Residential Evictions in New York in the Time of COVID-19
Residential Evictions in New York in the Time of COVID-19
By: Kenneth J. Falcon, Esq. and Brice Wilkerson
The onset of COVID-19 in New York has created impossible financial situations for tenants, and resultingly, for landlords, many of whom are themselves family owned businesses with tight financial concerns and obligations of their own. Despite a landlord or tenant’s best efforts, it is inevitable that a landlord may need to remove a tenant from their rental property. In this article, we evaluate the pros and cons of different approach in the residential context of New York both under normal conditions and considering the special circumstances presented by COVID-19, including the increasing benefits of turning to “Cash for Keys.”
Most tenancies will terminate amicably without ever going to court.
Termination of a tenancy happens in three ways: first, a tenant may move on their own initiative with the expiration or termination of their lease; second, a tenant may be evicted and removed through a legal process; or third, a landlord and tenant may enter into an negotiation whereby the tenant agrees to move.
There are three common ways a tenancy may terminate without going to court: First, the lease can expire naturally with a tenant choosing to move out on their own (which is by far the most common and generally the mutually preferred outcome). Second, a landlord can opt for non-renewal – this usually results in the tenant moving out on their own (effectively resolving minor lease violations and nuisances). Third, a landlord may give notice to tenants for more serious lease violations. In New York, the available notices are generally a Fourteen-day Notice to Pay or Notice to Quit, a Notice to Cure, or a Notice of Termination. When provided with these notices, usually the tenant will do what the notice asks. Sometimes the tenant will instead choose to vacate. But what happens when the tenant does neither? Without some action on the part of the landlord, “waiting” in this case risks extending unwanted occupancy and damages.
Waiting for the tenant to move out is not viable after a notice has been ignored.
After a formal notice has been ignored, it is no longer likely the tenant will be responsive to natural lease expiration or non-renewal. To the contrary, the risk of escalation towards formal legal process (eviction) has likely grown because the tenant has now demonstrated that they cannot, or will not, move as the landlord (or law) requires. Merely hoping the tenant will move on their own at this point usually results in additional lost rents and increased damages. Additionally, negotiations to maintain the tenancy will become less viable as unpaid balances grow larger.
The next step after notices have been ignored should generally be to pursue eviction.
After serving requisite notice, a landlord can start the eviction process by preparing a Petition and Notice of Petition. (In New York, only landlords whose rental property is titled in their own individual name(s) may bring an action pro se – all others must retain legal counsel). The Petition is filed with the Clerk of the local District or City Court. After filing, the Clerk will set a court date. Next, the landlord must properly serve the tenant and deliver an affidavit of said service to the Clerk. Normally, the tenant can request an adjournment of up to fourteen days, may raise defenses, and may make other motions. Assuming the tenant is responsive and somewhat savvy; the tenant may be able to use procedural tools to delay the eviction process several months and require at least three court appearances. If a landlord is ultimately successful on the merits and obtains a judgment for eviction, the landlord will then need to work with a local Marshal, Sheriff, or Constable for service of Notice of Eviction and the eventual removal of the tenant from the rental property. In New York, the landlord is also required to hire movers to remove and store the tenant’s belongings.
While eviction under normal circumstances can be costly, it is preferable to “waiting.”
As described above, eviction can easily cost several months in lost rent, plus other expenses, while requiring considerable time and effort. The tenant will occupy the rental property while the eviction is pending, which makes repairs, renovations, and reletting more difficult while extending vacancy losses beyond the eviction process. A landlord may also wish to avoid eviction because of how disruptive the process is. Despite the high costs of eviction, and its highly disruptive nature, it is nevertheless an essential next step because it places a finite limit on losses and increases the landlord’s bargaining power in pursuing a potential settlement.
Filing for eviction is still a worthwhile next-step with respect to COVID-19 protections; however, following through with it is considerably more costly.
On March 20, 2020 Executive Order 202.8 was issued mandating “no enforcement of … eviction of any tenant …” and on May 7, 2020 Executive Order 202.28 extended the moratorium until August 20, 2020. On June 30, 2020, the Tenant Safe Harbor Act began permitting new Petitions and Judgments while giving tenants a new defense: “financial hardship during the COVID-19 covered period.” With this defense, judgments rendered in Landlord-Tenant court no longer have as much force because tenants experiencing financial hardship are by definition unlikely to pay, thus requiring the landlord to bear – at least temporarily, presuming attachable assets are unavailable – additional losses. (Note, the defense only applies to nonpayment; other cases may proceed normally as of August 5, 2020).
More recently, on September 1, 2020, the Centers for Disease Control and Prevention issued an order under Section 361 of the Public Health Service Act temporarily halting evictions at the federal level (including throughout the State of New York) in order to “prevent the further spread of COVID-19.” This order applies to any “landlord, owner … or other person with a legal right to pursue eviction” and prevents them from “pursuing” eviction against tenants who submit a financial hardship and impact affidavit until after December 31, 2020. As of this writing, it is unclear exactly how this order will be interpreted or applied in New York State courts. If nothing else, this order demonstrates additional COVID-19 protections may be yet to come.
Nonpayment evictions will be ineffective for the foreseeable future and other evictions will be delayed by however long it takes courts to clear their backlogs of cases.
As discussed for pre-COVID-19 evictions generally, a significant cost component of an eviction is lost rent while an eviction is pending. For cases filed as of this writing, a landlord can expect that COVID-19 related temporary procedural rules and case backlogs in the courts will add at least an extra three months to an eviction thus dramatically increasing expected amount of lost rent. Additionally, eviction proceedings will not presently place a finite limit on losses because of the risk that protections will be extended and/or expanded with subsequent executive orders, legislation, and/or rulings. There is currently only one way to reliably limit losses: “Cash for Keys.”
“Cash for Keys” is exactly what is sounds like: A landlord pays a tenant to voluntarily vacate the rental property.
As anyone who has ever gone house-hunting or apartment-hunting knows – looking for a new place to live is at best a tedious chore. Being forced to move is expensive for a tenant. People understandably develop emotional attachments to the places they live. In some cases, tenants literally face the choice of delaying eviction or immediately becoming homeless. It is no wonder when faced with removal a tenant may be highly motivated to remain where they are and have no choice but to delay eviction.
Especially in these times, it is important for a landlord to understand the needs and motivations of their tenants, including viewing a tenant’s circumstances empathetically. But similarly, it is also important that a landlord understand the evolving legal landscape and not waive any legal rights unnecessarily. Various considerations, including money, time, emotion, and effort are precisely why it may be preferable to pay a tenant to move—under certain circumstances.
Paying a tenant to move may help in several ways. Court costs, repairs, and lost rent are shifted back to the landlord and tenant’s direct negotiation. Additional funds make it easier and less financially impactful for the tenant to move. The emotional impact to the tenant of agreeing to move is substantially less than that of facing eviction and all its uncertainty. Many tenants value not having an eviction attached to their backgrounds. Finally, by reaching an agreement, both parties will benefit from improved flexibility, certainty, and advanced scheduling.
Using Cash for Keys can save time, effort, and money under normal conditions.
Unlike eviction, there is no minimum time required with Cash for Keys. Tenants can often be persuaded to move out at the end of their rental period, or when they locate new accommodations. Cash for Keys only requires negotiation, drafting, and signing a Cash for Keys Agreement – no court appearances, papers, or service. Tenants who sign Cash for Keys Agreements are also incentivized to refrain from damaging the rental property, remain cooperative with any reletting processes, and honor other financial agreements. Importantly to a landlord’s bottom line, these incentives should ultimately reduce lost rents.
Using Cash for Keys is significantly quicker, easier, and less expensive than eviction with respect to COVID-19 eviction protections.
Everything that makes Cash for Keys appealing under normal circumstances is magnified during COVID-19. Increased financial hardships faced by tenants reduces the value of judgments. Evictions are less meaningful on background checks because of higher eviction rates generally. Temporary COVID-19 procedural rules make using court processes less appealing or potentially even impractical, considering added costs and delays. The case backlog currently faced by courts adds even more time to an already bloated eviction timeline. Also, COVID-19 evictions present wild uncertainty given the ongoing risks of tenant protections being continuously extended or expanded. In sum – where Cash for Keys was often an attractive alternative to eviction pre-COVID-19, it is now almost certainly among the best ways to resolve a tenancy dispute during the pandemic.
There are several practical considerations to keep in mind when offering Cash for Keys.
While Cash for Keys is a remarkably simple idea – “pay the tenant to leave” – its execution is slightly more complicated. Questions to consider include (but are not limited to): how much cash should be offered; how the offer should be structured; how and who should handle the negotiation; how the agreement should be formalized; and what will happen if the tenant changes their mind after signing an agreement. Finally, the landlord must also be mindful of other tenants, (who would otherwise have vacated in due course) do not begin exploiting the landlord. Cash for Keys only makes sense if it replaces evictions, not normal terminations. Timing of payment and vacatur is critical.
Retaining legal counsel will help a landlord avoid costly mistakes and maximize benefits of “Cash for Keys.”
Retaining experienced legal counsel to help with this process is always recommended. Counsel will guide a landlord through the process and assist with negotiation points and crafting formal offer letters. For some tenants, seeing attorney letterhead adds weight to the offer. If a tenant has their own counsel, the landlord’s counsel will help level the playing field. Counsel will help preserve the landlord’s option of pursuing eviction by ensuring the eviction process runs in parallel with negotiations. Finally, retaining counsel is purchasing peace of mind particularly with respect to these uncertain times, and the highly particular way Cash for Keys arrangements need to be implemented.
There is no cost-free choice when terminating a tenant’s occupancy. This is painfully true when the tenant physically, financially, or emotionally cannot vacate the rental property voluntarily. Though eviction is often necessary, negotiating a Cash for Keys alternative will always be more palatable for both a landlord and tenant.
This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.