Major Decision Comes as State Struggles to Send Out Rent Relief Funds
As the State Legislature began contemplating whether or not to extend the statewide eviction moratorium, the U.S. Supreme Court issued a crucial decision for the entire rental housing industry in a lawsuit challenging the constitutionality of the moratorium.
By way of background, RSA, along with a number of single-family homeowners and small building owners, filed a lawsuit in May in Federal Court in the Eastern District of New York that challenged the constitutionality of the moratorium after the Legislature extended the moratorium through August 31st.
The lawsuit sought preliminary and permanent injunctive relief enjoining the Chief Administrative Judge of the New York Courts, the sheriffs of New York City, Suffolk County and Dutchess County, the Commissioner of the New York City Department of Investigation, and the Director of the Bureau of Marshals, from enforcement of the residential eviction moratorium provisions of the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (CEEFPA), and a declaration that the law is unconstitutional.
The lawsuit primarily alleged that CEEFPA violated building owners’ due process rights because of the law’s vagueness, which allowed tenants to claim hardship without providing proof and simply checking off an “other circumstances” box that was completely undefined. Furthermore, owners cannot challenge the validity of a hardship declaration, which automatically stays and prevents all cases (pre- and post-pandemic) from being commenced in Housing Court.
After a June 1st hearing, Judge Gary R. Brown issued a decision on June 11th that stated that the Court in part agreed that the owners were easily able to demonstrate that they have suffered irreparable harm as a result of the statute, but ultimately deferred to the State’s power to implement broad public policy decisions for the sake of public health and declined to grant the plaintiffs’ motion for an injunction of the statute extending the moratorium. Immediately upon receiving the decision from the Court, RSA, along with the other plaintiffs, appealed this decision to the Second Circuit.
On August 12th, by a six-to-three ruling, the United States Supreme Court issued a decision that temporarily lifts part of New York’s eviction moratorium (Part A of CEEFPA), which had served to stay all eviction porceedings, even those that pre-dated the pandemic, and which precluded building owners from challenging a tenant’s self-certified claim of financial hardship, an attestation that had automatically paused eviction proceedings under the policy, or from filing suit once a hardship declaration was submitted by the tenant. However, the order does not change a tenant’s ability to mount a so-called “hardship defense” in an eviction court proceeding under the Tenant Safe Harbor Act passed in June 2020.
The immediate effect of this Order means that there are:
1. no more self-certifying hardship declarations;
2. no more requirements on property owners to serve hardship declarations and a list of legal aid organizations with each predicate notice and notice of petition;
3. no more prohibitions on the commencement of eviction proceedings on the basis of tenant hardship;
4. no more stays of eviction proceedings commenced prior to the pandemic based on a hardship declaration;
5. no more stays of execution of warrants of eviction where those warrants issued prior to the pandemic based on a hardship declaration.
The U.S. Supreme Court made it clear that building owners are entitled to due process. The Supreme Court also referenced that the Tenant Safe Harbor Act, which applies only to non-payment proceedings that deal with post-pandemic arrears and was not the subject of RSA’s lawsuit, is still in effect as a tenant protection.
Although the decision issued by the Supreme Court was a tremendous victory for RSA and the entire rental housing industry, the question of how the Court’s ruling would be administered in New York State became the biggest question mark. At the time of the ruling, RSA had just testified just two days earlier at a State Assembly hearing (see page 3) with regard to the State’s poor rollout of the Emergency Rent Relief Program (ERAP). As a result of the minimal amount of funds distributed by the middle of August, the Legislature had already started discussing extending the statewide eviction moratorium through at least the end of October. RSA constantly criticized lawmakers’ bandage approach to protecting tenants throughout the pandemic and that the real solution to providing aid to tenants and building owners was to expedite the delivery of rent relief rather than kick the can down the road by constantly extending moratoria.
The day after the Supreme Court issued its decision, Chief Judge Lawrence Marks issued an Administrative Order that details how Housing Court will be implementing the Supreme Court decision going forward. You can read the Order on RSA’s website by visiting https://bit.ly/3yY7lFy.
Despite Judge Marks’ Order, RSA was anticipating as we went to press on this issue of the RSA Reporter that the Legislature was working diligently behind the scenes to find ways to extend the statewide moratorium in some capacity nevertheless.
As a reminder, the U.S. Centers for Disease Control and Prevention (CDC) moratorium is still in effect (see page 6) and it is likely that the Court will continue to apply it to pending cases. However, it does not apply to most holdovers, and tenants may only avail themselves of it if they are below a certain income level. For more information with regard to the federal moratorium, you can go to the CDC’s website at https://bit.ly/3CXyV8e.
This is a constantly evolving situation and we certainly anticipate frequent updates between now and the next issue of the Reporter. We will keep you apprised of all important developments via email blast, as well as the October issue.