NY law shields small firms and landlords from eviction and foreclosure

A new state law shields small businesses and landlords from eviction and foreclosure until May 1.

Gov. Andrew M. Cuomo signed the COVID-19 Emergency Protect Our Small Businesses Act Tuesday, which protects firms that suffered "significant" financial distress during the pandemic. The measure extends actions that have safeguarded small businesses and landlords from eviction, foreclosure and tax lien sales since COVID-19 hit, according to Michael Webb, counsel in Nixon Peabody's real estate group, who is based out of the law firm's Jericho office. Businesses and landlords behind on rent, mortgage payments and other fees may still be subject to money judgments for the debt.

"We are strengthening the backbone of our economy — our small businesses that have faced unprecedented hardships — and this legislation will be instrumental in helping build New York's economy back better than ever before," Cuomo said in a statement.

The law applies to businesses with up to 50 employees — and landlords with up to 10 commercial units — that are "independently owned and operated." This may prevent national corporations from claiming the protection in New York offices, Webb said.

Expansion of law planned

Cuomo and lawmakers agreed to later expand protections to companies with up to 100 employees — or firms with up to 500 workers if state rules forced them to halt in-person operations for at least two weeks between May 15, 2020, and May 1, 2021, according to a memo attached to the law.

Small businesses may fill out hardship declarations if they have:

•lost "significant" revenue because of the pandemic;

•incurred "significant" expenses for protective equipment;

•or found relocating to be a hardship because of moving expenses and difficulty securing an alterative location.

Companies may qualify if the public assistance they've received does not make up for the revenue losses or expense increases during the emergency.

Submitting the forms

Businesses may return the form to their landlord, or if they're involved with an eviction case, the court handling the suit. Once submitted, landlords can't start an eviction case until at least May 1. Pending cases will remain on hold for at least 60 days — or until the court system is able to ensure qualified companies are given access to the hardship protections.

The law has an exception that allows for the eviction of tenants that persistently act in illegal, negligent or unsafe ways, Webb said.

Companies that own no more than 10 commercial units, have 50 or fewer employees and are not "dominant" in their field may avoid foreclosure or tax lien sales through May 1. They can submit hardship declarations to their lenders, courts or municipalities and school districts that conduct tax lien sales.

The protections are a proactive way of helping small businesses, according to Phil Andrews, president of the Long Island African American Chamber of Commerce Inc.

"Small Businesses often make a tremendous investment in the communities that they serve; and these businesses were adversely affected through no fault of their own," Andrews said in a statement. "This is the right decision at the right time as the Biden Administration CARES Act is currently working on pumping much needed funds into the economy."

The law overlooks underlying issues, according to Kyle Strober, executive director of the Association for A Better Long Island, which represents large property owners.

"Eviction moratoriums simply kick the can down the road," Strober said in a statement. "They do not provide struggling businesses with direct assistance nor help property owners."

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.