to “address the Supreme Court’s decision & strengthen the eviction moratorium legislation.”
CEEFPA’s failure to allow landlords due process, to contest a tenant’s self-serving hardship declaration, flies in the face of common sense and fairness, not to mention the weight our legal system places on affording due process to all litigants. The Supreme Court specifically cites these issues in its recent decision striking Part A of CEEFPA (link to decision) and has determined that this legislative scheme, which precludes a landlord from contesting such a certification and denying the landlord a hearing “violates the Court’s longstanding teaching that ordinarily “no man can be a judge in his own case” consistent with the Due Process Clause. In re Murchison, 349 U. S. 133, 136 (1955); see United States v. James Daniel Good Real Property, 510 U. S. 43, 53 (1993) (due process generally requires a hearing).”
In his dissent, Justice Breyer takes the position that landlords’ hardships under CEEFPA are alleviated since (i) they are temporarily protected from foreclosure (for property owners who own 10 or fewer dwelling units); (ii) CEEFPA’s pause on eviction proceedings was scheduled expire in less than three weeks; and (iii) because CEEFPA does not preclude them from seeking unpaid rent and other damages in a common-law action. Of course, these arguments ignore the reality that many small landlords – who have already been forced to endure over one year covering carrying costs for properties that have produced no income – will be unable to continue under such untenable circumstances. This position also wholly disregards the fact that the longer these eviction prohibitions remain in place, the less likely it will be that landlords will ever be able to collect the ballooning unpaid rent from tenants. Such overwhelming debts will certainly increase the likelihood that tenant debtors will choose to either walk away or seek insolvency protections from these small landlords for these unsecured debts. Whereas owners are afforded no such relief from their secured debts, beyond a hollow temporary stay from foreclosure.
It is noteworthy that both CEEFPA and EPOSBA include uncontestable self-certifications, although the Court has only ruled on CEEFPA’s Part A. Presumably, a challenge of the similar provisions of EPOSBA would result in a similar ruling of unconstitutionality. However, for now, those self-certified hardship declarations remain effective and uncontestable, as do the remaining provisions of both Acts.
The constantly shifting landscape continues to transform the way landlords must deal with defaulting tenants. Each situation is unique and landlords are advised to consult with a knowledgeable attorney, capable of navigating these complex and evolving enforcement requirements and to discuss options and resources that can be utilized to assist in recovering possession of their properties and collecting past due rent.
This alert does not purport to be a substitute for advice of counsel on specific matters.
Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.