On December 28, 2020, the New York legislature enacted the COVID Emergency Eviction and Foreclosure Prevention Act (“CEEFPA”), which placed a moratorium on residential and commercial evictions[i] until May 1, 2021. On May 4, 2021, the legislature further extended the moratorium until August 31, 2021.
Recently, on September 1, 2021, New York Governor Kathy Hochul approved legislation extending the residential and commercial eviction and foreclosure moratoriums to January 15, 2022.
In addition to extending the eviction and foreclosure moratoriums, the new legislation takes into account a legal challenge identified in a recent decision by the United States Supreme Court. In Pantelis Chrysafis, et al. v. Lawrence K. Marks, New York landlords sought injunctive relief from the Supreme Court preventing the enforcement of Part A of the CEEFPA. Part A provided that, if a tenant self-certifies financial hardship, a landlord is precluded from contesting that certification and denied that landlord a hearing on the matter. On August 12, 2021, in a 6-3 decision, the United States Supreme Court struck down Part A of the CEEFPA. The Supreme Court held that such a provision violated the Court’s longstanding rule that “‘no man can be a judge in his own case.’” Chrysafis v. Marks, 594 U.S. ___ (2021) (quoting In re Murchison, 349 U.S. 133, 136 (1955)). A copy of the decision can be found at:
Shortly thereafter, on August 26, 2021, the United States Supreme Court struck down an eviction moratorium enacted by the Centers for Disease Control and Prevention (“CDC”). The CDC’s moratorium only applied to those counties with high-transmission rates of the COVID-19 delta variant. In vacating the CDC’s moratorium, the Court found that the CDC had exceeded its statutory authority. Ala. Ass’n of Realtors v. Dep’t of Health and Human Servs., 594 U.S. __ (2021). A copy of the decision can be found at: https://www.supremecourt.gov/opinions/20pdf/21a23_ap6c.pdf.
In order to avoid the aforementioned legal pitfalls, the New York legislature modified CEEFPA by creating a due process mechanism for landlords to challenge the hardship declaration submitted by residential and commercial tenants. The legislation also allows banks and mortgage holders to challenge the declaration submitted by property owners to avoid foreclosure. In other words, landlords who believe that their tenant has not suffered a financial hardship will now be permitted to request a hearing in court.
In determining the validity of a hardship claim, the legislation authorizes the Office of Court Administration to access limited application information from the COVID-19 Emergency Rental Assistance Program. If the tenant’s hardship claim is determined to be valid, the Court will impose a stay on the eviction proceeding until after January 15, 2022. The legislation also directs judges to require residential tenants to apply for the COVID-19 Emergency Rental Assistance Program if their hardship claim is found to be valid. However, the burden of proof at such a hearing lies with the property manager, who must have evidence establishing that the tenant is falsely claiming a hardship.
Further, the legislation permits landlords to commence an eviction proceeding if the tenant is a nuisance, creates a safety or health hazard for other tenants, or has intentionally damaged property.
In response to the new legislation, on September 7th, New York landlords filed a class-action lawsuit challenging the moratorium.
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[i] CEEFPA’s moratorium on commercial evictions only applies to small businesses with 100 or less employees.