By Emma Whitford

Law360 (September 2, 2021, 12:21 PM EDT ) New York tenants can expect renewed eviction protections through the end of the year and more landlords will be eligible for pandemic rent relief following a marathon state legislative session that ran well into the night Wednesday.

Lawmakers re-upped a process for tenants to stop an eviction case through Jan. 15 if they're experiencing financial hardship, though landlords now have more recourse in court. The state also allocated an additional $150 million to landlords previously ineligible for rent aid.

The emergency late-summer session — called by Gov. Kathy Hochul in one of her first acts since taking office last week — came at a high stakes moment.

Though rent arrear payments to landlords recently began to pick up, New York's effort to distribute roughly $2.2 billion in federal dollars through the Emergency Rental Assistance Program, or ERAP, got off to a rocky start in June, straining trust and patience among tenants and landlords alike.

Meanwhile, two recent U.S. Supreme Court opinions chipped away at state and federal pandemic-era eviction defenses as local coronavirus cases rose, putting more pressure on ERAP and the protections it affords.

Tenants' path to stay an eviction case into January, albeit qualified, is "better than what we ever could have hoped for," Cea Weaver of the statewide housing coalition Housing Justice for All said late Wednesday.

But the Legislature's Republican minority panned the new measures as more of the same for struggling landlords. "We are kicking a dented can down the road," Republican Sen. Fred Akshar said during floor debate.

Here, Law360 breaks down the new legislation signed by Hochul early Thursday.

Responding To The U.S. Supreme Court

The meatier of two acts is tailored to address the Aug. 12 Supreme Court injunction that blocked part of New York's prior anti-eviction legislation, which took effect in late December and was later extended through August.

Under that law, tenants could simply fill out a form attesting to their pandemic-era hardship to pause or prevent an eviction case. But the justices ruled that this violated landlords' due process, handing a win to the Rent Stabilization Association, a local trade group, and several co-plaintiff landlords.

Now, landlords will be able to request a hearing to challenge any hardship form. "After a hearing, if the court finds the respondent's ... hardship claim invalid, the proceedings shall continue to a determination on the merits," the act states.

If not, the case will be stayed until Jan. 15.

"Basically we're giving people their day in court," Senate Housing Committee Chair Brian Kavanagh, the bill's sponsor and a Democrat, told his colleagues Wednesday.

But the Rent Stabilization Association was not convinced. RSA President Joseph Strasburg issued a statement pledging to try to block the new provisions in court, saying they were in "blatant contempt of SCOTUS' order."

The Legislature also extended protections for commercial tenants, homeowners and small landlords Wednesday. Hardship forms will stave off commercial eviction or mortgage or tax foreclosure until Jan. 15, with the same stipulation that the form can now be challenged in court.

Another eviction defense, New York's Tenant Safe Harbor Act of 2020, has been extended to cover arrears accumulated up to Jan. 15.

Lisa Faham-Selzer of Kucker Marino Winiarsky & Bittens LLP said that in practice, challenging a hardship form will be onerous and costly for landlords. "For the clients that just want the ERAP money, this is fine," she told Law360. "But for clients who need possession, there's no remedy for them here."

ERAP Adjustments

Most of the funding that the federal government allocated to New York to cover pandemic rent arrears, more than $2 billion, is being administered by the state's Office of Temporary and Disability Assistance, or OTDA.

More than $300 million has been administered so far, covering arrears for more than 23,000 households, according to Hochul's office. Another roughly $900 million is being held in the wings on behalf of tens of thousands of provisionally approved households.

On Wednesday, lawmakers voted to earmark $25 million of the federal ERAP funding for tenant legal defense. "The expectation is that it will be mostly for upstate where tenant-side lawyers are scarcer," Kavanagh told Law360.

New legislation also extends the tenant protections within ERAP to renters in a handful of New York localities, including Yonkers and Rochester, that opted to administer their portion of federal funds locally.

Among these protections, landlords who accept ERAP funds are not supposed to raise rent or evict without good cause for one year. The new law also states that an eviction cannot proceed while a tenant's ERAP application is pending — regardless of when the case was filed — after conflicting interpretations bubbled up in local courts.

"Any doubt that the ERAP stay applies to all tenants who have applied to the program … this language clarifies any uncertainty there," Legal Aid Society staff attorney Rebecca Arian told Law360.

ERAP is also now open to tenants and landlords whose localities opted out of the state program, in the event that their local program runs dry.

More still needs to be done to improve the ERAP application process overall, said Jay Martin, director of the Community Housing Improvement Program, a landlord trade group in New York City. The state needs to be "singularly focused on reaching every single tenant in arrears," he said in a statement Wednesday.

"The governor has talked a lot about the outreach that needs to happen," echoed Weaver, of Housing Justice for All. "That's the next step."

New State Funding

In April, New York announced that $100 million in state funds would be set aside to compensate landlords who did not meet federal requirements to have their rent arrears covered.

But months passed without any clarity on how or when the funds would be disbursed. On Wednesday, the state voted to allocate an additional $150 million to the pool and laid out a process for administering it.

Half of the $250 million will initially be set aside for landlords whose tenants exceed a federal income cap, while the other half will be held for landlords who can demonstrate that their tenants have moved out without paying or refused to apply for ERAP.

OTDA expects to have a portal up and running for the latter category before November, according to a memo circulated among legislators Wednesday.

A months-long delay in relief has compounded stress for a subset of landlords, according to Mario Kaiser of Bushwick, Brooklyn. Kaiser said he and his wife agreed to forgive rent arrears accumulated by a departing tenant, based on the assumption that state money would make them whole.

"Here we are with $25,000 in unpaid rent and thousands of dollars in unpaid legal fees, and frankly financially and emotionally destroyed," Kaiser told Law360 last week. "I do wonder if they understand what that does to your faith in government."

Communicating With The Courts

New legislation authorizes the state to share information with New York's Office of Court Administration about tenants who have applied for rent relief, to help courts determine which eviction cases should be stayed.

The change comes after New York City Housing Court Supervising Judge Jean Schneider testified to legislators in August that she had received pushback on her data requests, including "concerns about privacy."

"We really, really, really need to be able to tell when there is an ERAP application pending and we should not be moving forward with the case," she said at the time.

New York City's housing courts did receive a list of residential addresses associated with an ERAP application over the weekend, a court spokesperson told Law360. But the data came through a circuitous route — from New York City's Human Resources Administration rather than directly from the state.

Legal Aid attorney Ellen Davidson praised "any communication between courts and the [state] that doesn't put the onus on the tenant to have appropriate proof."

"We've been asking for closer coordination between OTDA and the courts for a while," she told Law360. "If the holdup has been the statutory language, this is a good thing."

--Editing by Alyssa Miller.

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