On September 2, 2021, New York's governor signed legislation (S.50001/A.40001) imposing a modified eviction and foreclosure moratorium to extend relief to tenants and property owners suffering economic distress from the ongoing COVID-19 pandemic. The new law largely reinstates New York's previous moratoriums targeting both residential and commercial properties while introducing a process for landlords and lenders to challenge a respondent's self-declared financial hardship.

To combat the spread of COVID-19 and mitigate the pandemic's economic damage, New York instituted (among other initiatives):

Each act required a landlord or lender to provide a hardship declaration with notice provisions to an affected tenant (before an eviction) or an owner or mortgagor (before a foreclosure). The respondent's certification that it had a designated COVID-19-related hardship prevented the landlord from bringing an eviction action based on nonpayment of rent or holdover, or the lender from beginning a foreclosure, until the deadline set by the legislature. Any pending proceedings were similarly stayed. The declaration created a rebuttable presumption that the respondent had in fact suffered a financial hardship.

To obtain relief, the respondent had to specifically assert under:

A group of landlords sought injunctive relief to bar enforcement of CEEFPA and related state executive orders. After a federal district court rejected their claims, the US Supreme Court granted the plaintiffs' emergency application and enjoined CEEFPA's hardship declaration provisions on due process grounds (Chrysafis v. Marks, (Aug. 12, 2021)). The stay period under both CEEFPA and CEPOSBA expired on August 31, 2021. For more details on CEEFPA's requirements and the Chrysafis decision, see Legal Update, Supreme Court Partially Enjoins Enforcement of New York's Residential Eviction Moratorium.

The new moratorium combines and preserves most of CEEFPA's and CEPOSBA's terms while extending the stay for qualifying respondents until January 15, 2022. To resolve the due process concerns raised in Chrysafis, the legislation expressly authorizes landlords and lenders to file a motion and request a hearing to challenge a hardship declaration. The landlord or lender must attest in good faith that the respondent's hardship is invalid. If the court agrees, the parties continue to a determination on the merits. If the court finds the hardship to be genuine, it must not only grant a stay but also direct the respondent to apply to the state's COVID-19 Emergency Rental Assistance Program or a local equivalent. The hardship declaration accordingly no longer notifies respondents that they have an absolute right to a postponement.

Although the moratorium's residential protections remain broad, they continue to omit:

A commercial tenant, owner, or mortgagor still qualifies for relief only if it:

As before, a tenant (residential or commercial) cannot obtain a stay if it causes a nuisance or creates a substantial safety hazard to others. The new legislation also excludes tenants that intentionally inflict significant damage to their properties.

New York's moratorium is one of several current measures to assist the state's tenants and homeowners in dealing with the COVID-19 crisis (see Legal Update, Supreme Court Partially Enjoins Enforcement of New York's Residential Eviction Moratorium). Many initiatives to provide eviction and foreclosure relief have faced strong pushback from landlords and lenders. The new program's relatively short duration and due process safeguards do not insulate it from challenge. There are already reports of efforts to block the law, including on the basis that landlords and lenders still maintain the burden of proving the invalidity of a respondent's hardship.

Counsel must continue to monitor developments at the federal, state, and local levels as the pandemic progresses and authorities' mitigation efforts evolve. For information on relevant moratoriums in select states, see:

For a continuously updated collection of real estate resources addressing COVID-19, see Practical Law's Real Estate Global Coronavirus Toolkit.