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Eviction relief may not be on the menu for restaurants

Eviction relief may not be on the menu for restaurants

| Feb 18, 2021 | landlord-tenant disputes |

New York’s commercial tenant eviction moratorium was repeatedly extended and ended on Jan. 31. Instead of issuing an executive order, the Governor is reviewing legislation that would give restaurants and other commercial businesses a reprieve until May 1, 2021. This delay continues uncertainty for a struggling industry and may lead to landlord-tenant disputes.

Restaurants struggle

In New York City, over 1,000 restaurants closed during the pandemic. A NYC Hospitality Alliance survey in Nov. 2020 showed that 88 percent of the more than 400 respondent restaurants were unable to pay full rent.

New York banned residential evictions at the end of 2020 and extended this deadline to May 1. However, this protection did not extend to restaurants, bars and other businesses which relied on a series of executive orders issued by Gov. Cuomo protecting them from eviction.

The earlier eviction ban may have stopped restaurants and taverns from losing their physical spaces. But they still must pay unpaid rent. Some restaurant owners negotiated new agreements with their landlords while others paid rent as a percentage of their monthly revenue.

Other establishments are expected to pay full rent. Without any substantive rent cancellation or government assistance, restaurants will continue to suffer losses even after pandemic-related restrictions are loosened.

Proposed bill

The relief legislation passed the state senate and assembly and is undergoing negotiations with the Governor’s office. If enacted, it would protect small business owners who employ no more than 50 workers and landlords owning 10 or fewer units in one building or multiple buildings.

Restaurants and other tenants who cannot pay rent may submit a letter to their landlords showing their revenue loss from the pandemic. This will protect them from eviction through May 1, 2021.

Landlords may also submit a hardship letter to their mortgage lenders or foreclosing party to prevent foreclosure until May 1. To avert tax-payment related foreclosures or lien sales, landlords can also provide this document to city or state officials.

The bill covers evictions filed no later than March 7, 2020 or 30 days after it becomes law. However, it does not cover cases where an eviction warrant was already issued. If a warrant was not signed, there will be a 60-day stay on proceedings until a judge determines whether the eviction may proceed.

The bill, however, will allow landlords to pursue evictions when tenants are engaging in unreasonable behavior that impedes the use and enjoyment of other tenants or occupants or causes a substantial safety hazard. Landlords will have to provide documented evidence to supported unreasonable behavior allegations.

Attorneys can help find solutions to these problems. Lawyers may assist clients with pursuing their rights.