Commercial tenants won't face eviction until 2021 if they are unable to pay their rent, New York Gov. Cuomo announces - bringing more pain for landlords
Businesses struggling due to lockdowns and social distancing rules can stay in their buildings until at least the end of this year, Cuomo announced Tuesday as a month-long extension of the original order – which expired September 20 – was due to run out.
It gives renters and mortgagors more time to catch up on payments or to renegotiate their lease terms to avoid foreclosure in the future.
However if landlords paying mortgages renegotiate a deal with the tenant that is lower than the minimum rent amount, they could end up defaulting and their property could be reclaimed by the bank.
Now, like a moratorium for residential tenants, landlords will not be able to kick out those who are unable to pay rent due to issues related to the COVID-19 outbreak until at least January 1, 2021.
'The health and economic impacts of this pandemic have been devastating, and we are continuing to do everything we can to support people who are suffering,' Cuomo said Tuesday.
'We are going to extend the commercial eviction and foreclosure moratorium through January 1. That will now align with our residential eviction moratorium so they are both extended to the same date.'
Nataly Goldstein, an attorney at New York's Pardalis & Nohavicka, told DailyMail.com that landlords could find some recourse as a personal guarantee on commercial leases that was set to expire September 30 doesn't appear to have been extended.
While a struggling business could liquidate their assets, a perhaps smaller business linked to an individual may have their banks accounts and assets on the line should it lead to legal action.
However Goldstein said Tuesday that 'landlords are realizing it's time to work things out' with tenants as its unclear how long the pandemic will last.
Goldstein - who represents some smaller commercial businesses and restaurants, as well as chains with locations across the country - commented that larger businesses seem to want to work out a deal to leave contracts on agreed terms because operations are doing well without brick and mortar locations.
On the other hand, smaller businesses are hopeful that negotiating a better deal now could pay off later on.
'It's beneficial to anyone entering a lease now as landlords are struggling to make ends meet.'Nataly Goldstein | Dailymail
However she observed businesses are reluctant to snap up a good deal due to no clarity on when the economy will pick up.
On Monday, Crain's reported that Equinox gym was behind about $1.3million on rent payments at it's Manhattan West Village location. Gyms have been one of the last venues allowed to reopen in NYC.
Landlords, most of whom are mom-and-pop operators with mortgages to pay, say they, too, are under unprecedented financial strain, as many move into the eighth month of nonpayment.
Many owners are 'not generating sufficient revenue,' Bob Pinnegar, CEO of the National Apartment Association told Reuters on Monday.
'This is not a high-profit-margin business,' he continued. 'Only 9 cents of every dollar return to the owner or investor as profit.'
On September 1, the CDC announced the suspension of residential evictions for not all but many renters across the United States until next year to help stem further spread of the novel coronavirus.
At that point, an estimated $32 billion in back rent will come due, with up to 8 million tenants facing eviction filings, according to a tracking tool developed by the global advisory firm Stout Risius and Ross, which works with the nonprofit National Coalition for a Civil Right to Counsel.
The nonprofit group advocates for tenants in eviction court to secure lawyers.
In a typical year, 3.6 million people face eviction cases, according to the Princeton University Eviction Lab, a national housing research center.
Cuomo granted residential tenants more relief on September 28 to protect people suffering financial hardship during the public health emergency.
The governor announced protections for residential and commercial tenants on March 20, with an executive order against eviction and foreclosure lasting 90 days.
On June 30, he signed the Tenant Safe Harbor Act which became effective immediately.
The order lasts as long as the crisis lasts, according to Cuomo. Currently New York State has one of the lowest 7-day rolling coronavirus positivity rates in the country at 1.17 percent.
The protections come alongside legislation providing financial assistance to both renters and landlords. However it may not be much help to commercial landlords who remain under pressure as the state relies on businesses to help boost the economy.
In May, Vornado said 80 percent of its retail tenants failed to pay rent in April and May as well as 40 percent of its office tenants. Vornado collected 53 percent of its retail rent but did not give numbers for office rents.
SL Green, another commercial giant, said it collected more than 90 percent but only around 65 percent of retail rent in May.
Empire Realty Trust collected 73 percent of its rent owed from office tenants in April. The company didn't specify whether it meant some companies didn't pay any rent at all or if its tenants only paid partially.
The company boosted its income to 93 percent by using some security deposits to make up the income. Cuomo has said that residential tenants can dip into deposits now and that over time the tenant should contribute more to pay it back.
Cuomo's Executive Order for residential tenants from last month extends the protections of the Tenant Safe Harbor Act to eviction warrants that existed prior to the start of the pandemic.
'Chapter 127 of the laws of 2020 is modified to the extent necessary to prevent, for any residential tenant suffering financial hardship during the COVID-19 state disaster emergency declared by Executive Order 202, the execution or enforcement of such judgment or warrant,' the executive order reads.
It adds: 'Including those cases where a judgment or warrant of eviction for a residential property was granted prior to March 7, 2020, through January 1, 2021.'
In August dozens of people marched through Brooklyn to protest the impending expiration of a previous order as 14,000 families risked being homeless, according to Legal Aid Society.
At the time he said he will keep extending it for as long as the coronavirus pandemic continues to ravage the livelihoods of New Yorkers.
'Until when? Until I say COVID is over,' he said.
The moratorium puts these proceedings on hold but, once expired, these can be carried out.
Even tenants protected by the Tenant Safe Harbor Act could be taken to court by their landlords to recover missed rent payments however the executive order could help the tenant fight the case.
Across the country more than 60,000 evictions have been filed since the pandemic started in the 17 cities tracked by the Princeton Lab.
Unless Congress and the Trump administration move past their deadlock over the contours of a new COVID-19 relief package and include financial relief for tenants and landlords, January will bring a surge in displacement and homelessness 'unlike anything we have ever seen,' said John Pollock, a Public Justice Center attorney and coordinator of the National Coalition for a Civil Right to Counsel.
The Democrat-controlled House passed a relief package that included $50 billion in emergency renter and homeowner assistance funds and a new ban on evictions and foreclosures for 12 months; the Republican-controlled Senate's proposal contains no similar provisions.
Health experts say evictions may contribute to a second-wave COVID-19 crisis, as the newly homeless are forced into shelters or tight quarters with friends and relatives, potentially exposing them to infection. The danger is particularly acute in the winter, when colder weather pushes people indoors.
The push for a right to counsel for tenants in eviction court is a relatively new movement, starting with 2014 legislation in New York City.
Since New York proposed its law six years ago, evictions in the city have fallen by more than 40 percent, according to an official announcement earlier this year, while nearly 85 percent of those who do go to eviction court end up staying in their homes, John Pollock, coordinator of the National Coalition for a Civil Right to Counsel, told Reuters.
Original article on Dailymail