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COVID-19 Emergency Protect Our Small Businesses Act of 2021

by | Mar 18, 2021 | Industry Updates

On March 9, 2021, Governor Cuomo signed into law the COVID-19 Emergency Protect Our Small Businesses Act of 2021 (the “Act”). In broad terms, the Act’s intent is to avoid the displacement by eviction or foreclosure of small businesses experiencing financial hardship during the COVID-19 pandemic. From the perspective of owners, however, the Act will temporarily halt efforts to recover possession of commercial spaces from tenants that have failed to pay rent or otherwise defaulted on their leases. The Act’s text is available here. The Act took effect immediately, and virtually all of its provisions are currently scheduled to expire on May 1, 2021; however, owners should be prepared for this deadline to be extended.

Any “eviction proceeding” that is currently pending or is commenced within 30 days of the Act’s effective date (i.e. on or before April 8, 2021) shall be stayed for at least 60 days, or to such later date as may be set by New York’s Chief Administrative Judge. Notably, “eviction proceedings” against commercial tenants are defined to include not only Civil Court summary proceedings, but also “any other judicial or administrative proceeding to recover possession of real property relating to a commercial unit,” which appears intended to include Supreme Court ejectment actions. Additionally, the Act defines an “eviction proceeding” to include all proceedings to recover possession, whether for nonpayment of rent or any other basis.

The Act further provides that commercial tenants may not be removed from possession prior to May 1, 2021, except by an eviction proceeding. This means that self-help, where otherwise allowed by a commercial lease, is not permitted for the Act’s duration.

A “tenant” entitled to the Act’s protections is defined to include a commercial tenant that is a resident of New York State, independently owned and operated, not dominant in its field and employs 50 or fewer persons.

A landlord must include a Hardship Declaration with every written notice to be provided to a tenant prior to the commencement of an eviction proceeding, and with every notice of petition or summons and complaint served on a commercial tenant. The form of Hardship Declaration is available here. A commercial tenant’s completion and return of a Hardship Declaration to the landlord creates a rebuttable presumption that the tenant is, in fact, experiencing financial hardship. If there is no pending eviction proceeding and a tenant provides a Hardship Declaration to the landlord, there shall be no initiation of an eviction proceeding until at least May 1, 2021. If the eviction proceeding is commenced but the tenant thereafter provides the Hardship Declaration, the proceeding will be stayed until at least May 1, 2021.

Where an eviction warrant or a judgment of possession or ejectment was issued prior to March 9, 2021 but was not executed as of such date, the court must stay execution at least until a status conference is held with the parties. No execution shall be effective unless the tenant was properly served with, and did not submit, the Hardship Declaration. If the tenant provides the Hardship Declaration prior to execution of the warrant or judgment, execution shall be stayed until at least May 1, 2021.

Many provisions of the Act do not apply if the tenant unreasonably engages in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others — or, in layman’s terms, the tenant is engaging in nuisance or objectionable behavior.

The Act contains many similar provisions and protections in connection with mortgage and tax foreclosure proceedings.

We would be happy to discuss any questions you may have about the Act and to analyze if and how the Act applies to you.

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