by Lisa Gordon, Esq.
Frenkel Lambert Weiss Weisman & Gordon LLP

USFN Member (FL, NJ, NY)

The Governor of New York signed into law legislation voted on in an “extraordinary” session of the legislature held on 9/1/21.  Below we highlight the most relevant aspects of the law as it pertains to residential foreclosures and evictions:

Residential Foreclosures:
Most of the provisions of this new statute are identical to the Emergency Eviction and Foreclosure Act initially enacted on 12/28/20 and thereafter extended in May 2021.   Submission of a hardship declaration will impose a stay of foreclosure through 1/15/22 but with this statute, mortgagees can challenge the validity of the hardship.

Applicability:

The statute applies to all residential real property provided the owner or mortgagor is a natural person and uses a unit as his/her primary residence and co-ops are also covered by this statute. The statute does not apply to vacant / abandoned properties as defined in RPAPL 1309(2), which were listed on the statewide registry prior to 3/7/20 and remain on the registry.   

New Actions/Pre-Complaint:

A hardship declaration must be included with every RPAPL §1303 and §1304 notice.  The new form of hardship declaration includes the following language: “If a foreclosure action is filed against you and you provide this form to the plaintiff or the court, the action will be postponed until January 15, 2022 unless the plaintiff moves to challenge your declaration of hardship.  If the court finds your hardship claim valid, the foreclosure action will be postponed until after January 15, 2022. While the action is postponed, you may remain in possession.” 

No court shall accept for filing any action to foreclose a mortgage without an affidavit, from the foreclosing party, attesting to service of the hardship declaration, the manner in which it was served and, that at the time of the complaint filing, no hardship declaration was received by plaintiff or its agent.  

Alternatively, the affidavit may assert that at the time the complaint is filed, a hardship declaration was received from the mortgagor, but the foreclosing party believes, in good faith, that a hardship does not exist.  This is the new provision added to the legislation that did not previously exist.  A plaintiff may now challenge a claim of financial hardship by filing a motion, on notice to the mortgagor, for which the court must schedule a hearing to determine the validity of the hardship. If after a hearing, the court determines defendant’s claim is valid, the stay continues through at least 1/15/22.  If the court determines defendant’s claim to be invalid, the action shall continue to a determination on the merits.A form of the new hardship declaration is attached as Exhibit A.

At the earliest possible time, a court must seek confirmation that the mortgagor has received a copy of the hardship declaration and whether the mortgagor has returned the hardship to the foreclosing party or its agent.  If the court determines that the mortgagor has not received the hardship declaration, it shall stay the proceeding for a reasonable period of time, at least 10 business days. to ensure that the mortgagor has had an opportunity to receive and fully consider whether to submit the hardship declaration.

Post Complaint:

If a judgment of foreclosure and sale has not been signed, as of the effective date of the act, the action is stayed until 1/15/22 if the mortgagor returns a completed hardship declaration and same is not successfully challenged as being invalid.

Any action, in which a judgment of foreclosure and sale has been signed/granted prior to the effective date of the act, is stayed at least until the court holds a status conference with the parties.  If a hardship declaration is returned by the mortgagor, the action is stayed until 1/15/22 unless successfully challenged as being invalid.

General Provisions:

The Office of Court Administration shall translate the hardship declaration into other languages. Unless a court determines a mortgagor’s hardship claim invalid, the hardship declaration creates a rebuttable presumption of financial hardship in any judicial or administrative proceeding for purposes of establishing a defense under an executive order of the Governor or any other local or state law, order or regulation restricting actions to foreclose a mortgage. 

Residential Evictions:

Most of the provisions of this new statute are identical to the Emergency Eviction and Foreclosure Act initially enacted on 12/28/20 and thereafter extended in May 2021.   Submission of a hardship declaration will impose a stay of eviction through 1/15/22 but with this statute, a landlord/owner can challenge the validity of the hardship.

Applicability:

Any summary proceeding to recover possession of real property under Article 7 of the Real Property Actions and Proceedings Law (“RPAPL”) relating to a residential dwelling unit or any other judicial proceeding to recover possession of real property relating to a residential dwelling unit. 

Definitions:

Landlord - landlord, owner of residential property and any other person with a legal right to pursue eviction, a possessory action or a money judgment. 

Tenant - a residential tenant, lawful occupant of a dwelling unit, or any other person responsible for paying rent, use and occupancy, or any other financial obligation under a residential lease or tenancy agreement.  Does not include a residential tenant or lawful occupant with a seasonal lease where such tenant has a primary residence to which to return

Hardship: Either (a) an inability to pay rent or other financial obligations due in full pursuant to a lease or rental agreement or obtain alternative suitable permanent housing due to one or more of the following reasons where public assistance, including employment insurance, pandemic unemployment assistance, disability insurance, or paid family lease, does not fully make up for the loss of household income or increased expenses: 

1)      Significant loss of household income during pandemic; or

2)      Increase in necessary out of pocket expenses related to performance of essential work or related to health impacts during pandemic; or

3)      Childcare responsibilities or responsibilities to care for an elderly, disabled or sick family member which negatively affected ability to obtain meaningful employment or earn income; or

4)      Increased necessary out of pocket expenses; or

5)      Moving expenses and related difficulty in securing alternative housing make it a hardship to relocate; or

6)      Other circumstances related to pandemic have significantly reduced household income or significantly increased expenses

-OR-

(b) inability to vacate the premises and move into new permanent housing because doing so would pose a significant risk of severe illness or death from COVID-19 that a tenant or household member would face due to being over the age of sixty-five, having a disability or having an underlying medical condition, which may include but is not limited to being immune compromised.  

New Actions:

A hardship declaration must be served with every written demand for rent made, with any other written notice required by the lease or tenancy agreement, law or rule to be provided prior to commencement of an eviction proceeding and with every notice of petition served on a tenant.  The form of the hardship declaration has been revised to add the following language: “I further understand that my landlord may request a hearing to challenge the certification of hardship made herein, and that I will have the opportunity to participate in any proceedings regarding my tenancy.”  A form ofthe new hardship declaration is attached as Exhibit B.

No court shall accept for filing any petition to commence an eviction proceeding without an affidavit, from the petitioner, attesting to service of the hardship declaration, the manner in which it was served and, that at the time of the petition filing, no hardship declaration was received by petitioner or its agent.

Alternatively, the affidavit may assert that at the time the petition is filed, a hardship declaration was received from the tenant, but the landlord believes, in good faith, that a hardship does not exist.  This is the new provision added to the legislation that did not previously exist.  A petitioner may now challenge a claim of financial hardship by filing a motion, on notice to the tenant, for which the court must schedule a hearing to determine the validity of the hardship. If after a hearing, the court determines tenant’s claim is valid, the stay continues through at least 1/15/22.  If the court determines tenant’s claim to be invalid, the action shall continue to a determination on the merits.  

Notwithstanding all the above, if a tenant a) intentionally caused significant damage to the property; or b) is persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others, an eviction proceeding can move forward.  A new petition will be required if such behavior was not previously alleged or if such behavior was alleged in a pending petition, the court the court shall hold a hearing to determine if the tenant is continuing to intentionally cause significant damage to the property or infringe on the use and enjoyment of other occupants. 

Post Petition/Pending Proceedings:

No warrant issued: If a hardship declaration is filed by a respondent, the matter is stayed through 1/15/22 unless the hardship is successfully challenged by petitioner. 

Post Warrant Cases: Execution of the warrant is stayed at least until the court has held a status conference with the parties.  However, if a hardship declaration is filed by the respondent, execution of warrant is stayed until 1/15/22 unless the hardship is successfully challenged by the petitioner.

Pre-Default: No court shall issue a default judgment in any proceeding authorizing a warrant of eviction against a respondent who has defaulted without first holding a hearing, after the effective date of this act, upon motion of the petitioner.  

In any proceeding where a warrant has been issued, including any proceeding filed on or before 3/7/20, the warrant issued will not be effective unless specific additional language is contained in the warrant.  Such language pertains to service of the hardship declaration and lack of receipt by the petitioner or the ineligibility for a stay because the court determined respondent’s hardship claim was invalid or the eviction is being pursued due to the respondent causing significant damage to the property or engaging in behavior that substantially infringes on the use and enjoyment of other occupants. 

Other relevant provisions of the statute:

Evictions and Emergency Rental Assistance Program:

• Evictions are prohibited from being commenced or continued if an eligible occupant has applied for rental assistance pending a determination of eligibility
  
  
• Eviction may proceed if a tenant intentionally causes significant damage to the property or is persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard

Lending institutions must not discriminate in the determination of credit decisions because of a stay of mortgage foreclosure proceedings or that an owner of residential real property is currently in arrears and has filed a hardship declaration. 

The granting of a stay of mortgage foreclosure proceedings, or that an owner of residential real property is currently in arrears and has filed a hardship declaration shall not be negatively reported to any credit reporting agency.

 
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