State of New York Update – Extension of Stay on New York Foreclosures Following Passage of the Covid-19 Emergency Eviction and Foreclosure Prevention Act and Covid-19 Protect Your Small Businesses Act of 2021

On May 3, 2021, New York passed an extension to the Covid-19 Emergency Eviction and Foreclosure Prevention Act and Covid-19 Protect Your Small Businesses Act of 2021 (“the Acts”).

The Acts extended the New York moratorium from May 1, 2021, to August 31, 2021, effective immediately. The Acts pertain to evictions, residential foreclosures, and commercial foreclosures.

Evictions: Where a tenant submits a Hardship Declaration, a new eviction proceeding cannot be initiated until at least August 31, 2021. Additionally, in any pending proceeding where a warrant has not been issued, if the tenant provides a Hardship Declaration, the eviction proceeding shall be stayed until at least August 31, 2021. No Court shall issue a default judgment authorizing a warrant to enforce an eviction without first holding a hearing upon motion of the petitioner. The petitioner must provide notice to the tenant of the motion to hold a hearing.

In actions where a default judgment was issued, the default will be vacated upon the tenant’s oral or written request before or during the hearing before the Court. Eviction warrants previously issued shall be stayed until the Court holds a status conference with all parties.

Residential Foreclosures: Where an owner/mortgagor submits a Hardship Declaration, a new foreclosure proceeding cannot be initiated until at least August 31, 2021. Additionally, in any pending foreclosure, where the owner/mortgagor submits a Hardship Declaration, or previously submitted one, the foreclosure is stayed until at least August 31, 2021.

In actions where judgment of sale has been issued but not yet executed, the execution of the judgment shall be stayed at least until the Court has held a status conference with the parties. However, if the owner/mortgagor submits a Hardship Declaration prior to the execution of the judgment, the action shall be stayed until at least August 31, 2021.

As with the original legislation, the extension also requires the foreclosing party to promptly file the Hardship Declaration with the Court, provided it receives one from the owner/mortgagor.

New York Foreclosures will continue to:

  • Apply to mortgagors/owners who are a natural person that resides in the property subject to the foreclosure.
  • As a result of the stay imposed by the submission of a hardship declaration, the Act provides for an extension of the statute of limitations, stating that “any specific time limit for the commencement of an action to foreclose a mortgage shall be tolled until August 31, 2021.”
  • In order to proceed with a new action, following any applicable stay under the Act, the foreclosing party must still file an affidavit of service demonstrating that the mortgagor/owner was served with a copy of the hardship declaration and was not returned at the time of commencing the action.

Commercial Foreclosures: Where a mortgagor submits a Hardship Declaration, a new foreclosure proceeding cannot be initiated until at least August 31, 2021. Additionally, in any pending commercial foreclosure, where the mortgagor submits a Hardship Declaration, the foreclosure is stayed until at least August 31, 2021. In actions where judgment of sale has been issued but not entered, the execution of the judgment shall be stayed at least until the Court has held a status conference with the parties.

Unlike the original legislation, which was comprised of separate bills for residential and commercial matters, the extension applies to residential and commercial properties at the same time. In addition, it should be noted that while the original Covid-19 Emergency Eviction and Foreclosure Prevention Act created a sixty (60) day automatic stay, no such hold is imposed by the extension. Accordingly, timely mailing of the Hardship Declaration forms as well as monitoring for receipt of any forms completed by the owner/mortgagor will be critical in resolving any pending defaults. Thus, for any pending case or future action where the owner/mortgagor was not yet sent a Hardship Declaration form, we would recommend doing so as soon as possible.

Click here to view the State of New York In Senate session discussion