New York eviction and foreclosure moratoria update

On May 5, 2021, New York State Governor Andrew Cuomo signed Senate Bill S6362 (the Extension), which extends the COVID-19 Emergency Protect Our Small Businesses Act of 2021 until August 31, 2021 (the Act).[1] As we advised in our March 15, 2021 alert, the act supplanted Governor Cuomo’s blanket executive orders prohibiting the filing of all foreclosure and eviction possessory actions in the state with more limited restrictions, keeping in place protections against New York-based small business borrowers and commercial tenants. 

The Extension further extends the moratorium on foreclosures and evictions against qualifying New York commercial tenants and borrowers, which expired under the Act on May 1. Legislators are hoping that the four-month Extension will provide the state enough time to distribute funds allotted under the COVID-19 Emergency Rental Assistance Program, which authorizes spending of over $2.4 billion to provide rental and utility assistance for qualified households, as well as an additional $600 million allocated for the Homeowner Relief and Protection Program and $1 billion set aside to assist small businesses.[2] They believe this assistance will help avoid a wave of evictions and foreclosures expected in the wake of the COVID-19 pandemic.

The Extension amends the Act solely in terms of the expiration date and leaves all of the protections intact, including those that:

• Allow commercial tenants that are residents of the state, independently owned and operated, not dominant in their field and employ 50 or fewer persons to file a hardship declaration to prevent the filing of any eviction or stay any eviction proceeding in progress
• Allow mortgagors for properties where the owner or mortgagor owns ten or fewer commercial units, is a business that is resident of the state, is independently owned and operated, is not dominant in its field and employs 50 or fewer persons to file a hardship declaration with their mortgage lender, other foreclosing party or the court to prevent the filing of a foreclosure action or stay any foreclosure action in progress and
• Allow an eligible commercial property owner to file a hardship declaration with any village, town, city, school district, county or other entity or person that conducts tax foreclosures or tax lien sales to stay such foreclosure or lien sale.[3]

In addition to the Extension, the New York State Senate and Assembly have both passed parallel bills (Senate Bill S5742 and Assembly Bill A7127) which would expand the protections offered under the Act to a greater number of small businesses.[4] As currently in effect, the Act protects businesses with up to 50 employees by allowing them to submit a hardship declaration. S5742, which is waiting for Governor Cuomo’s signature, would expand the protections to small businesses with up to 100 employees, or businesses with up to 500 employees if the business was shut down for a 2-week period between May 15, 2020 and May 1, 2021.[5] This bill has not yet been signed into law. We will provide an additional update and guidance should Governor Cuomo sign the bill.