What New York Landlords and Property Managers Need to Know as April Rent Comes Due

4 min

April rents are now due, and the big question on everyone's mind is whether, and how many, tenants will pay their rent. Here is what landlords and property managers in New York need to know to formulate their business strategy.

Moratorium on Evictions

  • By executive order, Governor Cuomo has ordered a 90-day moratorium on evictions for residential and commercial tenants. This moratorium became effective on March 20 and expires on June 20.
  • The moratorium blocks the filing of new nonpayment or eviction cases until April 19. New York landlords will have the option to file new cases on April 19, but these new cases will be temporarily adjourned until June 20. The moratorium does not stop landlords from issuing rent reminders or notices of default.
  • Pending eviction cases are stayed until further notice. However, the courts are open for vital housing court functions, such as proceedings for landlord lockouts, repair orders, and serious code violations.

General Considerations

Tenant Access to Capital
  • CARES Act. As a result of Congress's passage of the CARES Act and other national and state stimuli, some tenants, large and small, will have access to funds. A portion of the funds can be used to pay rent without jeopardizing their ability to obtain loan forgiveness. We recommend that landlords and property managers distribute information regarding national and local programs to tenants.
  • Small Business Administration Loans. The CARES Act significantly relaxed the normal conditions and procedures for small businesses (under 500 employees) to obtain loans from banks and non-bank lenders that are authorized to make Small Business Administration (SBA) loans. More information can be found here.
  • New York Economic Relief. Small Businesses in New York are eligible for two loan programs provided by the U.S. Small Business Administration. The two loan programs are the SBA Paycheck Protection Program and SBA Economic Injury Disaster Loan Program. More information can be found here and here.
    • New York City
      • The City will provide the NYC Small Business Continuity Fund for small businesses across the City seeing a reduction in revenue because of COVID-19. The program applies for businesses with fewer than 100 employees that have seen sale decreases of 25% or more. These small businesses will be eligible for zero-interest loans of up to $75,000. More information can be found here.
      • Small businesses with fewer than 5 employees are eligible for a grant to cover 40% of payroll costs for two months to help retain employees.
      • Additional planning resources for business continuity and business pandemic response can be found here and here.
Bankruptcy and Lease Termination
  • If a tenant is likely to file for bankruptcy, and for business reasons a landlord desires to end its relationship with the tenant, consult an attorney about whether a termination agreement would be in the landlord's best interests. A termination agreement does not have to provide for forgiveness of rent or liability for future rent, but it can resolve whether the tenant has a right of possession and in certain circumstances could expedite a landlord's recovery of possession of the premises.
  • If a tenant wants to hand over the keys, there may be unintended consequences for the landlord, and we urge you to consult an attorney before accepting the keys from a tenant.
  • If the tenant has already filed for bankruptcy, the automatic stay is in place, and a landlord should take no action before consulting an attorney.
Loan Relief
  • New York. On March 21, Governor Cuomo issued an executive order to suspend mortgage payments for 90 days, based on financial hardship as a result of the pandemic. More information can be found here.
  • Multifamily Properties. For mortgages of multifamily properties backed by Fannie Mae and Freddie Mac, property owners are offered mortgage forbearance on the condition that they suspend all evictions for renters unable to pay rent due to the coronavirus.
  • Other Properties. As of this writing, there are no other national relief programs for landlords who have mortgage obligations even as they are not receiving rent. States are starting to impose moratoriums on loan enforcement, and industry associations are pressuring for more relief. We are monitoring developments and will update you.