By Executive Order 202.70, New York Gov. Andrew Cuomo has further extended – through Jan. 1, 2021 – the moratorium prohibiting the initiation of a proceeding or enforcement of (i) an eviction of a commercial tenant for nonpayment of rent, or (ii) a foreclosure of a commercial mortgage for nonpayment.
This latest Executive Order represents the fourth extension of the moratorium on commercial evictions and foreclosures originally set forth in Executive Order 202.28, issued in March of this year. The new order now coincides with the moratorium on residential evictions.
These extensions have repeatedly moved the light farther down the tunnel and delayed the prospect of relief for landlords, who are facing their own financial stresses.
According to the Governor’s Office, this latest extension “gives commercial tenants and mortgagors additional time to get back on their feet and catch up on rent or their mortgage, or to renegotiate their lease terms to avoid foreclosure moving forward.” However, renegotiation of rents at a level below minimum required thresholds may put those very mortgagors into default under the terms of their loans. And, even if owners manage to reduce mortgage costs temporarily, they remain liable for non-negotiable carrying costs including taxes, insurance, maintenance and repairs.
Both commercial and residential tenants technically remain liable for unpaid rent accruing during the moratorium. Tenants and their guarantors, however, may seek bankruptcy protection or otherwise abandon property (at the moratorium’s conclusion) as their liabilities continue to grow. Smaller owners and landlords will be left holding the bag and might be forced to file their own bankruptcies.
New York State’s Housing Stability and Tenant Protection Act of 2019, the more recent Tenant Safe Harbor Act and the various Executive Orders issued by the Governor, continue to transform the way landlords 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 obtaining possession of their property and collecting past due rent.