Unpaid landlords say they can't pay their bills —or get new tenants

A moratorium on evictions is forcing small landlords on Long Island to run up credit card balances, take out loans and default on their own bills.

Sheriffs on the Island haven't carried out residential evictions since March, when the state began curtailing court activity in the early days of COVID-19.

With the virus straining many industries, thousands of Long Islanders have lost jobs and are struggling with basic expenses like rent. The government passed policies and bolstered benefits designed to protect renters. Only a fraction of that relief has reached landlords, and some small property owners are reeling.

'You don't have a lot of cushion'

"If you are relying on the extra thousand or $1,500 a month from renting out a finished basement or attic, and that suddenly goes away because your tenant can't afford to pay, you don't have a lot of cushion," said Lawrence Levy, executive dean at the National Center for Suburban Studies at Hofstra University. "When something goes south [for] them, it hits very quickly, very hard."

Thousands of households on Long Island would be facing eviction if not for state and federal moratoriums, according to Vivian Storm, spokeswoman for the nonprofit legal group Nassau Suffolk Law Services. Storm noted that COVID-19 has likely left senior citizens vulnerable, as well as other groups disproportionately impacted by the pandemic, including lower-income communities and people of color.

There is limited data on how the pandemic is impacting property owners, and which types of landlords are most vulnerable. An estimated 30.43% of adults in the metro area are behind on rent, according to a Jan. 6-18 Household Pulse Survey, the most recent data released by the U.S. Census Bureau.

The Association for a Better Long Island, which represents large, institutional property owners, stopped surveying its members when they reported returning to relatively standard rent collection rates in August, executive director Kyle Strober said.

The most vulnerable landlords

Smaller landlords are more likely to have had their rental income reduced, according to Moody's Analytics chief economist Mark Zandi's estimations. He said these property owners tend to have cheaper rents and, therefore, be occupied by lower-income tenants and by people who have been more vulnerable during the pandemic. The Touro Law Center's Senior Citizens Law Program, a nonprofit initiative that helps older Long Islanders with a variety of matters, has fielded a 30% increase in landlord clients, according to senior staff attorney Denise Marzano-Doty.

And small landlords may be more intimately involved with their tenants lives. Long Islanders who rent out part of their primary home feel "more pressure, as human beings, to help," according to Levy.

"There’s no layer of lawyers and agents to insulate the owners from making the tough decision to try to push somebody out onto the street," he said. "This becomes intensely personal."

Eviction restrictions

When a landlord decides eviction is unavoidable, their options are limited. The state prohibits removal of tenants who have experienced a financial hardship or would face heightened health risks while relocating until at least May 1. And the U.S. Centers for Disease Control issued an order shielding lower- and middle-income renters through March.

Under the state measure, owners can file eviction cases if tenants receive a hardship form and don't return it, according to Bradley Schnur, a Jericho-based attorney who handles landlord-tenant cases. If the document is submitted to the landlord or a court, it will be assumed to be true, unless proved false, according to Schnur. Once cases are accepted, they are moving slowly through housing courts, which are operating under COVID-19 safety measures, lawyers said.

The state has extended COVID-19 hardship protections to small landlords. The safeguards allow those who own 10 or fewer dwelling units to delay foreclosure and tax lien sales. But owners will still be responsible for unpaid bills, which leaves landlords like Syed Hassan, 43, of Centereach, in limbo.

Hardship protections

Hassan's inability to evict his only tenant may land him in housing court, he said. Hassan says he stopped receiving rent from the tenant in his Ridge town house in May. Without that $2,000 a month, Hassan, who works in human resources, struggled to cover the town house's roughly $1,400 in monthly expenses as well as the $1,850 monthly rent and bills on his own apartment in Centereach. His family moved from the Ridge town house to be closer to his aging parents in Holbrook.

His lease with the tenant, a nurse with children, expired at the end of July, according to Hassan. So he filed a lawsuit in August, seeking a money judgment for the $8,350 she owed and an eviction warrant, the court petition shows.

"They keep extending the court date, keep extending the court date. You know what?" said Hassan, who used a loan and credit card to pay his landlord $11,500. "I ran out of money. I have no money."

His tenant could not be reached for comment.

Sued by his landlord

Hassan borrowed $5,500 from his brother but could not pay all of his own back rent. His landlord, Fairfield Centereach Gardens LLC, filed a case against him in December, court records show. Hassan said he has since paid that back rent.

But after racking up $6,000 in rent payments on his credit card, Hassan exhausted his resources and stopped paying Fairfield again in December.

"I have a choice: either pay [my] rent or pay my mortgage" on the Ridge town house, Hassan said. "I'm going to save my house. I'm going to pay my mortgage."

Hassan said he is unsure whether Fairfield plans to pursue his eviction. The residential housing company and its attorney did not respond to requests for comment.

The case has a court date at the end of February, but housing lawyers say they have seen many such dates get repeatedly delayed.

If his tenant gets evicted, Hassan said he will likely need to file at least one other case to recoup the $12,000 in back rent that has accrued on his town house since August. Then, he can pursue the full $20,350 in debt through money judgments, which can be used to seize a portion of a tenant's wages and bank account funds.

Chances of collecting

But Susan Hermer, a Bohemia-based attorney who is representing Hassan, said collecting the monetary judgments can be difficult. Many tenants never have the means to pay them, and locating their funds can be challenging, she said.

"I’ve been doing this for 35 years, and I’ve gotten hundreds and hundreds and hundreds of judgments," said Hermer, of Commack. "Maybe I’ve collected five times."

Inability to collect rent forced Anthony and Kessa Figaro to take out a $10,500 loan.

The couple started renting out their Baldwin home after moving to Florida five years ago, where Anthony Figaro got a job as a U.S. Postal Service account manager. The Figaros often work with insurance companies and temporary housing services to lease their four-bedroom house to people while their primary homes are repaired from floods, fires and other mishaps.

"You try to assist people that are impacted by tragedies or situations in their home," Figaro said. "We're not doing this because we just want to get as many tenants in as possible."

Figaro said he helped a Hempstead man, who was displaced while his home was being repaired, plus three people described as his relatives. The group was originally slated to vacate in June, but the construction in Hempstead was delayed by COVID-19, Figaro said. Then in October, one of the tenants came down with COVID-19, according to Figaro.

So Figaro extended the lease twice, with approval from the man's insurance company, Nationwide, and CRS Temporary Housing, a firm that works with insurance companies to provide short-term homes for those in need, according to Figaro.

With construction on the Hempstead house wrapping up, the tenants were slated to leave by Dec. 1 and were informed that the rent would increase from $4,100 to $5,125 a month if they stayed, according to Figaro and court records. But Figaro said some tenants stayed behind. The Hempstead home was habitable, so Figaro stopped receiving money from CRS.

When the remaining tenants left around early February, Figaro said he was out about $10,250 in rent and had lost another temporary lease deal worth at least $15,000.

"It's really a hardship," he said.

Nationwide declined to comment, and CRS did not respond to requests to discuss the matter.

Although Figaro filed an eviction case in December, the matter is not slated to come before the court until June, court records show. Figaro said he may be able to recoup some of his losses through civil court cases, but he can't afford to wait until June to recover the unpaid rent. So he'll need to explore relief programs.

Financial and emotional toll

"We actually had to take out a loan in December," Figaro said, referring to a $10,500 agreement. "That and credit cards, that's how we've been running."

Figaro said he is up-to-date on his expenses in Florida, but will need help with the $2,400 monthly mortgage payments and taxes on the Baldwin home. The pressure won’t ease up yet, since Figaro believes he'll need about three months to fix storm damage to the roof and address water, mold and smoke smell issues before bringing in new renters.

"The emotional impact of this is what really is dissuading, discouraging ... thinking about putting this home back on the market, knowing what you've been through," Figaro said.

Renter-landlord negotiation

In normal times, tenants who are behind on their rent are often willing to relocate in exchange for a reduced payment to the landlord, which prevents evictions. But renters are less likely to negotiate now, when court dates are months away, according to Schnur, who is representing Figaro.

Schnur said typically more than 90% of his cases are resolved through settlements, which tend to emerge within three court sessions. The long delays aren’t helping either side — and may saddle the courts with a crush of cases when proceedings begin again in earnest, Schnur said.

"The case doesn’t necessarily have to be tried, but if you can bring two people together — whether it’s in a courtroom, virtually through the technology that the courts have been using, or through a mediation program — to try to come through with a resolution, this downtime should be used for that," said Schnur, of Woodbury.

By Sarina Trangle

sarina.trangle@newsday.comSarinaTrangle

Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.