Financial institutions, lenders, and servicers should take note that the United States Supreme Court (“SCOTUS”) granted an injunction filed by plaintiffs-landlords seeking to prevent the enforcement of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“CEEFPA”) because it violates their due process rights. However, SCOTUS limited its ruling to enjoin the enforcement of only Part A of the CEEFPA, which provides that if a tenant self-certifies financial hardship, a landlord generally cannot contest the certification and denies the landlord a hearing. Thus, financial institutions, lenders, and servicers should continue to abide by other prohibitions regarding foreclosures, evictions, and credit reporting in the CEEFPA.
On August 12, 2021, in Chrysafis v. Marks, No. 21A8, — S. Ct. –, 2021 WL 3560766 (Aug. 12, 2021), the United States Supreme Court granted an injunction blocking the enforcement of New York’s COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020—an anti-eviction law originally passed on December 28, 2020, and subsequently extended. SCOTUS found that the provision allowing tenants to submit an affidavit self-certifying their pandemic-related hardship to prevent eviction violated the plaintiffs-landlords’ due process rights (“Hardship Declaration”).
When enacted on December 28, 2020, the CEEFPA stayed all pending residential eviction proceedings and foreclosure actions for 60 days and provided a further stay through May 1, 2021, to those defendants who provided their landlord or lender/servicer, as applicable, with a Hardship Declaration certifying that they have been negatively impacted as a result of the COVID-19 pandemic. On May 4, 2021, the CEEFPA was extended to, among other things, protect tenants who submitted a Hardship Declaration from eviction until August 31, 2021.
On May 6, 2021, a small group of landlords and the Rent Stabilization Association (“Landlords”) filed a lawsuit in the Eastern District of New York challenging the constitutionality of the CEEFPA. The district court dismissed the Landlords’ complaint and the United States Court of Appeals for the Second Circuit denied the Landlords’ request for an injunction pending their appeal. The Landlords then filed for a petition for a writ of certiorari to the Supreme Court and, on July 26, 2021, filed an application for emergency injunctive relief, which was presented to Justice Sotomayor and referred to SCOTUS.
To read the full client alert, please visit our website.