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December 29, 2020
NEW PPP LOANS AVAILABLE
NEW EVICTION AND FORECLSOURE MORATORIUMS IMPOSED

Over the last two days, the Federal government and the New York State legislature have passed Covid-19 relief related  laws which will have a substantial impact on our clients.  On Sunday night, President Trump signed into law the $900 billion Covid relief package, which, among other things, allows for a second wave of filings for potentially forgivable payroll protection loans. The legislation allows cooperative housing corporations (but apparently not condominiums or homeowners associations) to file for the loan. On Monday, December 28, New York State enacted its own “Covid-19 Emergency Eviction and Foreclosure Prevention Act” which substantially stays all residential eviction proceedings and mortgage foreclosures until May 1, 2021. Non-payment proceedings against commercial tenants remain stayed by executive order until January 31, 2021.
 
The Payroll Protection Program Loans
The Federal government has earmarked another $284 billion for the SBA’s Payroll Protection Plan. In addition to first time applicants, the new law allows entities who received a prior loan to apply for a second loan.  In good news for our co-op clients, the new law expressly permits cooperative housing corporations to file for the loan. Condominiums and Homeowner Associations were not specifically included in the bill.  In short, most business are eligible to borrow up to 2½ times their monthly payroll; restaurants and other food service providers are eligible to borrow up to 3½ times the monthly payroll.  The requirement that 60% of the proceeds be used for payroll in order to be eligible for forgiveness remains.  However, that means up to 40% of the loans can be used for other forgivable expenses such as rent. This may be a good opportunity to speak to delinquent commercial tenants about applying for the loan and using as much of those proceeds as possible to pay any outstanding rent which has accrued. While buildings who have not seen a substantial decline in maintenance revenue are still technically eligible for the loan, before applying, the Board should discuss with its management, accountant and attorneys, its ability to meet the SBA requirement that it certify that “the uncertainty of current economic conditions makes it necessary to apply for the PPP loan to support its ongoing operations.” Finally, many commentators believe that this allocation of PPP money will be gone quickly so if you are eligible, we suggest you get in touch with your banker quickly to submit an application before funding no longer exists. Updated regulations which may clarify further eligibility requirements have not yet been released by the SBA. 
 
New York State Legislation
New York State has enacted what the State Senate proudly calls the strongest bill in the nation to prevent evictions and foreclosures against individuals who have been financially impacted by Covid-19.  The bill basically stays all eviction and foreclosure proceedings until May 1, 2021.  This bill does not offer any relief to commercial tenants; however, by Governor Cuomo’s executive order, the commercial moratorium has been extended to January 31, 2021. The moratorium not only stays residential summary proceedings, it covers any proceeding brought to recover property. This would include actions brought in Supreme Court for ejectment.  However, it does not affect the Cooperative’s ability to seek to recover a money judgment for the maintenance owed or exercise any non-judicial rights it may have under the proprietary lease or the Uniform Commercial Code. 

The stay does not apply to those cases where a tenant is "persistently and unreasonably engaging in behavior that substantially infringes on the use and enjoyment of other tenants or occupants or causes a substantial safety hazard to others."  

While the moratorium does not apply to any action taken by a Condominium to foreclose on a common charge lien, those Condominiums who have asserted lien foreclosure claims as cross-claims in a foreclosure proceeding  commenced by a Bank, may find itself unable to move its claim forward because of any stay imposed on the prosecution of the Bank's foreclosure action.

As the Courts release their own regulations relating to the implementation of these new laws, we will keep you advised of any significant changes.
 
In  the meantime, we wish everyone a happy, healthy and safe New Year. 

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Tane Waterman & Wurtzel, P.C. · 120 Broadway Ste 948 · New York, NY 10271-0996 · USA

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