COMMERCIAL NONPAYMENT PROCEEDINGS AS OF JULY 6, 2020
As we noted in a blog post in early May 2020, in an effort to help those impacted by COVID-19 address their rent obligations, Governor Cuomo issued Executive Order 202.28, wherein the Governor ordered, among other things, 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 per Executive Order 202.28, no new proceedings for the nonpayment of rent against someone financially affected by COVID-19, for commercial or residential tenancies, could be commenced and a moratorium was imposed on evictions in pending cases (both residential and commercial) against someone financially impacted by COVID-19 were barred until August 20, 2020.
On June 30th, the Governor signed into law the Tenant Safe Harbor Act the aim of which is to help keep residential tenants in their homes following the COVID-19 pandemic by allowing only money judgments, and not evictions, for unpaid rent that comes due while restrictions are in place due to COVID-19 on businesses, public accommodations, and nonessential gatherings.
On July 6th, the Governor issued Executive Order 202.48 wherein the Governor ordered that:
“The directive contained in Executive Order 202.28, as extended, that prohibited initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent …, is continued [for another thirty days through August 5, 2020] only insofar as it applies to a commercial tenant … as it has been superseded by [the Tenant Safe Harbor Act] for a residential tenant, …”
It is important to note that Executive Order 202.48 only prevents landlords from filing new commercial non-payment proceedings, or enforcing a commercial eviction in a pending proceeding, it does NOT excuse the non-payment of rent by a commercial tenant.
It is also important to note that under the restrictions set forth in Executive Order 202.28, as extended, a commercial non-payment petition could not be filed in court until August 20th; however, Executive Order 202.48 issued July 6th provides that a commercial non-payment petition may be filed in court after August 5th. We assume that the provisions of the later Executive Order will supersede the prior Order and commercial non-payment petitions will be permitted to be filed in court after August 5th. The required predicate notices to commercial nonpayment proceedings (i.e. a Five (5) Day Notice and Fourteen (14) Day Rent Demand) may be served prior to August 5th so that petitions can be prepared and ready to be filed promptly after August 5th.
That being said, it is important to remind everyone of Judge Mark’s June 18th Memorandum concerning the opening up of Housing Court and the procedure for addressing both residential and commercial summary proceedings which procedure seemingly can be interpreted to halt all eviction proceedings “until further notice”, whether based upon nonpayment of rent or otherwise, and whether the nonpayment of rent is as a result of a financial hardship resulting from the COVID-19 pandemic or not. Notably, a Suffolk County District Court Judge recently issued a decision holding that Judge Mark’s Memorandum cannot overrule the Governor’s Executive Order and found Judge Mark’s Memorandum of guidance to be an “unconstitutional usurpation of the Legislative and Executive prerogatives and powers” because it sought to “contradict, limit or expand” an Executive Order.
The only thing that is clear from the various Executive Orders, the Tenant Safe Harbor Act and Judge Mark’s cryptic Memorandum of guidance is that how New York City Housing Court will proceed is anything but clear. As this office has advised in prior Blog Posts, until there is some real clarity concerning the commencement and prosecution of commercial non-payment proceedings in Housing Court, landlords should continue exploring the possibility of proceeding either in Civil Court (in the non-housing part) or Supreme Court. Contact Daniels Norelli Cecere & Tavel, PC to review the particulars of your case and determine how it may be best to proceed.