During a press conference on May 7, 2020, Governor Andrew Cuomo announced that the moratorium on evictions, which was originally set to expire on June 20th, would be extended through August 20, 2020.

We previously posted at length about Executive Order 202.8, which provided that, beginning on March 22, 2020 at 8:00 p.m., “there shall be no enforcement of either an eviction of any tenant residential or commercial, or a foreclosure of any residential or commercial property for a period of ninety days.” Executive Order 202.28, released late this evening, similarly provides that “there shall be no initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent or a foreclosure of any residential or commercial mortgage, for nonpayment of such mortgage, owned or rented by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20, 2020.”

This directive opens the door to evictions ever so slightly. While the moratorium in place until June 20th bars all evictions, the Governor’s new executive order appears to permit evictions as against tenants who are not experiencing financial hardship. The distinction is important, as it suggests that evictions may proceed against fiscally stable tenants who have not been paying rent over the last several months simply because they knew their landlords’ hands were tied. Of course, commencing a proceeding against such a tenant would also require the courts to allow the filing of new cases, which has yet to happen.

To be sure, there will eventually be litigation over whether tenants have suffered the type of financial hardship that would prohibit an eviction. Landlords should tread lightly, as there may be consequences for one who commences an eviction proceeding when it knew it or should have known that a tenant was adversely impacted by the pandemic.

The latest Executive Order also addresses the use of security deposits towards existing rent obligations. It provides that, upon the consent of the tenant, a landlord and tenant may agree in writing to apply the tenant’s security deposit and any accrued interest on that deposit to satisfy back rent or rent that will become due. If the amount of the deposit is less than a full month’s rent, the landlord retains its right to the remaining rent due and owing for that month. A tenant who consents to this arrangement must replenish the security deposit by making equal monthly payments for twelve months, beginning no later than 90 days after the security deposit is applied to the tenant’s rent. Alternatively, a tenant may, at its option, procure insurance to protect the landlord in lieu of replenishing its security deposit.

Landlords are required to agree to the use of a security deposit to satisfy rent obligations if requested by a tenant that is eligible for unemployment under state or federal law, or is otherwise facing hardship due to the COVID-19 pandemic. Landlords are also required to accept insurance in lieu of security deposit replenishment if that is what the tenant wants. However, landlords are not allowed to harass or threaten a tenant to coerce it to enter into this type of agreement.

Executive Order 202.28 also addresses the assessment of fees for rent paid late. It provides that no landlord may charge late fees for late rent payments between March 20, 2020 and August 20, 2020.

Governor Cuomo’s most recent order will provide temporary relief to many residential and commercial tenants during these uncertain times, while simultaneously adding to the strain landlords are enduring. As discussed in our prior post, both landlords and tenants can benefit from reaching a private resolution now rather than waiting to litigate later.

If you have any questions, please contact Samantha Guido at sguido@jaspanllp.com, Marci Zinn at mzinn@jaspanllp.com or Steven Schlesinger at sschlesinger@jaspanllp.com