United States: New York Governor Cuomo Signs COVID-19-Related Residential Evictions And Foreclosures Moratorium Bill Into Law

On December 28, 2020, New York Governor Andrew Cuomo signed into law the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the "Act") passed by the New York State Legislature. The Act (S.9114/A.11181) is intended to provide relief to tenants, homeowners, and small landlords facing continued economic hardship resulting from the ongoing COVID-19 pandemic. The Act prevents residential evictions, foreclosure proceedings, credit discrimination, and negative credit reporting related to the COVID-19 pandemic until May 1, 2021. It also extends the Senior Citizens' Homeowner Exemption and Disabled Homeowner Exemption from 2020 to 2021.

The Act helps tenants facing eviction and mortgagors facing foreclosure proceedings due to the pandemic in the following areas:

1) Residential Evictions: The Act places a moratorium on residential evictions until May 1, 2021, for tenants who have endured COVID-related hardship. Tenants must submit a hardship declaration or a document explaining the source of the pandemic-related hardship ("Hardship Declaration") in order to prevent evictions. The Hardship Declaration gives tenants the opportunity to assert pandemic-related hardship arising from any of the following:

(a) Significant loss of household income;

(b) Increase in necessary out-of-pocket expenses related to performing essential work or related to health impacts;

(c) Childcare responsibilities or responsibilities to care for an elderly, disabled, or sick family member that have negatively affected the tenant's ability or the ability of someone in the tenant's household to obtain meaningful employment or earn income, or increased necessary out-of-pocket expenses;

(d) Moving expenses and difficulty tenant has in securing alternative housing making it a hardship for tenant to relocate to another residence; or

(e) Other circumstances related to the COVID-19 pandemic that have negatively affected tenant's ability to obtain meaningful employment or earn income or have significantly reduced household income or significantly increased expenses.

The Hardship Declaration form provides that the declarant is signing and submitting the Hardship Declaration under penalty of perjury. However, the declarant is not required to submit any evidence or documentation of such hardship.

Any eviction proceeding pending on the effective date of the Act, including eviction proceedings filed on or before March 7, 2020, or commenced within 30 days of the effective date of the Act, shall be stayed for at least 60 days (or to such later date that the chief administrative judge shall determine is necessary to ensure that courts are prepared to conduct proceedings in compliance with the Act and to give tenants an opportunity to submit the Hardship Declaration pursuant to the Act). If a tenant submits a Hardship Declaration, (i) the landlord may not commence an eviction proceeding until at least May 1, 2021, (ii) if an eviction proceeding has already been commenced, the court may not issue a default judgment against the tenant until at least May 1, 2021, and (iii) warrants of eviction that have been issued but not yet executed will be stayed until at least May 1, 2021.

Notwithstanding the submission of a Hardship Declaration, landlords may still evict tenants that are creating safety or health hazards for other tenants. The Act contains procedures for landlords to demonstrate persistent and unreasonable conduct by the tenant that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others at the property.

2) Residential Foreclosure Proceedings: The Act also places a moratorium on residential foreclosure proceedings until May 1, 2021. Homeowners and small landlords who are a natural person and own 10 or fewer residential dwellings (the dwelling units may be in different properties so long as the total number of units includes the primary residence of the owner, and the remaining units are currently occupied by a tenant or are available for rent) may file Hardship Declarations with their mortgage lender, other foreclosing party, or a court in order to prevent foreclosure until after the moratorium expires.

3) Tax Lien Foreclosures and Sales: The Act prevents local governments from engaging in a tax lien sale or a tax foreclosure (including, in connection with any unpaid tax, special ad valorem levy, special assessment, or other similar charge) until at least May 1, 2021. However, tax payments and assessments due to the local government will remain due and payable.

4) Credit Discrimination and Negative Credit Reporting: The Act prohibits lenders from discriminating against a property owner when making lending decisions because the property owner has been granted a stay of mortgage foreclosure proceedings, tax foreclosure proceedings, or tax lien sales pursuant to the Act, has filed a Hardship Declaration, or is in arrears.

5) Senior Citizens' Homeowner Exemption and Disabled Homeowner Exemption: Local governments are required to carry over Senior Citizens' Homeowner Exemptions (SCHE) for homeowners who are 65 years old or older, and Disabled Homeowner Exemptions (DHC) from the 2020 tax assessment roll to the 2021 assessment roll at the same levels. Local governments are also required to provide renewal applications for anyone who may be eligible for a higher amount of exemption in 2021. Municipal governments may set up procedures for assessors to require renewal applications from people who the assessors believe may no longer be eligible for an exemption. Recipients of the exemption do not have to file renewal applications in person due to the COVID-19 pandemic.

Throughout the COVID-19 public health emergency, New York's government has attempted to provide relief from pandemic-related hardship to New Yorkers in danger of losing their homes or their businesses. Governor Cuomo has issued Executive Orders, such as moratoriums on residential and commercial evictions that include permitting residential tenants to request use of their security deposit to pay rent and prohibiting late payment charges for residential leases. The New York legislature has also passed legislation such as the Tenant Safe Harbor Act. The New York State Homes and Community Renewal (HCR) is offering the COVID Rent Relief Program, which provides payments to landlords on behalf of eligible tenants who have applied to HCR for rental payment assistance. While these measures provide only temporary relief, their stated goal is to help tenants, homeowners, small landlords, the elderly, and other vulnerable populations weather the economic hardships of the pandemic and get back on their feet quicker when the pandemic ends. According to Governor Cuomo, the Act is "the kind of support that helps us stay New York Tough."

We will continue to monitor this legislation and related efforts and provide updates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.