NY Bill Would Cancel Rent, Mortgages For Virus Plus 90 Days

By Emma Whitford
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Law360 (July 13, 2020, 9:19 AM EDT) -- New York legislators on Friday announced a bill to cancel residential rent and certain mortgage payments across the state, the latest such effort backed by tenant advocacy groups after an earlier rent cancelation bill faltered this spring.

The so-called Rent and Mortgage Cancellation Act of 2020, introduced by Assemblywoman Yuh-Line Niou, D-Chinatown, and Sen. Julia Salazar, D-Bushwick, would cancel residential rent payments accrued between March 7 and the end of New York's ongoing state of emergency, plus an additional 90 days.

Unlike prior efforts, the bill does not place hardship qualifications on the cancellation of rent. Homeowners who live in buildings with six or fewer units would not be responsible for mortgage payments during that same window.

"Housing is health care," said Assemblywoman Niou during a virtual press conference Friday morning. "This act will be crucial to preventing a wave of evictions."

The bill also prohibits typical consequences for the nonpayment of rent, such as eviction, fines or money judgments.

"The nonpayment of rent by a tenant ... shall not be grounds for any termination of tenancy or eviction proceeding or civil judgment," the bill states. "No tenant or tenant household may be treated as accruing any debt by reason of suspension of rent under this section."

Nonpayment of rent or mortgages would not harm a person's credit score, according to the bill.

In an apparent effort to appease landlords, the new bill would also establish a so-called "landlord relief fund," to be administered by the state commissioner of Housing and Community Renewal.

Landlords and public housing authorities could be reimbursed for "all rent payments canceled," according to the bill text.

But reimbursement would be contingent on a five-year freeze on rent increases for tenants, and a commitment not to evict tenants without good cause, such as illegal occupancy, valid nuisance claims or a lease violation.

"The landlord can decide: Do they want that money, or not?" said Cea Weaver, an organizer with the statewide tenant coalition Housing Justice for All, which helped draft the bill. "It comes with these protections."

Landlords could seek an exemption for "undue financial hardship," according to the bill.

Friday's legislation also stipulates fines for landlords or mortgagees who take "adverse action" against tenants and small homeowners, from $10,000 for a first violation, up to $100,000 or forfeiture of the property for a third violation.

Landlord attorneys and trade groups expressed early consternation about the bill.

"I think it is beyond unconstitutional," said Meryl L. Wenig of Wenig Saltiel LLP, raising possible violations of the contracts clause.

Joseph Condon, general counsel for the Community Housing Improvement Program, a landlord trade group in New York City, predicted that "no small building owner in this city could survive losing months of rent on a token promise of relief or compensation at some date in the future."

James Whelan, president of the Real Estate Board of New York, said that, "unlike this bill, we support responsible, balanced policy ... and will continue to advocate for federal aid and rental assistance for the city and state."

The new legislation would require substantial government funding. Gov. Andrew Cuomo so far has not entertained legislative efforts to raise taxes on billionaires in the state.

"We think it's really important that the state find money to stabilize people's homes," Weaver told Law360, adding that federal funding is needed as well — potentially in the form of the long-shot $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act.

Friday's announcement comes on the heels of Office of Court Administration guidance that extended a pause on evictions and most related cases. But on Thursday the courts announced that Brooklyn will begin hosting pre-pandemic trials, including eviction cases, later this month.

Another new bill, introduced by state Sen. Zellnor Myrie, D-Flatbush, would impact commercial tenants as well as residential tenants. It would prohibit evictions, new case filings and money judgments for a full year after the state lifts its final pandemic-related restrictions.

An estimated 1.15 million New York State renter households have at least one member who lost their job due to the coronavirus, according to a recent NYU Furman Center analysis. An extra $600 per week in federal unemployment insurance is set to expire at the end of the month.

Gov. Cuomo's office did not immediately respond to a request for comment. 

--Additional reporting by Emily Brill. 

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