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Perspectives

New Limitations in Dealing With Tenant and Mortgagor Defaults

On May 8, 2020, Governor Cuomo issued Executive Order 202.28, which requires residential landlords to apply a tenant’s security deposit to rent arrears upon request where tenants are “eligible for unemployment insurance or benefits … or are otherwise facing financial hardship due to the COVID-19 pandemic.” This executive order also prevents landlords or mortgage lenders from seeking “any payment, fee or charge for late payment of rent” from March 20 to August 20, 2020. This does not eliminate the obligation to pay the rent itself.

Early in the pandemic, Governor Cuomo and the court system enacted rules suspending eviction proceedings and pending eviction orders. Executive Order 202.28 extends the moratorium “for a period of sixty days beginning on June 20, 2020,” but appears to limit the extension to those tenants or borrowers who are eligible for unemployment or face “financial hardship.” This may open the door to eviction proceedings against those who do not meet this standard, but State officials have already indicated that further guidance will be forthcoming. In any event, at this writing New York State courts remain closed to most new civil proceedings.