U.S. District Court Upholds Constitutionality of New York Moratorium on Evictions

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A recent challenge to the constitutionality of Gov. Andrew Cuomo’s Executive Order 202.28 in Elmsford Apartment Associates, LLC et al. v. Andrew Cuomo (U.S. District Court for the Southern District of New York, Case No. 1:20-cv04062-CM) was unsuccessful. The plaintiffs sought but failed to convince the Court to enjoin the Executive Order on the grounds of violations of rights under the U.S. Constitution’s Contracts Clause, Takings Clause, Due Process Clause and Petition Clause.

By way of background, the Court recognized a reality that is familiar to New York landlords, that “evicting a tenant – especially a residential tenant – in New York is a slow, cumbersome and extremely tenant-favorable process, especially when compared to analogous procedures in other states.”

The means by which a New York landlord recovers its property from a defaulting tenant is by “summary proceeding,” which is an expedited statutory method intended to offer the parties a quick path to resolution. The “summary” nature of the proceeding is appropriate given the limited scope of the issues in dispute.

Governor Cuomo’s Executive Order 202.28 effectively halted initiation or enforcement of commercial and residential evictions against tenants who are facing financial hardship due to the pandemic until August 20, 2020. The Executive Order also temporarily permits a qualifying tenant or licensee to require the landlord to apply security deposit funds toward rent. The depleted security deposit is then to be replenished over 12 equal monthly payments, which may commence no less than 90 days from the date of such application. The tenant at its sole option may provide insurance in lieu of the monthly replenishment payments, which the landlord is obligated to accept.

The Court found that because the Executive Order expires on August 19, 2020, it is merely a temporary halt on evictions which does not result in a permanent physical occupation of property, or qualify as a taking. Further, the Court explained that the Executive Order neither reduces nor forgives the sums due landlords, which they will be able to collect, with interest, once the Order has expired. At that time, the ability to prosecute evictions will be restored. Judge McMahon made clear: “[a]nd I again emphasize that nothing in the Order diminishes the tenant’s rental obligation by even a nickel.”

The Court notes that the Executive Order only applies to evictions for nonpayment. It is the order of Chief Administrative Judge Marks that suspends eviction proceedings in the civil courts on all other grounds, and concludes that “[t]herefore, Governor Cuomo is not responsible for the injury for which Plaintiffs seek a cure, because striking his Order would not grant the Plaintiffs access to the Civil Courts to file holdover proceedings for reasons other than nonpayment.

It is clear that New York landlords will be facing additional difficulties in dealing with defaulting tenants once the courts reopen to a flood of new cases. And the treatment of evictions post-COVID is evolving, as witnessed by the adoption of the Tenant Safe Harbor Act. Click here to read our alert about that legislation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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