Real Estate, Construction & Infrastructure

The landscape for foreclosures and evictions in New York State is constantly evolving. With the entire State of New York in Phase 4 of New York Forward, the courts have begun to reopen (at least virtually) and certain foreclosure proceedings have resumed. Eviction proceedings remain stayed as against those commercial and residential tenants who demonstrate COVID-related hardship.

On July 6, 2020, Massachusetts entered Phase 3 of its four-phased approach to reopening.  The Administration also updated its Sector Specific Workplace Specific Safety Standards for Office Spaces to Address COVID-19, which were originally released on May 18.  

On Monday New York City entered Phase 1 of re-opening. Phase 1 guidance provides specific guidelines relating to construction, manufacturing, whole trade and select retail (for curbside pickup only), agriculture, forestry and fishing. For purposes of this publication, we have focused on the State of New York’s mandatory summary guidelines for construction related activities. Many real estate developers will fall under the umbrella of “construction businesses” and we are providing an overview of the construction specific requirements established by the guidance issued by the New York State Department of Health.

In late May, guidance for Phase 2 of Governor Cuomo’s New York Forward re-opening plan was issued. New York City is expected to enter into Phase 1 on June 8th, and thereafter Phase 2, provided certain thresholds are satisfied.

On May 26, 2020, Mayor de Blasio signed into effect N.Y.C. Council Int. No. 1932-A (2020). The law amends NYC administrative code by rendering unenforceable provisions in commercial leases providing for personal guaranties by individuals where the tenant’s business was negatively impacted by COVID-19.

Recent Executive Orders by New York Governor Cuomo and Administrative Orders by the New York State courts effectively have stayed the enforcement of residential and commercial evictions and foreclosures in New York through June 20, 2020, and barred the commencement of any such new proceedings until further order of the courts.

On May 18, 2020, the Baker-Polito Administration revealed its four-phased approach to reopening the Massachusetts economy and getting people back into the workplace in a safe manner, all while gradually easing social restrictions in order to minimize the negative health impacts of COVID-19.

COVID-19 has flipped the landlord-tenant relationship on its head. Prior to the COVID-19 pandemic, the relationship between landlords and tenants—and the payment of rent—was governed by the terms of the lease.

COVID-19 has flipped the landlord-tenant relationship on its head. Prior to the COVID-19 pandemic, the relationship between landlords and tenants—and the payment of rent—was governed by the terms of the lease.

The United States Supreme Court’s April 23 decision in County of Maui v. Hawai’i Wildlife Fund (https://www.supremecourt.gov/opinions/19pdf/18-260_i4dk.pdf) proves that legislating is best done by the Congress, not the Courts. The Court’s decision also tells us that the era of judicial deference to EPA that began in the mid-1980s seems to be coming to an end.

Today, April 20, 2020, Governor Charles Baker signed into law an act providing for a moratorium on evictions and as well as foreclosures of residential property (the “Act”) during the pendency of Massachusetts’ COVID-19 emergency declared by the Governor on March 10, 2020.

In accordance with Governor Cuomo’s Executive Order 202.6 issued on March 7, 2020, and the Guidance on Executive Order 202.6 issued on March 27, 2020, all non-essential construction is suspended in the State of New York.

In part one of our two part series we discussed a number of the menu options that may be available to commercial landlords and tenants to help them protect their businesses during the COVID-19 pandemic, but few of those options we discussed in part one are without their own unique set of hurdles.

On March 24, we posted a summary of California’s “shelter in place” order issued on March 16, 2020, and in particular discussed the relationship between it and the Bay Area county orders already in effect at the time. As expected, the Bay Area counties have since lengthened the duration of their shelter in place orders to May 3, 2020 (except Solano County, which extended to April 30) and implemented tighter restrictions.

The interruption to business-as-usual in the commercial real estate industry brought about by the COVID-19 pandemic has been unprecedented and, while hopefully only temporary, the full extent of the impact may not be entirely understood for some time to come. Below, we explore just some of the options both landlords and tenants will want to consider when looking to answer that question.

In response to the COVID-19 outbreak, the United States, like many states has reacted by providing certain multifamily landlord and tenants with economic benefits during this unprecedented global pandemic. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Section 4023 of the CARES Act contains several provisions that assist borrowers of federally backed multifamily mortgage loans due to the COVID-19 outbreak.

On March 23, 2020, Governor Charlie Baker of Massachusetts issued COVID-19 Order No. 13 requiring all businesses and organizations in the Commonwealth of Massachusetts that do not provide “COVID-19 Essential Services” (“Essential Services”) to close their physical workplaces and facilities to workers, customers and the public as of 12:00 noon on Tuesday, March 24, 2020 until 12:00 noon on April 7, 2020. On March 31, 2020, Governor Baker issued a related order, COVID-19 Order No. 21 (the “Order”) extending the operation of its previous order to May 4, 2020 and updating the list of Essential Services based on federal guidance.

On March 23, 2020, Governor Charlie Baker of Massachusetts issued COVID-19 Order No. 13 (the “Order”) requiring all businesses and organizations in the Commonwealth of Massachusetts that do not provide “COVID-19 Essential Services” (“Essential Services”) to close their physical workplaces and facilities to workers, customers and the public as of 12:00 noon on Tuesday, March 24, 2020 until 12:00 noon on April 7, 2020.  

On March 16, 2020, the City and County of San Francisco issued an order requiring all individuals in San Francisco County to “shelter in place” from March 17, 2020 through April 7, 2020. The surrounding Bay Area counties (e.g. Santa Clara County, Alameda County, etc., etc.) also issued orders largely mirroring San Francisco’s directive.

As part of the “New York State on PAUSE” response to the COVID-19 outbreak, on March 20, 2020 Governor Cuomo issued Executive Order No. 202.8 requiring a 100% reduction of the in-person workforce of all non-essential businesses in New York State. While the reduction of in-person workforce is broad reaching, the essential services exception serves to allow landlords to continue providing basic security, janitorial service, and other services truly needed for maintaining and operating their buildings.  Furthermore, landlords and tenants should be able to maintain the IT infrastructure needed for remote work, provided they are doing so in a manner that otherwise comports with the NY State on Pause requirements.