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COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020

By BJ Finneran and Philip Rosen

On December 28, 2020 Governor Andrew Cuomo signed into law the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (the “Act”). Subsequently, New York State Chief Administrative Judge Lawrence Marks issued a certain memorandum (the “Memorandum”) and administrative order (“AO”) to effectuate and implement the Act. The text of the Memorandum and AO are here: Memorandum  |  AO

The Act, which took effect immediately, provides COVID-related protections for tenants in residential eviction proceedings and defendants in residential foreclosure actions.

Notably, the Act does not apply to commercial evictions and foreclosures. Further, the Act does not apply to properties that are vacant and abandoned which were listed on the state-wide vacant and abandoned property electronic registry prior to March 7, 2020 or to actions to foreclose a mortgage on a property that is not the primary residence of the mortgagor.

Regarding foreclosure actions:

  • the Act immediately stays all pending residential foreclosure actions for sixty days (until February 27, 2021), including actions in which a judgment of foreclosure and sale has been issued but not executed (the “Stay Period”).
  • Actions commenced between December 28, 2020 and January 27, 2021 are stayed for sixty days from commencement.
  • The statute of limitations is tolled during the Stay Period.
  • A covered mortgagor under the Act must be a natural person who owns ten or fewer dwelling units (the units can be in more than one building) and one of the units is the person’s primary residence and is otherwise occupied or available to rent.
  • the Act does not stay or alter the mortgagor/borrower’s payment obligations and interest, penalties and fees continue to accrue.

During the Stay Period, the Act requires the court to post a Hardship Declaration (the “Declaration”) in English and in six of the most common languages spoken in New York City on its website and to mail the Declaration to the mortgagors in English and, to the extent possible, in the mortgagor’s primary language. The Declaration identifies six categories of COVID-related financial hardship. Click here for the text of the Declaration.

If the mortgagor returns a signed Declaration to either the court or the plaintiff in a pending action, the court will extend the Stay Period until at least May 1, 2021. The Declaration creates a rebuttable presumption that the mortgagor is suffering a financial hardship. If the mortgagor fails to return a Declaration the action can proceed after the expiration of the Stay Period. Further, the foreclosing party must also include a copy of a blank Declaration with every notice sent pursuant to RPAPL 1303 and 1304. The foreclosing party must provide the Declaration in the mortgagors’ primary language and file all Declarations received from mortgagors with the court. As noted, post judgment actions are also stayed for sixty days and until the court conducts a status conference with the parties. If the mortgagor submits a Declaration at the status conference the case is stayed until May 1, 2021.

New actions must be accompanied by an affidavit of service of the Declaration and an affidavit that no Declaration has been received from the mortgagor. In addition, “at the earliest opportunity” the court must confirm with the mortgagor that the mortgagor received, and did not return, the Declaration.

We await further direction from the court as to whether it will conduct previously scheduled foreclosure settlement conferences during the Stay Period.

We are available to discuss any questions you may have concerning the Act.

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BJ Finneran, licensed in both New York and New Jersey, is of counsel to ZEK and a member of its Litigation and Bankruptcy groups. His 32 years of experience includes successfully litigating trials, motions and appeals in complex commercial and residential creditors’ rights matters and many other issues in Courts on all levels. For questions regarding this article, please contact BJ at bjfinneran@zeklaw.com.

Philip Rosen practices in New York and New Jersey, is a member of the firm’s management committee and the chair of the firm’s New Jersey creditors’ rights group. Phil’s diverse practice includes mortgage-related litigation, foreclosures, title and real estate disputes, bankruptcy matters and assisting investors in their acquisition of performing and defaulted loan portfolios. He is seasoned in foreclosure law having foreclosed millions of dollars in commercial and residential mortgages for banks, private equity firms and securitized servicers. For questions regarding this article, please contact Phil at prosen@zeklaw.com.