Economic Relief for Non-Profit Organizations Through the Paycheck Protection Program
In response to the 2020 Coronavirus pandemic, President Trump signed into law, a $2.2 trillion economic stimulus program called the Coronavirus Aid, Relief, and Economic Security Act (“Cares Act”). The Cares Act is designed to distribute money quickly to provide immediate financial relief to qualified individuals, small businesses, and other organizations. One of the most far-reaching sections of the Cares Act is the Paycheck Protection Program (“PPP”) which expands the economic relief the Small Business Administration (“SBA”) can offer and creates incentives to retain and pay employees during these uncertain and stressful times.
The Cares Act’s PPP commits $349 billion for – potentially forgivable – loans, by expanding loans provided by the SBA under Section 7(a) of the Small Business Act. PPP expands the recipients eligible for federally-backed loans, by including certain non-profit organizations as a qualified business. Small businesses, non-profit organizations, sole proprietorships, self-employed individuals, and independent contractors that meet the criteria and requirements of the program can apply for a loan through PPP. Specifically, a qualified non-profit organization is any entity: (a) exempt from federal income taxes undereither Section 501(c)(3) and 501(c)(19) (veteran organizations) of the Internal Revenue Code (“Code”), and (b) with fewer than 500 employees, including individuals employed on a full-time, part-time , or other basis . This article will solely focus on how PPP applies to non-profit organizations exempt from taxes under 501(c)(3) of the Code with fewer than 500 employees (“Non-profit Organization”), including certain religious and charitable organizations.
The SBA will guarantee 100% of the loans issued by qualified banks, credit unions and other lenders previously authorized to issue loans under Section 7(a) of the SBA or recently designated by the Treasury Department. Through the PPP, eligible recipients can receive a loan up to $10 million with a fixed interestrate of 0.5%. The loan amount is determined based on the Non-profit Organization’s payroll (as such term is defined below) and will be the lesser of: (a) 2.5 times the average monthly payroll costs incurred during the one year period before the date on which the loan is made (seasonal businesses and companies not in existence from February 15, 2019 to June 30, 2019, are treated differently), and (b) $10 million. The repayment of the loan (principal and interest) will be deferred for six (6) months, however, interest will continue to accrue over this period. No personal guarantee is required, no collateral is needed to be pledged to secure the loan, no administration fee will be charged (although participating lenders may charge a fee) and there will be no prepayment penalties. In addition, the loan is nonrecourse (the lender has no claim against any member of a Non-profit Organization for non-payment), except if the proceeds are used for prohibited or illegal uses.
A PPP loan must be used for the following expenses:
(a) payroll costs,
(b) interest on mortgage obligations (not including prepayment or the payment of principal) or other debt obligations existing prior to February 15, 2020,
(c) rent under an enforceable lease agreement executed prior to February 15, 2020, and
(d) utility payments for which services began prior to February 15, 2020 (collectively, “Eligible Operation Expenses”).
Specifically, “payroll” includes salaries, wages, commission, payroll support (paid vacation, sick, medical and family leave), group healthcare benefits (including insurance premiums), retirement benefits and the payment of state or local employment taxes. However, payroll expenses exclude: (a) salaries for individual employees in excess of $100,000 annually, (b) payroll taxes, railroad retirement taxes, and income taxes, (c) compensation for employees with a foreign principal residence, and (d) qualified wages for which a credit is permissible under another federal program (sick or family leave programs).
A Non-profit Organization can apply for a loan through PPP from any existing SBA lender, federally insured depository institution, federally insured credit union, Farm Credit System institution or from additional lenders authorized by the Department of Treasury, by submitting a loan application and the required supplemental documents. In evaluating a potential borrower, the lending institution will only consider whether the Non-profit Organization: (a) was in operation on March 1, 2020 and (b) paid salaries and payroll taxes during that time. An eligible Non-profit Organization must make a good faith certification to the lending institution stating that: (i) the requested loan is necessary to support operations during the adverse economic conditions resulting from the COVID-19 pandemic, (ii) the funds will be used to retain employees and maintain payroll and (iii) the Non-profit Organization has not and will not receive another loan through the PPP (only one loan is permitted) between February 15, 2020 and December 31, 2020.
If a Non-profit Organization receives a loan through PPP, it is eligible for forgiveness (cancellation) of the indebtedness based on the amount spent on the Eligible Operation Expenses. Due to the high demand, it is anticipated that the SBA will require that 75% of the forgiven indebtedness be used for payroll over the eight (8) week period commencing upon receipt of the loan (“Eight Week Period”). Forgiveness of the loan is not automatic. The Non-profit Organization will need to submit a loan forgiveness application to the servicing lender. The lender must make a decision on the forgiveness of the loan within sixty (60) days from receipt of the forgiveness application.
The loan may be forgiven up to the principal amount, but the forgiven amount may be reduced if: (a) the Non-profit Organization decreases the number of employees during the Eight Week Period. The loan forgiveness reduction is based on the following equation:
The average number of full-time employees per month for the Eight Week Period
divided by
The average number of full-time employees per month from February 15, 2019 to
June 30, 2019 or January 1, 2020 to February 29, 2020 (as such time period is
elected by the Non-profit Organization).
(b) there is a reduction in eligible employee compensation in excess of 25% of such compensation paid during the most recent full quarter period prior to origination of the loan, (c) any of the proceeds of the loan are not used for the Eligible Operation Expenses (in accordance with the required proportions), or (d) the Non-profit Organization does not provide the lender with adequate records evidencing the use of the funds; thus, it is crucial for Non-profit Organizations to keep track of the funds. It is important to note that if a Nonprofit Organization restores the reduction in employees and/or compensation by June 30, 2020, the forgiven indebtedness will not be decreased pursuant to (a) and (b) above.
Any portion of the loan that is not forgiven is subject to a two year maturity date and will continue to operate in accordance with the loan terms agreed upon by the Non-profit Organization and the lender. Last, the Cares Act provides that the forgiven debt under the PPP is excluded from gross income for purposes of the Code of 1986. Therefore, unlike other cancelled debt, the Non-profit Organization will not be required to pay income tax on the forgiven debt.
Non-profit Organizations and small businesses can apply for the SBA loans starting April 3, 2020, and independent contractors and self-employed individuals can apply starting April 10, 2020. The PPP will continue until June 30, 2020, however Non-profit Organizations should apply as soon as funds become available because there will likely be a high volume of applicants and there is a finite amount of funds allocated to the program.
Below are a few key resources to assist Non-Profit Organizations through the application process:
- Fact Sheet: https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf
- Sample Application: https://home.treasury.gov/system/files/136/Paycheck-ProtectionProgram-Application-3-30-2020-v3.pdf
- 100 Most Active SBA 7(a) Lenders: https://www.sba.gov/article/2020/mar/02/100-mostactive-sba-7a-lenders
Disclaimer: The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. Each entity, based on its specific circumstances, must determine whether to seek and secure an SBA loan. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate for all entities to seek such loans. If your religious corporation or non-profit organizations requires assistance, please contact Jodi Warren, Esq., at Jwarren@cbmslaw.com or Renato Matos, Esq., at Rmatos@cbmslaw.com.
Author:
Client Update – COVID-19 GUIDANCE: The CARES Act for Non-Profit Organizations
On March 27, 2020, a $2.2 trillion economic stimulus program called the Coronavirus Aid, Relief, and Economic Security Act (as known as the “CARES Act”), was signed into law, in response to the 2020 coronavirus pandemic. The CARES Act includes provisions that are designed to provide immediate relief to, among others, certain non-profit organizations. One (1) area of note in the CARES Act, includes the expansion of section 7(a) of the Small Business Act (15 U.S.C. 636(a)) (the “Act”), known as the Paycheck Protection Program.
PAYCHECK PROTECTION PROGRAM
Under the CARES Act, the Paycheck Protection Program (“PPP”) provides for $349 billion of forgivable Small Business Administration (“SBA”) loans to qualifying businesses. One such qualifying business eligible for SBA loans are non-profit organizations that (a) are tax exempt under Section 501(c)(3) or Section 501(c)(19) of the U.S. Internal Revenue Code and (b) have less than 500 employees. This would include certain religious and charitable corporations.
Through the PPP, eligible non-profits can receive a loan of up to $10 million with an interest rate not to exceed 4%. The exact loan amount will be determined by a formula directly correlated to the payroll costs (i.e. up to 2.5 times the borrower’s average monthly, less certain excluded payroll costs). No personal guarantee is required, and no collateral needs to be pledged to secure the loan. The SBA will guarantee 100% of the loan and eligible borrowers can apply through their existing SBA lenders, qualified banks, credit unions and other lenders. Lenders will begin processing loan applications as soon as April 3, 2020.
The CARES Act also provides for grant forgiveness of the loans up to an amount equal to the following expenses paid during an eight-week period beginning on the date of the origination of the loan:
1. Payroll costs (subject to certain salary cap and other limitations);
2. Interest on mortgage obligations or other debt existing prior to Feb. 15, 2020;
3. Rent under any enforceable lease agreement prior to Feb. 15, 2020; and
4. Utilities for which service began prior to Feb. 15, 2020.
It is important to note that there are the restrictions on the amount of loan forgiveness that may be received by borrowers, including that the forgiven amount: (a) cannot exceed the loan principal and (b) will be reduced if employees are either laid off or there is a reduction in compensation during such eight-week period. However, if those employees are rehired or if their compensation is restored to the February 15, 2020 levels prior to June 30, 2020, then the forgiveness reduction penalties will not impact the business or entity.
The application can be found here, along with a fact sheet for borrowers here, provided by the U.S. Department of the Treasury. Additional information regarding the mechanics and requirements of the PPP will be released in the coming weeks.
For any questions or comments, please reach out to our team member, Jodi Warren, Esq., at jwarren@cbmslaw.com.
Big Changes are Expected for the Medicaid Program – Stuart Schoenfeld & Monica Ruela
Governor Cuomo recently announced his proposed State Budget for 2020-21 and it is making the many of us working with the elderly or disabled very nervous. The proposed budget states that $2.5 billion must be cut from the Medicaid program. Although the proposed budget does not specify which aspects of the Medicaid program will be cut, it does set up a Medicaid Redesign Team (“MRT”) designed to consider the aspects of the Medicaid program that should be changed or eliminated. These recommendations are expected to come out in mid-March.
Although no one knows for sure what these recommendations will be, we have some good guesses as to what is on the chopping block. The first item under the microscope is the Consumer Directed Personal Assistance Program (“CDPAP”). The CDPAP program allows consumers to recruit, hire, and direct their own home care workers, rather than using caregivers from agencies. In many cases, the most appropriate and suitable care can best be provided by a relative or other chosen caregiver rather than an agency.
The second item is the Spousal Refusal. The Spousal Refusal is utilized by many couples applying for long-term care benefits for an ailing spouse – either at home or in a facility. This essential eligibility strategy ensures that the “well” spouse can protect needed resources and income to pay living expenses. The elimination of this strategy would be devastating to many throughout the state as it would mean that both spouses would need to be impoverished to get on the program.
Various NYS bar associations are advocating for these needed programs. We at CBMS continue to vigilantly watch the changes to the Medicaid program and we urge our friends, colleagues and clients to be proactive about their own Medicaid planning. We are always here to address any questions and concerns.
David de Barros has been Promoted to Partner!
CBMS is proud to announce that associate attorney David de Barros has been promoted to Partner, effective as of Jan 1, 2020.
Lecture on Passive Activity Losses
CBMS Partner Robert Barnett recently presented a lecture through Lorman discussing how to utilize passive activity losses including recent tax legislation and cases.
With so many new tax rules, it is important to be informed before the upcoming tax season Lorman has graciously offered this 93-minute lecture to our friends and colleagues at a 50% courtesy discount. The course is eligible for 1.5 CPE credits in Connecticut, New Jersey and 9 other states.
Click the link below if you would like to access it as either an OnDemand Webinar, an audio file and reference manual delivered on USB flashdrive, or MP3 download of the webinar along with reference manual.
A Successful 5th Interchurch Center Conference!
CBMS is pleased to report the success of our 5th annual Interchurch Center Conference. This year, titled ‘”Reenvisioning Mission and Ministry: Creative Strategies for the Church of Tomorrow” had amazing speeches from all of our speakers, beginning with our Keynote address: How We Gather’s Casper ter Kuile. Casper is the co-founder of Sacred Design Lab, a research and design consultancy working to create a culture of belonging and becoming. His engaging speech gave audience members opportunities to reflect and converse with each other, but also to ask thought-provoking questions and learn about the parallels of gathering in different circumstances.
Bill Woolsey, founder of the FiveTwo Network, and Melissa Spas, Director of Education and Engagement of the Lake Institute on Philanthropy and Giving, rounded out the rest of the speakers with their own respective talks on Christianity’s place in leadership, and the ways beyond monetarily that we can contribute philanthropically.
The conference was wrapped up with two panels, first a diverse panel of pastors from various backgrounds and denominations speaking of their various experiences as leaders of the faith in New York. The Reverends Cleotha Robertson, Andrew Durbidge, William Critzman, and Lenny Duncan delivered touching anecdotes about the different struggles that come with leading a congregation, being LGBT, not having enough money to renovate appropriately, and more. Ultimately their different backgrounds demonstrate the individual perspectives that they bring to the table in order to solve the problems that they all face.
Finally, the Council of Church Advisors, a not-for-profit group that was a main sponsor for the Conference held a panel with its members discussing how to spearhead solutions from different professional avenues. They are a diverse group of individuals from different professions that have joined together to help address and fix the ailments presented to most modern congregations, and from a multi-faceted approach work with leaders of said congregations.
We hope all who attended enjoyed themselves and took something valuable away from the conference. Here’s to another successful conference next year!
CBMS Attorney Secures Plea Deal that Removes Pro Bono Client from Tennessee’s Death Row After 18 Years
Capell Barnett Matalon & Schoenfeld LLP attorney Elizabeth Cate recently successfully negotiated a favorable plea agreement for a CBMS pro bono client who was facing the death penalty for the second time on capital murder charges in Memphis, Tennessee. As the ABA Death Penalty Project noted “a term-of-years plea deal for a reduced charge on a remand capital case is extremely rare.” Ms. Cate and her co-counsel also uncovered new evidence that will provide the client, Andrew Thomas, with a basis to challenge his federal convictions and life sentence on charges stemming from the same 1997 armed robbery for which he faced charges in Tennessee state court.
Under the plea agreement, reached on the morning that opening arguments in Mr. Thomas’s re-trial were scheduled to begin, Mr. Thomas entered an “Alford plea” to one charge of Murder in the Second Degree and in return, the Shelby County District Attorney’s Office agreed to a sentence of 25 years. An “Alford plea” is a guilty plea under which the defendant does not admit that he is guilty of the crime charged, but admits that, if he went to trial, the evidence presented by the prosecution would likely result in his conviction. Under local rules, Mr. Thomas will receive credit for the 22 years he has already served in custody, making him eligible for release from state custody within the next three years.
Ms. Cate began working on Mr. Thomas’s federal and state habeas corpus petitions in 2013 while at her prior firm, which acquired the case through a referral from the ABA Death Penalty Project. In 2017, she and her team successfully vacated Mr. Thomas’s state conviction and death sentence for felony murder charges in the Sixth Circuit Court of Appeals. A panel of the Sixth Circuit found that Mr. Thomas’s conviction and death sentence should be reversed because the state prosecutor had a duty to disclose to Mr. Thomas’s trial counsel a $750 payment that law enforcement made to Mr. Thomas’s ex-wife after her testimony against him at his 1998 federal trial on armed robbery and weapons possession charges relating to the 1997 armed robbery. Mr. Thomas’s ex-wife also testified at his state trial for capital murder charges three years later stemming from the delayed death of the armored car guard shot during the robbery. Mr. Thomas’s lawyers in both of his trials were never told about the payment. The Sixth Circuit found that “the prosecutor had a duty to disclose this payment rather than allow the witness to commit perjury by denying its existence” and that failing to disclose this evidence was “particularly egregious.”
A re-trial in Shelby County criminal court was scheduled for July 2019. Ms. Cate, along with appointed Memphis counsel Claiborne Ferguson and Mike Working, were prepared to challenge the state’s claims that he shot the guard in the robbery and that the guard’s eventual death over two years after the shooting was a direct result of the gunshot wound inflicted during the robbery. After four days of jury selection, and extensive negotiations with the Shelby County DA’s Office, the prosecutor agreed to the deal that Ms. Cate and local counsel proposed – an Alford plea to Murder in the Second Degree with a 25-year sentence.
Partner Joseph Milano’s Case Featured in New York Law Journal
Partner Joseph Milano, representing the Metropolitan New York Synod of the Evangelical Lutheran Church in America (“Synod”), defended the Synod in a case against Eltingville Lutheran Church (“Eltingville”), one of their nearly 200 interdependent member churches. After a nearly two year ecclesiastic process, the Synod Council determined that Eltingville could no longer fulfill the purposes for which it was formed and took charge and control of Eltingville’s property pursuant to Church doctrine and polity and New York law. Eltingville sought to have the New York State Supreme Court nullify the decision of the Synod Council and prohibit the Synod from imposing synodical administration at Eltingville. The Synod moved to dismiss Eltingville’s complaint, arguing that the Supreme Court lacked jurisdiction over this internal church dispute because the decision of the Synod Council was a nonjusticiable religious dispute. The Supreme Court granted the Synod’s motion. Eltingville appealed to the Appellate Division, Second Department, which affirmed the decision of the lower court, stating that the “First Amendment forbids civil courts from interfering in . . . religious disputes” and that by “uniting with a denominational body, a local congregation consents to be bound by the ecclesiastical determinations of the denominational government, subject only to such appeals as” that denomination itself provides.
Mr. Milano represents many denominations and has successfully litigated numerous cases related to governance of religious organizations.
A link to the full article below:
Summary of Housing Stability and Tenant Protection Act of 2019
June 25, 2019
Housing Stability and Tenant Protection Act of 2019
A.8281/S.6458 (C.36 of the Laws of 2019)
Adopted June 14, 2019
On Friday, June 14, 2019 Albany lawmakers approved, and Governor Cuomo signed, legislation entitled The Housing Stability and Tenant Protection Act of 2019. A technical correction by way of a Chapter Amendment passed the Legislature on June 20, 2019 and was signed by the Governor on June 25, 2019. This legislation will significantly change New York State’s rent laws.
In prior years, the rent regulation law was up for examination and renewal, based on whether a housing crisis still existed, every 4-8 years. Now the rules have no expiration date. Additionally, other municipalities outside of New York City and its neighboring counties of Rockland, Westchester and Nassau may also opt-in to the provisions of stabilization.
Chapter Amendment
A.8433/S.6615 – Part Q (C.39 of the Laws of 2019)
Effective Date: June 14, 2019
The Chapter Amendment provides a series of technical corrections and edits to the adopted bill. The Rent Regulations sections of the bill (Part Q) are retroactive to the same date as Chapter 36 of the Laws of 2019.
SUMMARY OF CHANGES TO RENT STABILIZATION LAW
Please note, in parentheses is the relevant sub-section of A.8281/S.6458 for reference.
Changes to stabilization:
– Sunset Provision: Eliminates the sunset provision of the Emergency Tenant Protection Act (ETPA) and makes rent regulation permanent (Part A).
– Extension of the ETPA state-wide as an opt-in program by individual counties meeting the criteria of a housing emergency, as defined by a vacancy rate of less than 5% (Part G).
– High-rent vacancy and High income/high rent (luxury) deregulation are eliminated (Part D).
– “Owner use” provision limited to a single unit for a “immediate and compelling necessity” and lowers the tenure provision from 20 years to 15. Additionally, tenant is due damages and reasonable attorneys’ fee for fraudulent statements (Part I).
– Non-profit status: Units rented by non-profits for homeless must remain in stabilization (Part J).
– Overcharges – extends the overcharge look back from four to six years, allows for the examination of all available rental history, no “safe harbor” for proactively providing refunds (Part F).
– $10 fee is increased to $20 per unit to offset the cost of administering the ETPA (Part K).
– DHCR is subject to greater accountability through an annual public reporting requirement (Part L). According to the Chapter Amendment, it must promulgate its rules and regulations and have its centralized electronic retention system operational by June 14, 2020.
Changes that impact 421a/Affordable New York
– As amended by the Chapter Amendment, A.8433/S.6615, there are no changes to the 421a or Affordable New York programs’ stabilization status.
– However, those changes outlined in Part M that affect all rental units would apply, and if an owner sought a co-op or condo conversion, those changes as outlined in Part N would apply as well.
– Elimination of the vacancy allowance.
Status of De-Regulated Units prior to the 2019 Act
- The Chapter Amendment adds clarifying language that units lawfully deregulated prior to the adoption of The Housing Stability & Tenant Protection Act of 2019, Chapter 36 of the Laws of 2019 are not being re-regulated.
Changes that impact the ability to raise rents to cover expenses or improvements:
– 20% vacancy allowance and longevity bonus are eliminated (Part B) and prohibits a rent guidelines board (RGB) from instituting vacancy allowances (Part C)
– Preferential rents cannot be increased to the legal rent at renewal unless such rents are set pursuant to a regulatory agreement with a local government agency and uses project based rental assistance (HUD Funding) where the rents are set by a federal, state or local governmental agency (Part E)
– Rent controlled apartments now limit the maximum collectible rent increase to a five-year average of RGB increases and eliminates the fuel pass through (Part H)
– Individual Apartment Improvements (IAIs) are significantly curtailed along with increased oversight by DHCR (Part K):
o Improvements limited to $15,000 cap that can be expended on no more than three separate IAIs within a 15-year period.
o Licensed contractors must be used and there can be no common ownership between the landlord and the contractor or vendor.
o Increases shall be 1/168 for buildings with 35 or less units or 1/180 for buildings with more than 35 units, for a period of 30 years.
o Surcharges are eligible for increases but such increases must also be removed at the end of 30 years.
o Mandates DHCR to create a notification and documentation procedure and the electronic retention of such.
o The Chapter Amendment requires that forms for tenant consent of IAIs are provided in English and the top 6 other languages spoken in the state.
o The Chapter Amendment clarifies that new caps on rent increases for IAIs will go into effect at the next lease renewal for affected tenants.
– Major Capital Improvements (MCIs) are significantly curtailed along with increased oversight by DHCR (Part K):
o Increases shall be capped at 2% for a period of 30 years, amortized at a 12-year period for buildings with 35 or less units or 12.5 years for buildings with more than 35 units.
o For any previously granted MCIs between June 16, 2012 and June 14, 2019, increases will be capped at 2% instead of 6%. The Chapter Amendment clarifies that new caps on rent increases for MCIs will go into effect at the next lease renewal for affected tenants.
o Surcharges are eligible for increases but increases must cease at the end of 30 years.
o Licensed contractors must be used and there can be no common ownership between the landlord and the contractor or vendor.
o DHCR must set a schedule of reasonable costs for MCIS, included a ceiling for what can be recovered, and prohibits group work done in an individual unit that is otherwise not an improvement to an entire building.
o The law prohibits MCI in buildings with fewer than 35% of units that are stabilized.
o The law specifically prohibits MCIs if the landlord is receiving federal grants or insurance proceeds for the repair. However, insurance and Federal recovery aid can take multiple years to process, leaving MCIs as the bridge to recover a portion of the costs. Insurance and recovery aid often do not cover the full cost of repairs following a natural disaster.
o DHCR must inspect and audit for the review of 25% of the filed MCI applications.
o Tenants have a 60-day comment/review period.
o DHCR must provide reasons for approval or denial of a MCI application.
Changes that impact ALL rental units
Part M, entitled “Statewide Housing Security and Tenant Protection Act of 2019” enacts the following changes which would apply to all rental units, regardless of stabilization status:
– When signing a new lease:
o Limits security deposits to one month’s rent.
o Bans the use of “tenant blacklists.”
o Limits application fees.
– For lease renewals:
o Prohibits denying lease renewals or an unreasonable rent increase as a retaliatory measure when code complaints have been made.
o Aside from what the lease itself may state, if the owner intends to raise the rent above 5% or intends to not renew the tenancy, the owner must send notice. If the tenant has occupied the unit for less than one year, 30 days’ notice is required. For a tenant that occupies a unit for more than one year but less than two and has a lease of more than one year but less than two, 60 days’ notice is required. For tenants that have occupied a unit more than two years or a lease term or at least two years, 90 days’ notice is required.
o Requires written notice of late payments.
– When ending a lease:
o Provides a “cure” path on behalf of the tenant to fix any issues to secure the full or partial security deposit amount.
o Limits recoverable rents for early lease termination.
o Warranty of habitability is amended to include a duty to repair, thus extending the warranty to include a retaliatory eviction due to complaints on housing condition. A finding of retaliatory eviction carries severe penalties.
– Changes to landlord-tenant proceedings:
o For all apartments, rent stabilized or fair market, RPL 226-c requires notice of rent increase of more than 5% or a notice of non-renewal depending on the term of the lease and RPL 232-a requires this notice to be served by a process server service, not mail.
o For all apartments, under RPL 232-e, a Landlord has a duty to mitigate damages.
o For all apartments, RPL 238-a limits fees that can be sought in a summary proceeding except if provided by regulation or statute.
o For all apartments, RPAPL 702 definition of Rent.
o Rent demands are now 14 days, not 3.
o RPAPL 745: Where you used to be able to seek use and occupancy in court as of the date the (notice of petition and petition) NPP was served, after Tenant adjournment of more than 30 days and get dismissal of defenses and counterclaims if not paid, now it is 60 days, a Tenant request to seek counsel does not count, the order to pay is only as of the date of the order not back to when NPP served and it must now be on written notice and if not paid pursuant to the court order, remedy is not dismissal of defenses and counterclaims, but a trial subject to Court’s scheduling. No Court order if Tenant can make a colorable claim of overcharge or hazardous or immediately hazardous conditions.
o RPAPL 749: Marshall notice now 14 not 3 days. Eliminated that issuance of warrant cancels lease [impacts bankruptcy], Court now has power at any time to stay, vacate or restore. Now Tenant in a nonpayment proceeding can pay anytime before execution of warrant. Before it used to be 5 days.
o RPAPL 753: Instead of court having discretion to give only up to 6-month stay if pay use and occupancy, it is now one year and where it applied only to tenants, it now applies to occupants. Factors to consider include extreme hardship for the Tenant. Changes the time to cure defaults after trial from 10 to 30 days.
Co-Op/Condo Conversions (Part N).
– Removes eviction plans from future filings;
– Prohibits unreasonable increases for eligible seniors or disabled tenants who are unable to purchase their units.
– Conversion rate increased to purchase of 51% of all apartments solely by tenants in occupancy.
– Exclusive right to purchase for 90 days with a six-month extension.
Mobile & Manufactured Home (MMH) tenant protections, including provisions around rent-to-own contracts, rent increases, a bill of rights, and changes in use to the underlying land are covered in Part O.
**disclaimer**
This commentary is only an illustrative guide intended to direct the reader to further investigation and due diligence. It is not comprehensive and the full text must be reviewed in order to address most questions. This does not constitute legal advice nor can it be taken as a substitute for counsel with an attorney after full disclosure of all information pertinent to a client or potential client’s particular situation.
Partner Robert Barnett Named Chair of NYSSCPA Estate Planning Committee
The New York State Society of CPAs recently nominated partner Robert Barnett as chair of its Estate Planning Committee for 2019 and 2020. We are extremely proud of Robert and excited for him to represent Capell Barnett Matalon & Schoenfeld while serving as a part of this prestigious organization.