By Adam Leitman Bailey and Dov Treiman
Since the Covid-19 crisis hit, there has been a series of directives from the New York State Governor, the Chief Administrative Judge of the New York Courts, and the New York State Legislature.
These mutually contradictory proclamations have taken the already complex procedures for suing for rent (made more complex with last June’s overhaul of the rent laws) and made them not only more confusing, but more certain to frustrate a landlord seeking to get paid rent, even rent that has nothing to do with Covid-19.
While we could go through the wretched four month history of these pronouncements, it is best to tell you where things are at the moment we are writing to you and to leave the past to the past, as much as possible.
The current situation starts with two laws the Legislature passed: one, passed at the beginning of the crisis, giving the Governor authority to temporarily amend any New York law at all on his own without legislative oversight, the other passed only a few days ago, changing the procedures for suing in residential proceedings, but having no effect on the Governor’s Executive Orders regarding commercial nonpayment proceedings.
First, we note, that although the Civil Court (of which Housing Court and Commercial Part are both parts) is continuing to prosecute landlords for violations, it is still not accepting new cases landlords try to bring as either commercial or residential proceedings. As ever, all landlord-tenant cases start with buying an “index number.” The Civil Court says that it will only sell index numbers to people who apply for them by mail (with no indication as to how long it will take for the mail to be processed) or by ordering them on-line through the New York Court System’s electronic service, NYSCEF. However, there is no NYSCEF in the Civil Court at all at present, although its implementation has been promised to take place within the next two weeks. Even with NYSCEF in place, however, in order for a case to run purely electronically, the tenant has to consent. If there is no consent, the case will be on paper only and it is expected that all paper-driven cases will take an extremely long time to process. Thus, as a practical matter, no cases can be started in the Civil Court (except to prosecute landlords for repairs or lockouts). However, most commercial proceedings are against business entities like corporations and LLC’s, which are required by law to be represented by attorneys. Lawyers are likely to consent to completely electronic cases as it is much more efficient for them.
The Civil Court is now beginning to work on old cases (both residential and commercial) by video conference, but only if there are lawyers on both sides and only for the purpose of settling the case. There are no trials until the end of July. Those will only be in Brooklyn and only for cases that were ready for trail before the Covid crisis hit. Since there are no trials on new matters, tenants have no motivation to settle. Under the new law the legislature passed, if a residential tenant proves financial distress (Covid-19 or otherwise), the landlord can only get a money judgment, not an eviction. The tenant does not have to prove that the financial distress is Covid related, only that it happened during the Covid crisis period. The Civil Court’s administration has announced that once it does start selling index numbers again, it will automatically adjourn all cases for a “very long time,” without specifying how long. We do not anticipate the Civil Court allowing any nonpayment based evictions (commercial or residential) to take place for the rest of 2020.
It has also been reported that the State Attorney General has prosecuted firms for serving rent demands because the Governor’s order prohibits “initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent.” We believe this is wrong for two reasons: First, rent demands are not initiating a proceeding. They are only taking the steps necessary to initiate a proceeding. Second, there is a precedent from a Suffolk County judge stating that the Governor’s order with respect to eviction proceedings is illegal.
This office continues to serve rent demands.
Since the Civil Court is not a realistic place to sue for rent, this office is using a provision from the New York State Constitution that allows all cases to be brought in State Supreme Court. Supreme Court does have NYSCEF, does have authority to hear these cases, and is selling index numbers (although very slowly). While the Governor’s Executive Order continues to prohibit commercial cases for nonpayment of rent and that prohibition would theoretically apply in Supreme Court, we will continue to challenge the legality of that Order. Thus, this office will be bringing both residential and commercial nonpayment cases in State Supreme Court.
No new laws have been passed and no Executive Orders have been issued with regard to bringing holdover proceedings. Since a tenant whose security deposit is applied to pay rent is the subject of a holdover proceeding, we recommend applying the security deposits in this manner. In the holdovers that we bring based on an obligation to replenish security deposits, there are no known Covid related defenses available, neither in the residential nor in the commercial context.