On Tuesday May 4, 2021, Governor Cuomo signed an extension of the “COVID-19 Emergency Protect Our Small Businesses Act of 2021” (collectively, the “Act”) prohibiting residential and commercial evictions, foreclosure proceedings, credit discrimination and negative credit reporting related to the COVID-19 pandemic until August 31, 2021.
The Act places a moratorium on evictions until August 31, 2021 for commercial tenants that have endured COVID-related hardship. The legislation applies to small businesses with under 50 employees that demonstrate a financial hardship. Tenants must submit a hardship declaration to their landlord or a document explaining the source of the hardship, to prevent an eviction proceeding.
Commercial Foreclosure Proceedings
The Act also allows mortgagors meeting certain conditions to file a hardship declaration with their mortgage lender, other foreclosing party, or the court to prevent the filing of a foreclosure action or stay any foreclosure action in progress until August 31, 2021. In order to qualify for such relief, a mortgagor seeking such relief must own a property containing ten or fewer commercial units, must be a business that is resident of the state which is independently owned and operated (not dominant in its field) and employ 50 or fewer persons.
Tax Lien Sales
The Act allows commercial property owners meeting the above criteria to file a hardship declaration with any village, town, city, school district, county, or other entity or person that conducts tax foreclosures or tax lien sales, to stay such foreclosure or lien sale. Payments due to the locality are still due.
The legislation places a moratorium on residential evictions until August 31, 2021 for tenants who have endured COVID-related hardship. Tenants must submit a hardship declaration to their landlord or the court, or a document explaining the source of the hardship, to prevent evictions. Landlords can evict tenants that are creating safety or health hazards for other tenants, and those tenants who do not submit hardship declarations. Landlords that receive a hardship declaration must submit it to the court if there is an ongoing proceeding.
Residential Foreclosure Proceedings
The moratorium on residential foreclosure proceedings has been extended through August 31, 2021. Homeowners and small landlords who own 10 or fewer residential dwellings can file hardship declarations with their mortgage lender, other foreclosing party, or a court that would prevent a foreclosure.
Credit Discrimination and Negative Credit Reporting
Lending institutions are prohibited from discriminating against a property owner seeking credit because the property owner has been granted a stay of mortgage foreclosure proceedings, tax foreclosure proceedings or tax lien sales. They are also prohibited from discriminating because the owner is in arrears and has filed a hardship declaration with the lender.
Senior Citizens' Homeowner Exemption (SCHE) and Disabled Homeowner Exemption (DHE)
Local governments are required to carry over SCHE and DHE exemptions from the 2020 assessment roll to the 2021 assessment roll at the same levels. They are also required to provide renewal applications for anyone who may be eligible for a larger exemption in 2021. Localities can also set procedures by which assessors can require renewal applications from people who the assessors believe may no longer be eligible for an exemption in 2021. Recipients of the exemption do not have to file renewal applications in person.
Additionally, previous Executive Orders have prohibited charges or fees for late rent payments, and tenants facing financial hardship can still use their security deposit as payment and repay their security deposit over time.
Impact on Commercial Landlords Reaction
Commercial landlords take exception to the stated justification for the extension of the eviction moratorium. In its findings, the legislature indicated the extension of the eviction moratorium “will help the state address the COVID-19 pandemic, protect public health, and foster a full and equitable recovery.” However, in their misguided haste to push this legislation through, Commercial landlords argue that the legislature has painted with too broad a brush; particularly where residential tenants are not involved.
For example, preventing the legal removal of a commercial tenant, particularly one that is no longer in business and/or has effectively abandoned its space, does nothing to further the goals of preventing the spread of the virus, nor does this in any way “foster a full and equitable recovery.” In fact, to the contrary, this legislatively imposed outcome only serves to place a tremendous hardship on the commercial landlord who is unable to legally take back its space or make it available to another viable tenant. This is most certainly not “equitable” from the landlord’s perspective, who remains obligated to cover property taxes, insurance, utilities and maintenance costs, with no relief of any kind. Unfortunately, a commercial landlord in such a situation will never recover any rent from its insolvent tenant, which may now be up to an insurmountable sixteen months’ worth of unpaid rent.
Commercial landlords argue that the Courts should be allowed the discretion to consider commercial evictions on a case-by-case basis and not be forced to blindly accept a Hardship Declaration form submitted by a commercial tenant, in the absence of some form of corroborating proof qualifying for the protections afforded by the Act. Our Judges should be accorded due respect to consider as much.
A full copy of the legislation can be found here.