New York Extends Pandemic-Era Eviction Freeze to Jan. 15

(Bloomberg) -- New York lawmakers extended the state’s eviction and foreclosure freeze through Jan. 15, providing relief to renters, homeowners and small businesses that have struggled during the Covid-19 pandemic.

Newly appointed Governor Kathy Hochul called the state legislature into a rare extraordinary session on Wednesday to renew the ban on residential and commercial evictions and foreclosures, which ended on Aug. 31. The legislation increases the amount of hardship funds available to tenants and landlords to $250 million from $100 million and creates a $25 million fund for legal services for renters facing evictions.

“The pandemic has created unimaginable anxiety for families and business owners who have lost income and are struggling to pay the rent every month,” Hochul said in a statement Thursday. “To help remedy the Supreme Court’s heartless decisions striking down the New York and the Biden administration’s moratoriums on evictions, we are enacting a new moratorium on residential and commercial evictions.” 

The legislation also aims to get around a U.S. Supreme Court ruling last week that struck down a federal rent relief program that would have protected most New Yorkers who couldn’t pay their rent until at least October. The ruling cited “irreparable harm” suffered by landlords and the lack of authority afforded to the U.S. Centers for Disease Control and Prevention to impose a rental moratorium under a decades-old federal law.

To comply with the ruling, New York’s legislation provides more relief funds for landlords and allows them to evict renters under certain circumstances. 

Hochul, a Democrat, signed the measures into law on Thursday morning after canceling a bill signing event so she could focus on the emergency response to flash floods across New York.

Different Style

Hochul’s close negotiations with the legislature indicate a willingness to work with lawmakers, setting a tone that contrasts that of her predecessor, Andrew Cuomo. Cuomo, who stepped down last week over sexual-harassment allegations, was known for holding the reins of power tightly and using coercive measures to push his legislative agenda.

“As Covid-19 continues to be a threat to the health and wellbeing of New Yorkers throughout the state, we are taking decisive, comprehensive steps to extend and strengthen the pillars of our legislative strategy to keep all New Yorkers safe,” state Senator Brian Kavanagh, who chairs the Committee on Housing, Construction and Community Development, said in a statement.

While housing advocates and Democratic lawmakers applauded Hochul’s efforts, her administration’s decision to rush legislation and begin the legislative session hours before the bill language was available received criticism from Republicans who said lawmakers didn’t have enough time to read the bills before voting -- a signature move of the Cuomo administration.

“Governor Hochul has expressed a desire to change how Albany does business,” Republican Assemblyman Ed Ra said in a statement Wednesday. “Her actions don’t match her words.”

A Renter’s Market

As many as 3.5 million U.S. households are behind on rent, with landlords owed as much as $17 billion, according to an analysis by Goldman Sachs Group Inc. 

In New York, which has the highest share of renter households in the nation, almost 156,000 households owe more than $1.4 billion in back rent, according to an August estimate from the Federal Reserve Bank of Philadelphia.

Like many other U.S. states, New York in December 2020 passed a law placing a moratorium on rental evictions and residential mortgage foreclosures for residents who lost their income or had increased costs during the pandemic, and for those for whom moving would pose a significant health risk. The legislation was extended through last month, but faced legal challenges by landlords and organizations such as the Rent Stabilization Association of New York City, the city’s largest trade group.

The Supreme Court on Aug. 12 sided with the landlords, striking down a portion of the state law that allowed tenants to self-certify to Covid-related income loss using a hardship declaration form. Then last week, the court struck down the federal moratorium.

To avoid running afoul of the court rulings, the bills passed by the state legislature on Wednesday include measures such as a so-called nuisance provision, which lets landlords start eviction proceedings against tenants if they have caused property damage or engaged in certain unreasonable or unlawful property use. The legislation also creates a process for landlords to challenge tenant’s hardship declarations in court and for banks and mortgage holders to challenge declarations submitted by property owners to avoid foreclosure. 

“Basically we are giving people their day in court,” Kavanagh, the state senator who sponsored the new legislation, said during the floor vote.

The Rent Stabilization Association of New York City’s President Joseph Strasburg on Wednesday said his organization of 25,000 landlords plans to file a motion with the Second Circuit Court of Appeals that will seek to block the bill’s enforcement.

“Albany lawmakers can’t decide which part of the Supreme Court order they follow and which part they ignore,” he said.

Expanding Programs

The legislation extends the state’s moratorium on residential foreclosures, the stay on evictions and foreclosures for small businesses experiencing pandemic hardship and the Tenant Safe Harbor Act, which says a court can’t use unpaid rent that accrued during the pandemic as a basis for an eviction. 

Passing the law gives New York more time to distribute federal emergency rental assistance funds, which it had been slow to release under the Cuomo administration. Those who apply for the state-run Covid-19 Emergency Rental Assistance are automatically protected from eviction while their application is pending, and once approved, they can’t be evicted for 12 months.

Approximately $1.2 billion of about $2 billion in federal rental assistance has been obligated or distributed, including more than $300 million in direct payments to more than 23,000 landlords, according to the governor’s office. The state received $2.6 billion from the federal government, but a portion goes to administration and outreach. 

Hochul said the state “failed in its responsibility” to get the funding out and pledged to prioritize its disbursement.

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