GUIDELINE FOR TENANT NONPAYMENT ISSUES DURING COVID-19 AS OF MAY 11, 2020
- Security Deposits
On May 7, 2020, in an effort to help those impacted by COVID-19 address their rent obligations, Governor Cuomo issued Executive Order 202.28, which modified the security deposit law. Relief is available from the date of the Order but significantly only through June 6, 2020. The Executive Order states:
“For those tenants or licensees who are eligible for unemployment insurance or benefits under state or federal law or who are otherwise facing financial hardship due to the COVID-19 pandemic, Landlords and tenants or licensees of residential properties may, upon the consent of the tenant or licensee, enter into a written agreement by which the security deposit and any interest accrued thereof, shall be used to pay rent that is in arrears or will become due. If the amount of the deposit represents less than a full month rent payment, this consent does not constitute a waiver of the remaining rent due and owing for that month. Execution in counterpart by email will constitute sufficient execution for consent.”
The Governor’s Order directs that, it shall be the tenant’s option to enter into such an agreement and Landlord shall provide such relief to tenants (i) who so request it, and (ii) who are eligible for unemployment insurance or benefits under state or federal law or who are otherwise facing financial hardship due to the COVID-19 pandemic. Landlords shall not harass, threaten or engage in any harmful act to compel any tenant to enter into any such agreement. If the tenant opts to enter into such agreement, then the Governor further provided that any security deposit used as a payment of rent shall be replenished by the tenant, repayment to begin 90 days from date of the usage of the security deposit at the rate of 1/12 of the security deposit used as rent per month.
It is significant to note that the Executive Order (i) only gives a short window period of May 7, 2020 thru June 6, 2020 for the tenant to request this relief, and (ii) qualifies the availability of the relief to residential tenants who are eligible for unemployment insurance or “benefits under state or federal law or who are otherwise facing financial hardship due to the COVID-19 pandemic”.
If a tenant wishes to pursue the possibility of the security deposit relief, the tenant who is in rent arrears, an Agreement to Use Security Deposit for rent must be executed between the landlord and the tenant. The Agreement can be executed via email and Daniels Norelli Cecere & Tavel, PC remains ready to assist with this process.
- Commencement of Non-Payment Proceedings
As of May 4, 2020, the courts modified operations during the COVID-19 pandemic and expanded operations to permit some pending matters to proceed with electronically filed papers and virtual/Skype conferences. At this time however, argument on L&T matters may not proceed unless both parties are represented by counsel and both counsel consent. There is no indication from the courts indicating when operations will be further expanded to include the commencement of new matters. However, in the May 7, 2020 Executive Order 202.28 the Governor ordered that:
“There shall be no initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent or a foreclosure of any residential or commercial mortgage, for nonpayment of such mortgage, owned or rented by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20, 2020.”
As such, no new non-payment proceedings, for commercial or residential tenancies may be commenced and the moratorium on evictions in pending cases (both residential and commercial) are barred until August 20, 2020.
It is important to note that the Governor’s May 7th Executive Order only prevents landlords from filing new non-payment proceedings or with an eviction in a pending proceeding, it does NOT excuse the non-payment of rent by a tenant. It is also important to note that the moratorium is specifically directed to non-payment proceedings; therefore, it is presumed that holdover proceedings based upon a tenant’s breach of lease obligations other than the payment of rent should be allowed to proceed after June 20th.
Under the current restrictions a non-payment petition may not be filed in court until August 20th, the required predicate notices to nonpayment proceedings (i.e. a Five (5) Day Notice and Fourteen (14) Day Rent Demand) or predicate notices to holdovers or as required under the HSTPA may be served prior to August 20th so that nonpayment petitions can be prepared and ready to be filed promptly after August 20th and holdover petitions promptly after June 20th. Daniels Norelli Cecere & Tavel, PC is available to address any issues or questions regarding Governor’s Executive Order 202.28.