Today Governor Cuomo signed an extension of the COVID-19 Emergency Protect our Small Businesses Act of 2021. The law extends the moratorium through August 31, 2021. The law passed today mirrors the law which was passed on March 9th and which we wrote about on our March 11th update, available HERE.
A New York State based commercial tenant, employing fifty or fewer individuals, that is independently owned and operated, and “not dominant in its field” may complete a hardship declaration stating that they have suffered a significant loss of business due to Covid-19. Once a hardship declaration has been completed, the commercial tenant may not be evicted for the nonpayment of rent or holding over after expiration of the lease, however a commercial tenant may be evicted as a result of nuisance or a violation of safety.
The law does not define a significant loss of revenue, if employees are categorized on a full time or part time basis, independently owned, and “not dominant in its field”. From a practical standpoint, by the time the law expires it is unlikely to be tested in court.
While commercial tenants may be temporarily excused from eviction, the law does not prevent rent from accruing under the leases. Commercial tenants facing hardship should explore exit strategies under their leases and liability under any guaranty.
In addition to temporary relief for commercial tenants, the law also extends protections for commercial landlords who are facing mortgage foreclosure. A commercial landlord that owns ten or fewer commercial units and employing fewer than 50 individuals may stay a mortgage foreclosure proceeding through August 31, 2021 by completing a similar hardship declaration.