April 5th Update on COVID-19, Rent and Evictions in New York

By: Timothy Lynn

Effective at 8:00PM on March 22, 2020, Governor Cuomo issued a moratorium on the enforcement of either an eviction of any tenant residential or commercial, or any foreclosure of any residential or commercial property for a period of 90 days. This moratorium has caused a lot of fear for landlords of both residential and commercial properties that tenants would not make April rent payments. Now that we are in April, every landlord is seeing the reality of their rent roll for the time-being.

The CARES Act provides no relief for most landlords. The only relief being provided for landlords comes in the form of lender deferrals. Many lenders, understanding the scope of the problem and responding to calls from government officials to permit mortgage payments to be deferred, have granted two or three month deferrals to landlords. However, not all mortgage holders are providing this relief.

The Governor’s order did not relieve tenants of the obligation to pay rent. It only defers any action landlords can take for a period of 90 days. As yet, there is no legal guidance for what will happen when the moratorium expires. Governor Cuomo’s public statements indicate that he views his action as not abrogating the obligation to pay rent. It remains to be seen what will happen with respect to tenants who do not pay their April rent, either because they could not or because they merely took advantage of the moratorium on evictions.

In the New York Senate, Senate Bill S8125A would provide for suspension of rent for certain residential tenants and certain small businesses.

• For any residential tenant or small business commercial tenant in the state that has lost income or has been forced to close their place of business as a result of government ordered restrictions in response to COVID-19, all rent payments would be suspended for 90 days. The language refers to a suspension, but it is really a cancellation – the tenant would never have to pay the suspended rent.
• The bill goes further and provides for an automatic renewal of any lease that expires during the 90 day period on the same terms as were in effect under the current lease.
• The bill also provides for mortgage relief for landlords affected by the law, but that relief would only apply to mortgages over which New York has authority to issue such relief – a narrow category of mortgages. Similar to action already taken by the Governor with respect to state-charted institutions, the impact of this relief would be limited.

Another proposal would require landlords to offer tenants the option to use paid security deposits in place of April rent payments. Tenants would have 30 days to start paying back their security deposits. This proposal might be limited to New York City. And tenant advocates continue to press for an across-the-board rent forgiveness.

It is unclear at this point in time what will happen with unpaid April rent.