COVID-19 has had a serious impact on the real estate industry, especially as it relates to rentals, both on residential and commercial landlords and tenants. Both, landlords and tenants, are frustrated with the limitations imposed on the judicial system that resulted in court proceeding delays and the implementation of governmental assistance programs for those in arrears as a result of COVID-19, for example, in New York State the processing of tenants’ emergency rent relief applications under the Emergency Rental Assistance Program (“ERAP”).
Rosalyn Maldonado P.C. received complaints from tenants that have applied for rent relief under ERAP, however, their landlords have not cooperated with the application process. Landlords refuse or decline to respond to requests for information which are needed for the government to process the tenant rent relief application. It is unclear the reasoning behind the lack of cooperation; however, some of these landlords may have serious adverse consequences since they may be, unknowingly, waiving their ability to collect unpaid rent from that tenant. That is a game changer. There are tenants that have been unable to pay rent since March 17, 2020 due to a change in their work situation as a result of the initial closures, layoffs, furloughs, permanent business closures, or the severe illness or death of a family member who maintains or contributes to the family household. This relief is essential for the tenant to make the landlord whole but the tenant cannot avail itself of this resource without the landlord. For that reason, it appears that landlords may be penalized for not assisting their tenants in assessing these resources to bring their rental obligations up to date.
Why would landlords not cooperate with their tenants to get them paid? The main motivation may be that they are seeking to regain the rental units through an expired lease or holdover. Landlords may think that they can remove their tenants and then pursue the collection of the unpaid rents in breach of contract actions. But to be clear, landlords may have to decide which motivation is more important – (1) recovery of the unit and foregoing their rental arrears, or (2) recovering their unpaid rent and then pursuing recovery of the rental unit through another legal means after one (1) year following receipt of the rent relief payment. Rosalyn Maldonado P.C. recommends to its clients the latter, to obtain unpaid rent because the eviction moratorium continues until January 15, 2022 and may be extended beyond that date due to the increase in COVID-19 infections caused by the virus mutation into the Delta and Omicron variants. As everyone knows, the moratorium started in March 2020 and has remained in effect for over one (1) year. Additionally, once the moratorium is lifted, the courts will likely be backlogged and the pre-pandemic cases that have been on hold will need to be addressed before any of the cases filed or started after March 17, 2020. All these factors combined make this landlord/tenant battle a high stakes situation, but, practically, with all the unknowns presented by the COVID-19 Pandemic one thing is certain: if landlords forego cooperating with their tenants, they may very well forego recovering their back rent in the future.