NYS Legislature Extends Residential and Commercial Eviction and Foreclosure Moratoriums

During a special session held on September 1, 2021, the New York State legislature passed a new law that extends the state’s moratorium on residential and commercial evictions and foreclosures until January 15, 2022. The legislation (the “New Moratorium”) allows residential and commercial tenants alike to avoid eviction by submitting a hardship declaration form that certifies their COVID-related inability to pay rent and places a moratorium on commercial evictions and foreclosure proceedings for small businesses with 100 or fewer employees. Under the New Moratorium, residential homeowners and landlords who own 10 or fewer dwellings can also avoid foreclosures by filing a hardship declaration form with a court or their mortgage lender. Further, landlords still may evict a tenant who intentionally causes significant property damage, fails to submit the hardship declaration form, or poses a substantial health and safety risk to other tenants.

The New Moratorium is intended, in part, to facilitate New York’s Emergency Rental Assistance Program (ERAP), through which the state makes rental payments to landlords. Tenants with pending ERAP applications cannot be evicted and, if deemed eligible for assistance, cannot be evicted for one year. To date, ERAP has distributed over $300 million in rent payments to New York’s landlords, and the New Moratorium makes an additional $250 million available for distribution as “Supplemental Emergency Rental Assistance.” Half of that amount is set aside specifically for landlords whose tenants have either vacated with unpaid rent in arrears or chosen not participate in ERAP.

Governor Hochul signed the New Moratorium into law just one week after the Supreme Court struck down the U.S. Centers for Disease Control and Prevention’s (CDC) nationwide eviction moratorium (the “CDC’s Order”) in Alabama Ass’n of Realtors, et al. v. Dep’t of Health and Human Services, et. al. (594 U.S. __ (2021)). As we discussed in our August 16 client alert, the Supreme Court agreed in early August that the hardship declaration component of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”) violated due process principles, since landlords could not contest an individual tenant’s hardship declaration form (Pantelis Chrysafis, et al. v. Lawrence K. Marks, 594 U.S. ____ (2021)). As a result, the New Moratorium allows landlords and mortgagees to challenge the validity of any hardship declaration form by filing a motion for which courts are required to schedule a hearing. Otherwise, a tenant’s filing of the form automatically stays an eviction proceeding against such tenant through January 15, 2022.

Time will tell whether the New Moratorium will endure the same legal scrutiny that the CDC’s Order and the Act have faced. We will continue to monitor this issue, and we will provide updates. If you have any questions, please do not hesitate to contact the Morrison & Foerster team.