The New York State Legislature has adopted legislation (S.9114 / A.11181) which extends the moratorium on residential evictions to more than one year from the initial Executive Order 202.8 in March of 2020, through May 1, 2021.
The legislation, which was quickly signed by Gov. Andrew Cuomo, is being touted as “the strongest [legislation] in the nation to block eviction proceedings.” While, in theory, the intention is to protect residential tenants from eviction and owners from foreclosure and tax lien sales, we may yet find that the unintended consequence of the expansion of these protections may be a disparate negative impact on small residential landlords. It should be noted that the legislation does not shield the rental property itself from foreclosure or tax lien sales unless it is the owner’s primary residence.
The legislation ignores the fact that neither rent, nor taxes, nor mortgage payments are ultimately canceled. And the unfortunate reality may very likely be that, with this particular can well and truly kicked down the road for such an extended period, tenants will suddenly be faced with insurmountable liabilities and forced into bankruptcy. In contrast, the small landlord (from whom the tenant has sought bankruptcy protection) remains exposed to actual enforcement against the real property, from which there is no protection.
The legislation also includes a two-month moratorium on pending evictions, said to “ensure New Yorkers in need are able to take advantage of this legislation and the protections it provides.” Unfortunately, the bar to “take advantage” of these protections has been set quite low. Unlike the criteria established to qualify for previous protections, this legislation merely requires the submission of an unsubstantiated, standardized form of “hardship declaration,” which may lend itself to abuse — there being no provision for a landlord, or the court itself, to examine or evaluate any potentially self-serving statements proffered by the tenant.
Finally, the Act is intended to protect certain property owners from credit discrimination, through a hardship declaration form, if the owner has fallen behind on mortgage payments, or received a stay of mortgage or tax foreclosure, or tax lien sale. This protection would apply only to owner-occupied primary residences with fewer than ten rental units.
New York State’s Housing Stability and Tenant Protection Act of 2019, as well as the Tenant Safe Harbor Act and the various Executive Orders issued by the Governor and Administrative Order issued by Judge Marks, continue 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 property 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.