On September 2, 2021, new tenant protections were passed by New York State that will now extend through January 15, 2022, as well as amends the Covid-19 Emergency Rental Assistance Program (“ERAP”). This legislation impacts both residential and commercial tenants throughout New York State. It also addresses foreclosure protections for certain classes of landlords. This update will exclusively address its impact on residential and commercial eviction proceedings.
Residential Eviction Proceedings
The new legislation revived most of the provisions of Part A of the Covid-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“CEEFPA”), which were recently struck down on August 12, 2021, by the United States Supreme Court in Chrysafis v. Marks. While the Hardship Declarations previously submitted by tenants have been reinstated and therefore stay the initiation and/or prosecution of an eviction proceeding through January 15, 2022, this new legislation does create a due process mechanism for the landlord to challenge the validity of the Hardship Declaration in court in order to vacate the stay of the eviction proceeding. Previously there had been no verification process to determine the validity of the tenant’s claimed hardship. In many cases, a tenant filed a Hardship Declaration months ago, and the landlord has been unable to take any action against that tenant even though the claimed hardship may no longer exist.
The new legislation provides that the landlord can file a motion on a pending eviction proceeding where a Hardship Declaration has been submitted, attesting to the landlord’s good faith belief that the tenant has not experienced hardship and request a hearing by the court to determine if the tenant’s claim is valid. It is our recommendation that a motion be made in any case where there is no ERAP application currently pending or has been denied, and the proceeding is stayed due to the tenant’s submission of a Hardship Declaration.
Similarly, the landlord may commence a nonpayment proceeding despite the tenant submitting a Hardship Declaration if the landlord has the good faith belief that the tenant’s claimed hardship is invalid. If the nonpayment proceeding is filed on this ground, an affidavit by the landlord and/or landlord’s agent must be submitted along with the notice of petition and petition as well as a notice to the tenant that they are entitled to a hearing on the issue of whether the claimed hardship is valid. At this time, we are currently advising our clients to make an effort to verify the validity of the tenant’s Hardship Declaration prior to filing the proceeding in court. To assist our clients, our office has prepared a questionnaire to send to any tenant who has submitted a Hardship Declaration to ascertain relevant information. This effort, we believe can effectively support the “good faith” requirement necessary to proceed as well as provide information that could be used in court if the tenant raises a defense pursuant to the Tenant Safe Harbor Act, which this legislation extended through January 15, 2022.
This new legislation also made some important changes to ERAP, which already provides certain protections for tenants while their application is pending, including a stay of the initiation and/or prosecution of an eviction proceeding. This new law provides a landlord with the right to proceed with a holdover proceeding as an exception to this stay where the tenant is a nuisance and/or has caused substantial damage to the property.
As a reminder, if the tenant has not filed a Hardship Declaration or an application pursuant to the ERAP, the landlord can proceed with no restrictions.
This new law has reinstated the service requirements that existed under CEEFPA, including the service of the Hardship Declaration in English and the tenant’s primary language together with any notice served upon the tenant, the affidavits that accompany the filing of a notice of petition and petition, as well as the requirement that “due diligence” be exercised so that the Hardship Declaration which accompanies the predicate notices (including the rent reminder letter) and pleadings be served by personal service. This requirement has added an additional attempt at personal service, and has increased the cost of service of these papers.
Since CEEFPA was enacted on December 28, 2020, we have been absorbing the additional cost of service of the papers, as we have understood the financial strain the pandemic has especially caused our clients. Unfortunately, we can no longer continue to absorb these costs, and must now pass the additional service costs to our clients. It is our intention to adjust these costs back to normal once these additional requirements are lifted.
It is our belief that all appropriate action should still be taken to seek the collection of rental arrears and/or recover possession of a premises if necessary. Throughout the pandemic, our office has been able to adjust with the daily challenges being imposed by the legislature and the court system to still achieve positive results for our clients.
Commercial Eviction Proceedings
This new legislation extends the commercial tenant protections contained in the Covid-19 Emergency Protect Our Small Businesses Act of 2021 through January 15, 2022. The protections for commercial tenants are similar to those afforded to residential tenants. The law continues to impose a stay of the commencement and/or prosecution of commercial eviction proceedings and ejectment actions through January 15, 2022 if the commercial tenant has submitted a Hardship Declaration. It is still a requirement that the landlord serve a Hardship Declaration form upon the commercial tenant along with any and all predicate notices required by lease or statute and any pleadings filed in court.
The new legislation does permit the landlord to challenge the validity of the tenant’s hardship claim in court in order to vacate the stay of the proceeding or action, if the landlord has a “good faith” belief that the hardship does not exist. The process to challenge the Hardship Declaration submitted by a commercial tenant is similar to the process described above for residential tenants. Our office is prepared to file a challenge on any matter where a hardship declaration has been filed.
The law still provides for an exception to the stay of eviction if a commercial tenant intentionally causes damage to the property or engages in behavior that infringes on the use and enjoyment of the other tenants in the building. However, the law now requires that a separate proceeding be commenced based upon this nuisance activity.
As a reminder, if the tenant has not filed a Hardship Declaration, the landlord can proceed with no restrictions. The ERAP program only applies to residential tenants and currently there are no federal or state rent relief programs that automatically stay a commercial eviction proceeding.
If you have a commercial tenant who has breached their lease, there are options a landlord can pursue, including in certain circumstances filing a proceeding in New York State Supreme Court as well as possibly going after the guarantor of the lease. Please contact our office so that we can properly advise you as to the best course of action given your individual circumstances.
As always, the attorneys at Borah Goldstein are here to guide you through these tough times and assist you in any way we can. If you have any questions, please do not hesitate to contact us.