On Tuesday, August 3, the U.S. Centers for Disease Control and Prevention (CDC) issued a new order (the “Order”) that prohibits evictions in parts of the country experiencing “substantial transmission” of the COVID-19 virus. Specifically, the Order applies only in those U.S. counties where the virus and its Delta variant seem to be spreading more rapidly based on the CDC’s COVID Data Tracker tool. Further limiting the Order’s scope are a set of requirements tenants must meet, and to which they must swear in a declaration form under penalty of perjury, in order to qualify for protection from eviction:

  1. The tenant has used best efforts to obtain all available governmental assistance for rent or housing;
  2. The tenant either (i) earned no more than $99,000 ($198,000 if tenant is a joint filer) in 2020 or expects to earn no more than those amounts in 2021, (ii) was not required to report income in 2020, or (iii) received an Economic Impact Payment (stimulus check);
  3. The tenant cannot pay full rent or make a full housing payment due to substantial loss of income, loss of compensable hours of work, a layoff, or extraordinary medical expenses;
  4. The tenant is using best efforts to make timely partial rent payments as close to the full amount as tenant’s circumstances may permit;
  5. Eviction would likely render the tenant homeless; and
  6. The tenant resides in a U.S. county experiencing substantial or high rates (as defined by the CDC) of community transmission levels of COVID-19.

The Order, which is set to expire on October 3, 2021, comes after weeks of mounting pressure from various groups on the Biden administration to extend the CDC’s now-expired nationwide eviction moratorium (the “Previous Moratorium”). The Biden administration resisted that pressure, pointing to the intense scrutiny to which the Previous Moratorium was subject in federal courts across the country, as we detailed in our March 4, March 15, May 6, and July 1 client alerts. Most recently, the Supreme Court reviewed the Previous Moratorium in Alabama Association of Realtors, et al. v. Dep’t of Health and Human Services, et al., 594 U.S. ____ (2021), where Justice Kavanaugh opined, in concurrence, that the CDC lacked the requisite authority to issue the Previous Moratorium and, therefore, “clear and specific congressional authorization (via new legislation) would be necessary for the CDC to extend the moratorium past July 31.”

Though its scope is narrower in application and targets only certain parts of the country, time will tell whether the Order will face legal challenges akin to those the Previous Moratorium faced or if courts will view it any differently. In announcing the Order, President Biden acknowledged the Supreme Court’s ruling in Alabama Association and the possibility of litigation in the near future.

We will continue to monitor the Order and related issues, and we will provide updates. Please do not hesitate to contact the Morrison & Foerster team if you have any questions.

Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.

On June 23, 2021, New York Governor Andrew Cuomo announced an end to the state disaster emergency he first declared on March 7, 2020 to contain the spread of COVID-19. Citing significantly reduced rates of infection and increased rates of vaccination, the governor’s office announced that the public health emergency would expire after June 24, 2021. “We’re starting to write a new chapter for a post-COVID New York – the state disaster emergency is ending and we can focus on reimaging, rebuilding and renewing our state,” the governor said in his announcement. This new chapter marks an end to the COVID-19-era exercise of emergency powers that Governor Cuomo claimed through his March 7 Executive Order, which allowed him to temporarily suspend or modify state laws related to consumer protections, outdoor dining, and public gatherings, among others. Still, certain federal guidelines remain in place in New York, including the need to wear a mask while traveling on public transportation or visiting hospitals, nursing homes, or correctional facilities. New York has also adopted the Centers for Disease Control and Prevention’s (CDC) Interim Public Health Recommendations for Fully Vaccinated People (the “Recommendations”), issued on May 13, 2021. Thus, while businesses may choose to require masks and social distancing, they may also adhere to the Recommendations, which encourage only non-vaccinated people to wear masks in most settings.

As the CDC continues to reevaluate the Recommendations, its director, Dr. Rochelle Walensky, has extended the agency’s nationwide residential eviction moratorium (the “Order”) for an additional month, until July 31, 2021. The Order has been the subject of intense scrutiny in federal courts across the country, as we discussed in our March 4, March 15, and May 6 client alerts. Most recently, we provided an update to the Alabama Association case, which a coalition of landlords and realtors first brought against the CDC to prevent its continued enforcement of the Order in contravention, they argued, of federal law and the U.S. Constitution (Alabama Association of Realtors, et al. v. U.S. Dep’t of Health and Human Services, et al., Case No. 1:20-cv-03377, United States District Court of the District of Columbia). On May 6, 2021, District Judge Dabney Friedrich issued a stay of her decision to set aside the Order, which the U.S. Court of Appeals for the District of Columbia Circuit upheld by per curiam order on June 2, 2021. This decision by the D.C. Circuit prompted an appeal to the U.S. Supreme Court, where the Justices evaluated the landlord plaintiffs’ application to vacate Judge Friedrich’s stay.

On June 29, 2021, the Supreme Court narrowly ruled, 5 to 4, in the CDC’s favor, declining to vacate the stay (Alabama Association of Realtors, et al. v. Dep’t of Health and Human Services, et al., 594 U.S. ____ (2021)). While Justices Thomas, Alito, Gorsuch, and Barrett would have ended the CDC’s eviction moratorium, Chief Justice Roberts, joined by Justices Kavanaugh, Kagan, Sotomayor, and Breyer, voted not to grant the plaintiffs’ application. In his concurring opinion, Justice Kavanaugh cited his agreement with Judge Friedrich that the CDC had exceeded its statutory authority. Still, he voted not to set aside the Order primarily because it expires so soon: “[These] few weeks [until July 31] will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds.” With his concurrence, Justice Kavanaugh clarified that any proposed extension of the Order beyond July 31 would, in his view, require legislation empowering Congress to authorize it. President Biden’s administration has stated that the CDC’s recent extension is for “one final month,” suggesting, perhaps, that there is no intention to further extend the Order.

We will continue to monitor this case and related issues, and we will provide updates. Please do not hesitate to contact the Morrison & Foerster team if you have any questions.

Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.

On May 5, 2021, Federal District Judge Dabney Friedrich vacated the Centers for Disease Control and Prevention (CDC) nationwide moratorium on residential evictions (the “Order”), which the CDC had recently extended beyond its congressionally approved expiration date of March 31 to June 30, 2021 (Alabama Association of Realtors, et al. v. U.S. Dep’t of Health and Human Services, et al., Case No. 1:20-cv-03377, United States District Court for the District of Columbia). While Judge Friedrich is but one of several federal judges to rule against the Order as highlighted in our March 4, 2021 and March 15, 2021 alerts, her decision is arguably the most extensive. Though no more favorable to the CDC than Judge Friedrich’s vacatur order, the holdings out of federal courts in Ohio and Texas at least were limited to the plaintiffs with standing before those courts. Here, Judge Friedrich refused a request by the Department of Justice (DOJ) for similar treatment and held that the CDC Order must be set aside: “[The D.C. Circuit] has instructed that when ‘regulations are unlawful, the ordinary result is that the rules are vacated—not that their application to the individual petitioner is proscribed’” (citing Nat’l Mining Ass’n v. U.S. Army Corps of Eng’rs, 145 F.3d 1399, 1409 (D.C. Cir. 1998)).

The Alabama Association decision was based primarily on Judge Friedrich’s reading of the Public Health Services Act, 42 U.S.C. § 264(a) (the “Act”), pursuant to which the CDC first issued the Order in September 2020. Specifically, the federal court found that the Act, by its plain terms, did not expressly indicate congressional intent to vest the CDC with authority to impose a national eviction moratorium. Because the decision to ban evictions is one of “vast economic and political significance,” Judge Friedrich maintained, Congress could not be said to have delegated it without having made its intention to do so explicit.

The DOJ has announced that it has “already filed a notice of appeal of the decision [to the Court of Appeals for the District of Columbia Circuit] and intends to seek an emergency stay of the order pending appeal.”

We will continue to monitor these cases and provide updates as they become available.

Update (May 6, 2021): Judge Friedrich has just stayed her decision pending the DOJ appeal.

Update (June 3, 2021): On June 2, 2021, the United States Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”) opted to keep the CDC’s nationwide eviction moratorium in place during the appeals process.

A three-judge panel for the D.C. Circuit issued the per curiam order affirming the stay Judge Friedrich granted on May 6, 2021 over objections by the plaintiffs, a coalition of Alabama landlords and realtors. In filing their motion to vacate the stay, the plaintiffs had hoped to prevent the CDC from enforcing its Order, which expires on June 30, 2021, at least until a final ruling on the DOJ’s appeal. Instead, the D.C. Circuit found that Judge Friedrich had not abused her discretion in granting the stay, largely because, in the court’s opinion, the government had “made a strong showing that it is likely to succeed on the merits, [since] Congress has expressly recognized that the [CDC] had the authority to issue its narrowly crafted moratorium under [the Act].” In further support of its order, the court also underscored the plaintiffs’ failure to prove that the stay might cause irreparable harm to their interests such that reversing Judge Friedrich’s decision would be appropriate: “The record does not demonstrate any likelihood that [the plaintiffs] themselves will lose their businesses, that an appreciable percentage of their own tenants who would otherwise pay in full will be unable to repay back rent, or that financial shortfalls are unlikely ultimately to be mitigated.”

While not meant to resolve “the ultimate merits of the legal question” at issue, the D.C. Circuit’s order suggests that the court may rule in the government’s favor when it finally does consider the appeal of Judge Friedrich’s ruling, whereby she vacated the CDC’s eviction ban on statutory grounds: “[The Department of Health and Human Services] has demonstrated that lifting the national moratorium will exacerbate the significant public health risks identified by the CDC because, even with increased vaccinations, COVID-19 continues to spread and infect persons, and new variants are emerging.”

We will continue to monitor this case and will provide further updates as they become available.

Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.

Another federal court has ruled against the Centers for Disease Control and Prevention (CDC) nationwide ban on residential evictions (the “Order”), which is set to expire on March 31, 2021. A target of the various lawsuits we highlighted in our March 4, 2021 alert, the Order aims to slow the spread of COVID-19 by prohibiting landlords from evicting qualified tenants who have limited or no housing alternatives. The CDC first issued the Order in September 2020, pursuant to a Congressional delegation of authority codified in Section 361 of the Public Health Services Act, 42 U.S.C. § 264(a) (the “Act”). The Act allows the Secretary of the U.S. Department of Health and Human Services to instruct the CDC to “make and enforce such regulations as in his judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases,” and to enact “other measures as in his judgment may be necessary” to carry out those regulations.

On March 10, 2021, U.S. District Judge J. Philip Calabrese held that the CDC’s Order exceeded its authority under the Act (Skyworks, Ltd., et al. v. Centers for Disease Control and Prevention, et al., N.D. Ohio, Case No. 5:20-CV-02407). Like the other aggrieved property owners whose objections sparked the federal cases discussed in our previous alert, the Skyworks plaintiffs, a group of property managers and landlords, first filed suit for injunctive relief and a declaratory judgment in October 2020. Notably, though, their complaint did not raise the same constitutional concerns that underpin Terkel, the only other federal ruling against the Order to date. See Lauren Terkel, et al v. Centers for Disease Control and Prevention, et al., E.D. Tex., Case No. 6:20-CV-00564 (declaring the CDC’s Order an invalid exercise of the federal Commerce Clause power). Instead, the plaintiffs asserted that the Act by its plain terms did not authorize the CDC to mandate an eviction freeze—and Judge Calabrese agreed: “The most natural and logical reading of the [Act] as a whole does not extend the CDC’s power as far as [the CDC] maintains. . . [and the Act’s] text does not authorize such boundless action.” Accordingly, the court ruled in plaintiffs’ favor but did not grant their requested injunction.

While Terkel is the product of constitutional analysis, the outcome in Skyworks rests on the close reading of a federal statute. Judge Calabrese decided the Act was an unambiguous delegation of limited authority, based on an assessment of the Act’s terms “with an eye to their straightforward and commonsense meanings” (citing Black v. Pension Benefit Guar. Corp., 983 F.3d 858, 864 (6th Cir. 2020)). However, two federal district courts found that the same Act unambiguously compels the opposite result than decided by Judge Calabrese (Chambless Enters., LLC v. Redfield, 2020 WL 7588849, W.D. La. Dec. 22, 2020; Brown v. Azar, No. 1:20-CV-03702-JPB, N.D. Ga. Oct. 29, 2020). Indeed, each of the federal judges in Chambless and Brown upheld the CDC’s Order, finding that Congress must have intended to give the agency broad latitude to mitigate the pandemic’s effects. Yet Judge Calabrese summarily rejected this view as one that “would authorize action with few, if any, limits—tantamount to creating a general federal police power.” For him, the Chambless and Brown courts had stretched impermissibly to justify the Order by way of “strained or forced readings” of the Act.

Though its Order currently expires at the end of March 2021, the CDC could again find itself in federal court. Whether or not more lawsuits are on the horizon, the agency will need to confront the fact that the law authorizing the Order is susceptible of competing interpretations. We will continue to monitor these cases and will provide further updates as they become available.

Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.

On February 24, 2021, five New York landlords filed a complaint in federal court, alleging that Part A of the state’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”) violates their constitutional rights (Chrysafis, et al. v. James, Case No. 2:21-cv-00998). The suit challenges the extended statewide eviction moratorium and hardship declaration components of the Act on First Amendment and due process grounds. The landlord plaintiffs, whose tenants have refused to vacate or pay rent, have asked the court to declare the Act unconstitutional and to bar New York Attorney General Letitia James from enforcing the hardship declaration requirement, which allows tenants facing pandemic-related financial challenges (or for whom eviction would create a “significant health risk”) to stay their own eviction proceedings until May 1, 2021.

The complaint, filed in the Eastern District of New York, sets forth numerous claims arising under both the U.S. Constitution and the New York State Constitution. In particular, the plaintiffs assert that the Act:

  1. Compels speech, in violation of the First Amendment, since it forces landlords to provide tenants with the state government’s (i) hardship declaration form (the “Form”) and (ii) list of legal aid service providers (the “List”). Consequently, the Form and List as distributed by property owners amount to compelled speech “…in support of a government eviction moratorium with which [those owners] disagree,” and in favor of “specific legal organizations whose mission and advice is squarely adverse to [their] interests”;
  2. Invites arbitrary enforcement, since the Form’s “hardship” categories, pursuant to which tenants can avoid eviction without also providing supporting documentation, are not adequately defined. The complaint thus alleges that the Act is unconstitutionally vague under the Due Process Clauses of the U.S. and New York State Constitutions;
  3. Deprives small property owners of their procedural rights, since the Act fails to provide them with a mechanism to verify or challenge individual tenants’ hardship declaration forms;
  4. Prohibits landlords from filing eviction petitions in violation of both the First Amendment and the Petition Clause of the New York State Constitution; and
  5. Gives the New York Chief Administrative Judge an “unchecked power to unilaterally extend the eviction moratorium statewide,” which violates the state government’s authority to delegate its power under the New York Constitution.

As of March 4, 2021, New York State had not filed an answer to the complaint and the court had not yet addressed the plaintiffs’ accompanying request for a temporary restraining order and preliminary injunction.

We will continue to monitor this case and related developments, including a recent decision coming out of the Eastern District of Texas in a similar lawsuit brought by small property owners in September 2020. Their complaint alleged that the U.S. Centers for Disease Control and Prevention (CDC) issued a nationwide eviction moratorium order (the “Order”) that unconstitutionally deprived the plaintiffs of their property rights. The Order, which the CDC issued on September 4, 2020, makes it a crime for landlords to remove individual tenants with limited or no housing alternatives who (a) expect to earn less than $99,000 in 2021 (or $198,000, for joint tax return filers); (b) were not required to report income in 2020; or (c) received a stimulus check last year under the Coronavirus Aid, Relief and Economic Security (CARES) Act. For its part, the CDC has maintained that the Order is a valid exercise of the federal authority Congress granted to the organization to enact public health measures in the wake of COVID-19. An eviction freeze, in the CDC’s view, would help reduce the number of evicted people who may travel across state lines and spread the coronavirus.

But on February 25, 2021, U.S. District Judge John Barker rejected the CDC’s public health arguments (Lauren Terkel, et al. v. Centers for Disease Control and Prevention, et al., E.D. Tex., Case No. 6:20-cv-00564). The court instead found the Order unconstitutional, citing its view that Congress, and by extension the CDC, lacked the requisite authority under the Commerce Clause and the Necessary and Proper Clause to ban evictions nationwide. In so ruling, Barker described the Order as an impermissible intrusion into real estate, which he labeled an “inherently local” domain: “Residential buildings do not move across state lines, and eviction is fundamentally the vindication of the property owner’s possessory interest.”

Judge Barker ultimately stopped short of granting the plaintiffs’ motion for a preliminary injunction, so the Order will remain in place until March 31, 2021. But he shared an expectation consistent with his ruling that the CDC would withdraw its Order. Meanwhile, the U.S. Department of Justice (DOJ) intends to appeal the decision, which decision also conflicts directly with one that the Western District of Louisiana—another of the Fifth Circuit district courts—reached in December.

In Chambless Enterprises, LLC. v. Redfield (2020 WL 7588849, W.D. La. Dec. 22, 2020), the court, faced with plaintiffs’ contention that Congress had impermissibly delegated its lawmaking authority by empowering the CDC to ban evictions, rejected outright the Commerce Clause argument that underpins Terkel: “The Supreme Court has explicitly held that the commercial activity regulated here—‘rental of real estate’—is ‘unquestionably’ an activity that substantially affects interstate commerce” (Russell v. United States, 471 U.S. 858, 862 (1985)). Judge Doughty instead found that the CDC, in issuing its Order, acted with authority properly delegated to it by Congress. Notably, in yet another case, the Northern District of Georgia ruled along those same lines of administrative law in October 2020 to uphold the CDC’s Order in Brown v. Azar (No. 1:20-CV-03702-JPB, N.D. Ga. Oct. 29, 2020).

The DOJ’s appeal or a potential extension of the Order by President Biden notwithstanding, the conflict between Chambless and Terkel alone raises a strong possibility of review by the Court of Appeals for the Fifth Circuit. And while it rests primarily on constitutional arguments distinct from those the plaintiffs advanced in Brown and Chambless as discussed above, the Terkel case marks a departure from federal court decisions favorable to the Order—creating more for the Supreme Court to consider should the Order reach its docket. We will continue to assess these cases and will provide further updates as they become available.

Michael Machado, a Law Clerk in our New York office, contributed to the writing of this alert.

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.

On June 30, 2020, New York Governor Andrew Cuomo signed into law the New York Tenant Safe Harbor Act (the “Act”). The Act (S.8192B (Hoylman)/A.10290B (Dinowitz)), sponsored by New York State Senators Brad Hoylman and Liz Krueger and State Assembly Member Jeffrey Dinowitz, provides protection from eviction to residential tenants in the State of New York who have experienced financial hardship during the COVID-19 State of Emergency. The Act prohibits courts from ever evicting residential tenants who experienced financial hardship during the pandemic for non-payment of rent that accrues or becomes due between March 7, 2020, and the yet-to-be-determined date on which all COVID-related restrictions on non-essential gatherings and public and private businesses are lifted in the county of the tenant’s residence (the “COVID Period”).

The Act expands on the eviction protections already in place for residential tenants in New York during the COVID-19 pandemic. Pursuant to Executive Order No. 202.28 (the “Executive Order”) issued by Governor Cuomo on May 7, 2020, the State of New York currently has a moratorium on evictions until August 20, 2020 for residential and commercial tenants experiencing hardship due to the COVID-19 pandemic. The Executive Order requires 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.” This Executive Order extends and modifies the eviction moratorium in Executive Order 202.8, issued by Governor Cuomo on March 20, 2020, which initially suspended all evictions of residential tenants and commercial tenants in New York for a period of 90 days. In addition, New York courts have temporarily suspended new eviction cases from being filed until at least July 6, 2020.

Prior to the Act, a residential tenant who was unable to pay rent during the COVID-19 crisis could potentially be evicted for non-payment as soon as the eviction moratorium under the Executive Order ended. Now, as a result of the Act, a court can never use unpaid rent that accrued during the COVID Period as the basis for a non-payment eviction of a financially-burdened tenant. A tenant may raise financial hardship during the COVID Period as a defense in a summary proceeding under Article 7 of the New York real property actions and proceedings law. Unlike the Executive Order, the Act only applies to residential tenants and not commercial tenants.

The Act could also make it easier for tenants to prove that they suffered financial hardship during the COVID Period than under the Executive Order, which only applies to tenants experiencing hardship caused by the coronavirus. The Act requires that in determining whether or not a tenant suffered financial hardship during the COVID Period, the court must consider, among other relevant factors: (i) the tenant’s income prior to the COVID Period, (ii) the tenant’s income during the COVID Period, (iii) the tenant’s liquid assets, and (iv) the tenant’s eligibility for, and receipt of, cash assistance, supplemental nutrition assistance program, supplemental security income, the New York State disability program, the home energy assistance program, or unemployment insurance or benefits under state or federal law.

Notwithstanding the foregoing, a court can, however, impose a money judgment against a tenant for unpaid rent accrued during the COVID Period. Thus, the Act does not waive or abate rents, but rather it allows residential tenants who are facing financial hardships during the pandemic to remain safely in their homes and have some more time to pay back rent owed. A consequence of the Act may be to facilitate negotiations between landlords and tenants for the payment of rent once the state-mandated eviction moratorium ends on August 20, 2020.

According to a study by the NYU Furman Center for Real Estate and Urban Policy, an estimated 1,156,800 renter households in New York State have at least one worker who lost a job due to COVID-19. Of those households, an estimated 327,000 workers have lost their jobs but are not claiming unemployment insurance benefits. In response to this health and economic crisis, residential tenants in New York have been afforded additional protections by the Executive Order, in addition to the eviction moratorium. In accordance with the Executive Order, landlords and tenants of residential properties may, upon the consent of the tenant, enter into a written agreement by which the tenant’s security deposit, and any interest accrued thereof, shall be used to pay rent that is in arrears or will become due. Landlords are required to provide such relief to tenants who so request it if such tenant is either eligible for unemployment insurance or benefits under state or federal law or is otherwise facing financial hardship due to the COVID-19 pandemic. The Executive Order requires that it shall be at the tenant’s discretion to enter into any such agreement, and landlords shall neither harass, threaten, nor engage in any harmful act to compel such agreement. Any security deposit used as a payment of rent shall be replenished by the tenant, to be paid at the rate of 1/12 the amount used as rent per month, and the payments to replenish the security deposit shall become payable no less than 90 days from the date of the use of the security deposit as rent. The tenant may, at tenant’s sole option, retain insurance that provides relief for the landlord in lieu of the monthly security deposit replenishment. In addition, landlords may not demand, and are not entitled to, any late payment fee or charge for late payment of rent occurring during the time period from March 20, 2020, through August 20, 2020. The federal Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES) Act, passed by the House and currently stalled in the Senate, would also provide financial rental assistance to many COVID-affected residential renters if it passes in Congress, which would also benefit landlords.

Governor Cuomo signed Executive Order 202.8 on March 20, 2020, which initially established a 90-day stay on evictions and foreclosures, among other measures designed to prevent the transmission of COVID-19 and provide protections for affected residents.

On May 7, 2020, Governor Cuomo announced that the moratorium on evictions of commercial and residential tenants facing financial hardship due to COVID-19 will be extended by an additional 60 days through August 20.

In addition to extending the moratorium, the state will ban fees for late rent payments and will allow commercial and residential tenants to apply their security deposits as payment. Any tenants who use their security deposits will be required to repay them over time.

The Rent Stabilization Association, which represents owners of rent-regulated apartments, has called for financial assistance for landlords whose tenants are not paying rent. The governor has acknowledged the challenges that landlords would experience as a result of the moratorium and has indicated that the state is working on the issue but has not yet announced any details.