Important Coronavirus Update
On May 7, 2020, Governor Cuomo issued Executive Order No. 202.28. While the Order contains many new directives, this letter will discuss the different aspects of the Order that will significantly affect both residential and commercial property owners and managers.
The Executive Order extends the status of “non-essential” matters through at least June 6, 2020. As a result, it would appear that the prohibition of service of process for “non-essential” matters continues to remain in effect. Therefore, we believe law firms are barred from engaging process servers to serve any notice or paper that requires a process server, unless the Court finds an exception upon application, though at least June 6, 2020. This extends to both residential and commercial tenants.
Second, the Executive Order extends the stay of evictions through at least August 19, 2020, for both residential and commercial tenants, who are eligible for unemployment insurance or benefits under state or federal law, or otherwise are facing financial hardship due to the COVID-19 pandemic.
Third, the Executive Order prohibits the initiation of non-payment proceedings against both residential and commercial tenants through at least August 19, 2020, who are eligible for unemployment insurance or benefits under state or federal law, or otherwise are facing financial hardship due to the COVID-19 pandemic.
Despite these restrictions, the language of the Executive Order seems to permit the initiation of non-payment proceedings against both residential and commercial tenants who are ineligible for unemployment insurance or benefits or are not facing financial hardship due to the COVID-19 pandemic. However, we are currently unable to initiate these proceedings due to the Court’s refusal to permit the purchase of index numbers except in limited circumstances, and the apparent restriction on process servers’ ability to serve “non-essential” papers.
Fourth, the Executive Order permits landlords and residential tenants to agree that the security deposit be applied to outstanding rent, or future rent. This provision applies to residential tenants only, who submit this request in writing through June 6, 2020 or agree to a request made by the landlord. However, a landlord is only obligated to honor the tenant’s request if the tenant demonstrates they are affected or facing financial hardship due to the COVID-19 pandemic or are eligible to collect any type of unemployment benefit.
Upon the residential tenant’s demonstration that they meet the stated criteria, or if the parties agree to apply the security deposit to rent, the Executive Order permits the residential tenant to repay the security deposit over a twelve (12) month period commencing ninety (90) days from the day the security is applied to rent. The tenant may, instead of repayment, opt to obtain insurance to replenish the security deposit and the landlord must accept the tenant’s insurance payment as replenishment of the security. The Executive Order is silent as to tenancies that will expire in less than a year from the draw down on residential security.
The Executive Order does not restrict a landlord’s right to apply the security deposit to rent, if the tenant has not been impacted by the COVID-19 pandemic or is ineligible for unemployment benefits. Notification of this application of the security deposit to rent arrears should be made in writing to the residential tenant and will then obligate the residential tenant to replenish the security deposit. If replenishment is not made by the residential tenant, it will permit the landlord to serve a predicate notice to cure, and thereafter, terminate the tenancy. If the tenant does agree, a written agreement should be executed. Please contact any of our attorneys so that we can prepare the written request that encompasses the necessary language, as well as draft any written agreement, so that your rights are protected.
In light of these restrictions, there are still remedies you can pursue in order to navigate these unprecedented times. We believe we are permitted to serve “non-essential” notices and pleadings that do not require service of process. As such, certain preliminary notices such as the rent reminder notices pursuant to RPL Section 235(e)(d) and preliminary notices for holdover cases, such as notices to cure lease violations, may be prepared and served upon tenants by you and/or our office.
In certain circumstances, landlords may be able to initiate either non-payment or holdover proceedings, or an ejectment action to regain possession of the property. If you have a residential tenant engaging in dangerous or nuisance conduct that disturbs or endangers the other tenants in the building a predicate notice can be served upon that tenant. In an emergency, a request for emergency injunctive relief coupled by a request for ejectment (eviction) may be pursued. Our firm has successfully handled these emergency issues during this pandemic, and we can help you rapidly respond to your situations and protect your tenants’ well-being and your assets.
Likewise, predicate notices for lease violations may be served upon commercial tenants. Although the eviction moratorium extension does apply to commercial tenants, the Executive Order regarding the application of the security deposit to rent does not apply to commercial tenancies. Therefore, provided it is not prohibited by the lease, landlords may apply a commercial tenant’s security without consent, and demand replenishment. If the commercial tenant fails to replenish the security deposit, a notice to cure can be served. The commercial tenant’s failure to replenish provides a landlord the right to terminate the tenancy once the moratorium is lifted, providing the landlord with the remedy of either commencement of a holdover proceeding in Housing Court or the commencement of an ejectment action in Supreme Court.
We are here to assist you and welcome your inquiries. Please contact us if you have any questions or require additional information as to your rights and obligations. Our attorneys are here to provide you with tailored solutions to these issues and provide guidance during this unprecedented time.
Borah, Goldstein, Altschuler, Nahins, & Goidel, P.C.
This document has been prepared to provide preliminary information about Executive Order No.202.28, (“Order”) and the law surrounding companion Covid-19 government directives. It should not be relied upon as complete legal advice or opinion concerning any provision of the Order issues raised in this letter. The Order may be subject to further amendment and clarification. Consult your attorney at Borah Goldstein before taking any action in connection with any of the information provided herein.