Press ReleaseGovernor Andrew M. Cuomo this week signed the COVID-19 Emergency Protect Our Small Business Act of 2021 (S471A/A3207) (the “Act”), which will impact commercial landlords, tenants, mortgagors, and mortgagees. Among other things, the Act provides through legislation certain of the eviction and foreclosure relief previously afforded by a series of executive orders issued by Governor Cuomo since the COVID pandemic began.
What Types of Actions Are Covered by the Act[1]
- Eviction proceedings against a commercial tenant that employs fifty or fewer persons;
- Any action to foreclose a mortgage related to commercial real property, provided the owner of such property directly or indirectly owns ten or fewer commercial units and employs fifty or fewer persons. The ten or fewer commercial units may be in more than one property or building as long as the total aggregate number of ten units are currently occupied by a tenant or are available for rent.
How Are These Actions Affected by the Act
Eviction Proceedings covered by the Act:
- No self-help. No commercial tenant shall be removed from possession prior to May 1, 2021, except by an eviction proceeding.
- Pending eviction proceeding. Any eviction proceeding pending on the effective date of the Act or commenced within thirty days of the effective date of the Act shall be stayed for at least 60 days. Whether or not an eviction warrant or judgment of possession has been issued, if the tenant provides a hardship declaration (the text of which is set forth in the Act), the eviction proceeding shall be stayed until at least May 1, 2021.
- Pre-eviction notice. A landlord shall include a hardship declaration with every written notice required by the parties’ agreement, law or rule to be provided prior to the commencement of an eviction proceeding, and with every notice of petition or summons and complaint served on a tenant. Such notice shall also include the landlord’s contact information.
- Prohibition on initiation of eviction proceeding. If there is no pending eviction proceeding and a tenant provides a hardship declaration to the landlord, there shall be no initiation of an eviction proceeding against the tenant until at least May 1, 2021.
- Post warrant of eviction. Where an eviction warrant or judgment of possession or ejectment has been issued prior to the effective date of the Act, but has not yet been executed as of the effective date, (a) the court shall stay the execution of the warrant or judgment until the court has held a status conference with the parties; and (b) such warrant or execution shall not be effective as against the occupants unless, in addition to other requirements under law, such warrant or execution contains various statements required by the Act.
- Act not otherwise applicable. Certain sections of the Act may not be applicable if the tenant is persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others.
Foreclosure Actions covered by the Act:
- Pending foreclosure actions. Any action to foreclose a mortgage pending on the effective date of the Act, or commenced within thirty days of the effective date of the Act, shall be stayed for at least sixty days. Whether or not a judgment of foreclosure and sale has been issued, if the mortgagor provides a hardship declaration, the foreclosure action shall be stayed until at least May 1, 2021.
- Pre-action notice. The foreclosing party shall include a hardship declaration (the text of which is set forth in the Act) with every notice required provided to a mortgagor prior to filing an action for foreclosure. Such notice shall also include the landlord’s contact information.
- Prohibition on initiation of foreclosure action. If a mortgagor provides a hardship declaration to the foreclosing party there shall be no initiation of an action to foreclose a mortgage against the mortgagor until at least May 1, 2021.
- Post judgment of foreclosure and sale. Where a judgment of foreclosure and sale has been issued prior to the effective date of the Act, but has not yet been executed as of the effective date, (a) the court shall stay the execution of the judgment until the court has held a status conference with the parties.
- Act not otherwise applicable. The Act does not apply to a corporate governmental agency of the state constituted as a political subdivision and public benefit corporation.
What does this mean for you and your business? Farrell Fritz has analyzed the legislation and what clients need to do to navigate the path forward. If you feel you’re impacted by this legislation or have questions, feel free to contact Darren A. Pascarella or Patrick Collins to discuss your situation.
[1] Although not discussed herein, the Act also applies to (i) certain actions to foreclose on delinquent taxes or sell a tax lien relating to commercial real property; and (ii) discrimination in credit decisions and credit reporting by lending institutions.
