The COVID-19 era has been a roller coaster for New York City commercial property owners. Collectively, the amount of money at stake in the commercial leases in effect within the five boroughs is certainly astronomical, and when rent payments start to disappear, commercial property owners of all sizes could take a potentially significant financial hit.
Of course, the coronavirus impacts business tenants as they deal with prevention of physical transmission of the virus on publicly facing leased premises. Many types of businesses have had to shut down or reduce the type and amount of commerce they can conduct. Governmental authorities in New York have responded to this with some limits on commercial evictions during this public health crisis.
So, what restrictions does a New York City commercial property owner currently face when they want to evict a tenant for nonpayment of rent related to the impact of COVID-19?
Governor Cuomo’s orders
During the pandemic, New York Gov. Andrew Cuomo through executive orders has maintained a moratorium on commercial evictions through nonpayment proceedings. As of this writing, the most recent extension of that moratorium is through March 24, 2021. The ban applies both to initiation and enforcement of commercial evictions for nonpayment of rent, but not for other lawful reasons to evict like illegal activity or violations of other lease provisions.
Some landlords have decided to fight this order in the courts. They argue that issues which existed before the COVID-19 pandemic are unable to be resolved because of the blanket moratorium.
The COVID-19 Emergency Protect Our Small Businesses Act of 2021 was passed by both houses of the New York legislature but has not yet been signed by Gov. Cuomo as of this writing. The bill addresses concern about small businesses losing their places of business because of financial stress related to the coronavirus and intends to establish a temporary eviction stay for some smaller commercial tenants.
If signed, the bill would put a moratorium until May 1, 2021, on summary proceedings and other court or agency eviction proceedings against independently owned and operated commercial tenants with 50 or fewer employees that are New York residents and “not dominant in [their fields].” The tenant must sign a declaration of hardship that during the pandemic they have had a significant revenue decrease or expense increase or that relocation during COVID-19 would be a hardship. The property owner is responsible for giving the tenant a copy of the official hardship declaration.
The property owner may, however, initiate eviction if the small commercial tenant is “persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others.”
The legislation, if signed, is specific and detailed about the procedures and requirements that both parties would have to follow. It would take effect the day of signing.