Dear Valued Clients, Colleagues and Supporters: We hope that you and your families continue to remain safe and healthy during these extremely uncertain times. We are writing again as part of our continuing commitment to provide useful legal updates and other information pertaining to options and resources for those affected by the COVID-19 pandemic.
Mortgage and Rent Payment Suspension
On March 24, 2020, Governor Andrew Cuomo signed Executive Order No. 202.9 directing financial institutions to grant a forbearance on mortgage payments to individuals and businesses suffering a financial hardship as a result of the COVID-19 pandemic for a period of ninety (90) days.
Those businesses and individuals looking for some cash-flow relief or reducing their financial stress during these uncertain times may consider making that call prior to the end of the month for mortgage payment relief.
As for rent relief, there are no executive orders issued as of the date of this newsletter, but that could change. However, pursuant to the "New York State on PAUSE" executive order, which went into effect March 22, 2020, there is a 90-day moratorium on both commercial and residential evictions. It is not clear as of the date of this letter, whether any provisions will be made for rental payments to be forgiven, for direct assistance to be provided, or if landlords will receive tax breaks to offset losses in rental income.
In the meantime, to determine whether you already have any options for immediate rent relief–whether in the commercial or residential context–the terms of your individual lease will govern. Look to business interruption clauses to understand whether you have any rights to suspend rent payments in commercial leases (no such right in residential leases). While you may also want to review your business interruption insurance policies, it is our understanding that most carriers are disclaiming such losses. Regardless, contact your landlord or tenant and start an earnest discussion about reasonable options. This is a time of communication - positive and equitable communication. Some options could include written rent deferral agreements or temporary reduction agreements.
One major question many clients have asked in the interim is whether any rent or mortgage payments would become due at a later date as a lump sum amount or be added back into the principal with the mortgage or future rent payments with the terms extended at the bank end of the loan or lease. For the time being, many lenders are not committing, but are providing 30 day extensions automatically as of the date of this letter with 60 and 90 day further extensions available under the Executive Order. For renters, this will have to be negotiated on a case-by-case basis, until further guidance is issued.
New York Courts All But Closed
As ordered by Chief Judge Janet DiFiore and Chief Administrative Judge Lawrence Marks, New York Courts will be closed to all legal proceedings except those deemed "essential matters." Courts will not be accepting filings, electronically or on paper, in any non-essential proceedings and will be extremely lenient on any party who is unable to meet deadlines due to the COVID-19 pandemic. Litigants or anyone considering court proceedings should discuss their option with counsel before taking action and to determine whether their situation falls within an "essential" category.
Pursuant to Executive Order 202.8, Governor Cuomo has extended any statutes of limitations or court imposed deadlines until April 16, subject to further extensions so for most client and most matters, this court shutdown will not result in a loss of any right to bring a claim or pursue a remedy in court but will certainly create substantial delays both during and after the shutdown.
Small Business Assistance
New York City has offered some initial financial assistance for small businesses who are suffering during this crisis. Any New York City business with four (4) or fewer employees that can demonstrate a decrease of 25% or more in revenue as a result of COVID-19 are eligible to receive a grant covering up to 40% of their payroll for two (2) months, up to $27,000.
Businesses must also have been in operation for at least six (6) months and have no outstanding tax liens or legal judgments against them.
Additionally, the City is making zero interest loans of up to $75,000 available to business with under one hundred (100) employees. Business must likewise demonstrate that they have no outstanding tax liens or legal judgements and that they will be able to repay the loan.
For both of these forms of relief, the City has made applying accessible via the internet at the following website.
One of both of these options may be better for certain business than the furlough-related options we previously discussed.
New York state has expanded the Paid Family Leave Act to apply to individuals who are quarantined as a result of the COVID-19 outbreak or if they have to care for their dependent child as result of the pandemic. Employees who work from home are not eligible for these benefits. The State has issued extensive guidance on Paid Family Leave under COVID-19 here. Readers can view our previous posts on PFL here and here.
On the Federal level, the Families First Coronavirus Response Act (FFCRA) goes into effect on April 2, 2020. The FFCRA expands the Family and Medical Leave Act to allow employees to take leave for reasons related to COVID-19, including to care for children who are home due to school closings. The U.S. Department of Labor has issued extensive guidance here. As with any of these developments, we are available to discuss how they impact both employees and businesses alike.
Credit card companies have been cooperating with customers in forgiving payments for a month and waiving any interest and penalties related to the deferment. You should call your credit card companies right away to see what relief is available and what relief maybe made available in the future.
Federal and State tax filings are now due July 15, 2020.
As always, we will continue to stay abreast of any legal developments that affect our clients, their families, and their businesses and do our best to
share them directly with you. Until then, stay strong.