We have recently posted a series of articles regarding the effect of COVID-19 on the real estate industry.
In this article, we draw on two cases, one in Nassau County and the other in Westchester County that illustrate the point.
In the Westchester County case, landlord Piscionere filed a suit against tenant Gori for non-payment of rent. On December 11, 2020 the Court granted the landlord’s warrant for eviction, staying its execution by operation of The Tenant Safe Harbor Act until January 1, 2021. The tenants were advised that the warrant would be executed by the City Marshall on January 20, 2021.The COVID-19 Emergency Evictions Prevention Act of 2020 became effective on December 28, 2020.
The Act states: “In any eviction proceeding in which an eviction warrant has been issued prior to the effective date of this act, but has not yet been executed as of the effective date of this act, including eviction proceedings filed on or before March 7, 2020, the Court shall stay the execution of the warrant at least until the Court has held a status conference with the parties.” The Court found that the proceeding was still pending and that the Act was applicable.
A virtual status conference was held on January 8, 2021 with the parties and their attorneys present. On January 11, 2021 the tenants filed a hardship declaration indicating “financial hardship” and “significant health risk.” The Act states that if the tenant provides a hardship declaration, the execution of the warrant shall be stayed until at least May 1, 2021. The Act also provides the landlord with the chance to rebut the tenant’s declaration of hardship, which the landlord did on January 14, 2021. The landlord argued that the tenants owned an income producing multi-family home, which they could move to and which generated enough income to pay the rent on the landlord’s property. In addition, one of the tenants was earning over $19,000 per month in income, while the other tenant was receiving unemployment insurance as well as separation compensation. The Court stated that while the Act provides landlords with the opportunity to rebut a claim of financial hardship, it provides no such relief if the claim is based on significant health risk, which, in this case, the tenant also did.
The Court states: “This particular case unfortunately highlights a flaw in this new law which laudably seeks to help people truly in need of relief.” It went on to say: “The Court found their testimony to be self-serving, evasive, and in conflict with the evidence of disinterested third parties, at times even in conflict with their own evidence. In short, the court found them incredible.” It added: “The result therefore that these tenants are permitted to live in a home ostensibly rent free at least until May 1, 2021 even though it has been demonstrated to this Court that they own a large home in a neighboring city to which they could move and even though they have significant income to live very comfortably and safely.”
The second case involves a Nassau County Supreme Court ruling in the case of Soundview Cinemas Inc. v. Great American Insurance Group.
The case emerged from the fact that Governor Andrew Cuomo, on or about March 7, 2020, issued an Executive Order declaring a disaster emergency for the State of New York. About March 16, 2020 Soundview Cinemas was closed for business pursuant to the Executive Order, which caused Soundview to suffer a financial loss. Soundview filed a claim with Great American with respect to business loss of income due to the Governor’s shutdown order. Great American denied the claim. It stated that the “suspension” of business must be caused by a direct physical loss to the property, and the policy must contain a clause stating coverage for such loss. The Court agreed. It stated, in part: “Federal Courts in New York and throughout the country have almost uniformly held that loss of use of the premises due to COVID-19 related to government orders does not trigger business income coverage based on physical loss of property.”
The Judge went on to say: “While the Court is sympathetic to the economic consequences resulting from the closure of plaintiff’s movie theater, the Court concurs with the majority view that loss of use of premises due to COVID-19 related government orders does not constitute “direct physical loss of or damage to the property” that would trigger Business Income coverage under the policy.”
(Note: The Tenant Safety Harbor Act article due to expire on May 1st was extended by the State Legislature to August 31st.)