New York Tenant Safe Harbor Act Extends COVID-Related Eviction Protections For Residential Tenants

Morrison & Foerster LLP

Morrison & Foerster LLP

On June 30, 2020, New York Governor Andrew Cuomo signed into law the New York Tenant Safe Harbor Act (the “Act”). The Act (S.8192B (Hoylman)/A.10290B (Dinowitz)), sponsored by New York State Senators Brad Hoylman and Liz Krueger and State Assembly Member Jeffrey Dinowitz, provides protection from eviction to residential tenants in the State of New York who have experienced financial hardship during the COVID-19 State of Emergency. The Act prohibits courts from ever evicting residential tenants who experienced financial hardship during the pandemic for non-payment of rent that accrues or becomes due between March 7, 2020, and the yet-to-be-determined date on which all COVID-related restrictions on non-essential gatherings and public and private businesses are lifted in the county of the tenant’s residence (the “COVID Period”).

The Act expands on the eviction protections already in place for residential tenants in New York during the COVID-19 pandemic. Pursuant to Executive Order No. 202.28 (the “Executive Order”) issued by Governor Cuomo on May 7, 2020, the State of New York currently has a moratorium on evictions until August 20, 2020 for residential and commercial tenants experiencing hardship due to the COVID-19 pandemic. The Executive Order requires that “there shall be no initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent or a foreclosure of any residential or commercial mortgage, for nonpayment of such mortgage, owned or rented by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20, 2020.”  This Executive Order extends and modifies the eviction moratorium in Executive Order 202.8, issued by Governor Cuomo on March 20, 2020, which initially suspended all evictions of residential tenants and commercial tenants in New York for a period of 90 days. In addition, New York courts have temporarily suspended new eviction cases from being filed until at least July 6, 2020.

Prior to the Act, a residential tenant who was unable to pay rent during the COVID-19 crisis could potentially be evicted for non-payment as soon as the eviction moratorium under the Executive Order ended. Now, as a result of the Act, a court can never use unpaid rent that accrued during the COVID Period as the basis for a non-payment eviction of a financially-burdened tenant. A tenant may raise financial hardship during the COVID Period as a defense in a summary proceeding under Article 7 of the New York real property actions and proceedings law. Unlike the Executive Order, the Act only applies to residential tenants and not commercial tenants.

The Act could also make it easier for tenants to prove that they suffered financial hardship during the COVID Period than under the Executive Order, which only applies to tenants experiencing hardship caused by the coronavirus. The Act requires that in determining whether or not a tenant suffered financial hardship during the COVID Period, the court must consider, among other relevant factors: (i) the tenant’s income prior to the  COVID Period, (ii) the tenant’s income during the COVID Period, (iii) the tenant’s liquid assets, and (iv) the tenant’s eligibility for, and receipt of, cash assistance, supplemental nutrition assistance program, supplemental security income, the New York State disability program, the home energy assistance program, or unemployment insurance or benefits under state or federal law.

Notwithstanding the foregoing, a court can, however, impose a money judgment against a tenant for unpaid rent accrued during the COVID Period. Thus, the Act does not waive or abate rents, but rather it allows residential tenants who are facing financial hardships during the pandemic to remain safely in their homes and have some more time to pay back rent owed. A consequence of the Act may be to facilitate negotiations between landlords and tenants for the payment of rent once the state-mandated eviction moratorium ends on August 20, 2020.

According to a study by the NYU Furman Center for Real Estate and Urban Policy, an estimated 1,156,800 renter households in New York State have at least one worker who lost a job due to COVID-19. Of those households, an estimated 327,000 workers have lost their jobs but are not claiming unemployment insurance benefits. In response to this health and economic crisis, residential tenants in New York have been afforded additional protections by the Executive Order, in addition to the eviction moratorium. In accordance with the Executive Order, landlords and tenants of residential properties may, upon the consent of the tenant, enter into a written agreement by which the tenant’s security deposit, and any interest accrued thereof, shall be used to pay rent that is in arrears or will become due. Landlords are required to provide such relief to tenants who so request it if such tenant is either eligible for unemployment insurance or benefits under state or federal law or is otherwise facing financial hardship due to the COVID-19 pandemic. The Executive Order requires that it shall be at the tenant’s discretion to enter into any such agreement, and landlords shall neither harass, threaten, nor engage in any harmful act to compel such agreement. Any security deposit used as a payment of rent shall be replenished by the tenant, to be paid at the rate of 1/12 the amount used as rent per month, and the payments to replenish the security deposit shall become payable no less than 90 days from the date of the use of the security deposit as rent. The tenant may, at tenant’s sole option, retain insurance that provides relief for the landlord in lieu of the monthly security deposit replenishment. In addition, landlords may not demand, and are not entitled to, any late payment fee or charge for late payment of rent occurring during the time period from March 20, 2020, through August 20, 2020. The federal Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, passed by the House and currently stalled in the Senate, would also provide financial rental assistance to many COVID-affected residential renters if it passes in Congress, which would also benefit landlords.

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