GOVERNOR CUOMO'S MORATORIUM IS A FARCE

In response to the COVID-19 pandemic, New York State Governor Andrew Cuomo imposed a moratorium on residential and commercial evictions.[1] While providing temporary relief to tenants (and avoiding the catastrophic consequences of displacing people from their homes and businesses during the course of a public-health crisis), the standstill is far from a solution.

Even though dispossess proceedings cannot be commenced, or warrants of eviction executed, landlords are arguably free to serve default notices and can terminate tenancies so that evictions can be sought immediately after all stays are lifted.[2] And notwithstanding that his order further provides relief from late-payment penalties and permits security deposits to be applied to unpaid rent,[3] such measures only delay the inevitable.

With business closures and a pandemic-driven rise in unemployment as a backdrop,[4] months of rents payments continue to accrue and, absent legislative intervention, such monies will be collectible upon moratorium's expiration; with many likely facing the very real possibility of displacement. Indeed, when the city of New Orleans, Louisiana, imposed an eviction moratorium in the wake of hurricanes Katrina and Rita back in 2005, the number of dispossess proceedings skyrocketed upon that order's lifting. The courts were deluged with approximately 700 eviction applications in the first 10 days, alone.[5]

New York City is likely to face a significantly worse influx. The population of New York City is orders of magnitude larger than that of New Orleans – approximately 8.3 million[6] to 484,674, pre-Katrina.[7] Self-help options for Louisianan landlords are far more permissive than those in New York, [8] so many around the Mississippi River were able to recover their property extra-judicially, particularly since a large number of tenants fled as swaths of that city were rendered uninhabitable. And even though the Big Apple saw an exodus of residents, such flight has been concentrated in the wealthier areas where evictions based on nonpayment of rent are less likely to be an issue.[9]

Unquestionably, a rash of eviction proceedings can be anticipated. Predicting the outcome of those cases is another matter.  It is not clear whether New York State and/or city governments will issue any form relief to tenants. Governor Cuomo has repeatedly indicated that some action will be taken before the moratorium’s expiration,[10] but he has provided no details on what such a package might contain and has, instead, indicated that he would not sign a “rent-forgiveness” bill into law, which refusal has resulted in the latter concept being tabled by the legislature, for the time being.[11]

State Senator Michael Gianaris has introduced a bill which would limit rent liability to certain economically-impacted tenants to 30% of their income or contractual rent, whichever is less.[12] That bill would further create a COVID “rental assistance fund” to be funded by, among other sources, federal COVID relief funds.[13] Another proposal, dubbed the “Tenant Safe Harbor Act” would prohibit evictions for nonpayment of rent during the pendency of the COVID pandemic and for six months after its end.[14] To date, no comprehensive plan has been enacted.

Absent legislative relief, tenants may find sympathy in the courts. Historically, judges were extremely reluctant to “read into” lease terms or to modify clearly delineated contractual rights and obligations. But times have changed. And it is uncertain how their equitable powers will be exercised in this most challenging economic environment. They will also likely use their discretion to “nudge” landlords into agreeing to lenient payment plans – arrangements that would not have previously been available. Alternatively, courts could issue possessory judgments, but stay evictions for a protracted period, particularly for those tenants facing COVID-19 related financial hardship,[15] in order to afford them additional time to pay off those arrears and stave off eviction altogether.

Notwithstanding all that uncertainty, one thing is clear.  Albany needs to act with due dispatch to prevent a “tidal wave” of evictions that would have disastrous implications for a countless number of commercial and residential tenants of our great City and State. And that time is, most certainly, now.