Following the onset of the COVID-19 pandemic, both landlords and tenants in New York City have struggled to know what comes next in terms of the payment of rent. Obviously, the pandemic has caused substantial defaults in rent payments. The pandemic has also caused substantial court closures, adjournment of cases, and stay-at-home work orders. As of June 22, 2020, the Housing Court is technically open for new nonpayment proceedings, but the restrictions on what cases can be brought limit a lot of cases that might otherwise be able to be commenced.
That said, there is an alternative that does not require judicial intervention. In the context of a nonpayment proceeding, the State of New York has issued an Executive Order, which may help both landlords and tenants find a short-term solution. On May 7, 2020, Governor Andrew Cuomo signed Executive Order 202.28 permitting the application of the security deposit to cover the rent. The Executive Order technically modifies Section 7-103, 7-107, and 7-108 of the General Obligation Law.
The Executive Order permits landlords and tenants, upon the written consent of the tenant, to enter into a written agreement by which the security deposit and any interest accrued thereof, shall be used to pay rent that is in arrears or will become due.
The application of the security is somewhat limited after the Housing Stability and Protection Act of 2019 limited the security deposit a landlord can accept to one month. Given that this pandemic has gone on for several months, and landlords are unlikely to have more than one-month security deposit for residential tenants, the Executive Order is not a perfect solution, but it certainly may help.
The Executive Order also provides that the payments to replenish this security deposit shall become due and owing in no less than 90 days from the date of usage of the security deposit as rent. This means that if a tenant consents and agrees, or requests, to apply their security deposit as rent, they’re going to have to pay it back within three months of that application.
Generally, the Executive Order highlights what appears to be a trend from the State of New York’s position on rent during this pandemic. It does not appear that the State of New York is ready to waive rent due for any of that period but that tenants will be given a longer period of time to resolve debts that accrue.
Jordi Fernandez Law, P.C.
420 Lexington Avenue, Suite 2920
New York, NY 10170