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U.S. Supreme Court Enjoins New York Courts From Staying Evictions Based Upon Self-Certified, COVID-19 Hardship Declaration Filings – What Will Happen Next? Print PDF

08.16.2021

On August 12, 2021, the U.S. Supreme Court entered an order in Chrysafis v. Marks, 594 U.S. ___ (Aug. 12, 2021), on an Emergency Application for Writ of Injunction filed by or on behalf of five landlords and one landlord association in New York.

The order enjoined Part A of New York’s COVID Emergency Eviction and Foreclosure Prevention Act of 2020 ("CEEFPA"), relating to self-certified hardship declarations. Below is a summary of the order, along with our thoughts about the order and what potential next steps may be – including this order’s impact upon Part B of CEEFPA, which relates to mortgage and tax foreclosures.

Majority opinion: In the majority opinion, the Court granted an injunction, temporarily enjoining the use of self-certified, COVID-19 Hardship Affidavits as a basis to stay an eviction of a tenant. The injunction is effective pending a decision of the landlord petitioners’ appeal filed in the Second Circuit and any petition for writ of certiorari. 

Specifically, the Court enjoined enforcement of Part A of CEEFPA, which provides that if a tenant in an eviction action "self-certifies financial hardship," a landlord may not contest that certification and shall be denied a hearing. In so ruling, the Court found that "[t]his scheme violates the Court’s longstanding teaching that ordinarily 'no man can be a judge in his own case' consistent with the Due Process Clause."

The Court explained the differences between CEEFPA and the Tenant Safe Harbor Act (TSHA), and confirmed that the Court was not enjoining enforcement of the TSHA, which the applicants did not challenge.

Under the TSHA, courts may consider a COVID-related hardship defense in eviction proceedings, and assess a tenant’s income prior to COVID, income during COVID, liquid assets and ability to maintain government assistance. Under those circumstances, a court may find that the tenant has "suffered a financial hardship" during the covered period, in which case the court may not issue a warrant of eviction or judgment of possession. 

Dissenting opinion: Justice Breyer wrote a dissent, to which Justice Sotomayor and Justice Kagan joined. The dissent found that the applicants had not met the standard for the drastic relief imposed by the Court, because: (1) the legal rights at issue in this case were not "indisputably clear"; (2) there were no "critical or exigent circumstances" to justify the Court’s intervention; and (3) the public interest weighs in favor of honoring New York’s "especially broad" latitude to “act in areas fraught with medical and scientific uncertainties."

As noted by Justice Breyer, CEEFPA simplified the process by which tenants may invoke a financial and/or health hardship that occurred during the pandemic to warrant staying an eviction or prohibiting the commencement of a new eviction during the effective period (which expires on August 31, 2021).

Justice Breyer further suggested that it was unwarranted for the Court to sanction the "extraordinary" relief of an injunction of "a presumptively constitutional state legislative act" – particularly where the underlying lower court denied the request, the Second Circuit has not issued a ruling yet, and the CEEFPA is set to expire "in less than three weeks." Justice Breyer opined that issuance of an injunction is only appropriate where "the legal rights at issue [we]re indisputably clear and, even then, sparingly and only in the most critical and exigent circumstances." In the dissenting justices' view, the applicants failed to meet that standard here.

Analysis and potential next steps: On balance, in our view, the majority opinion properly enjoined the use of self-certifying hardship declarations, while still giving the parties the ability to assert a hardship, and the courts discretion to stay an eviction under appropriate circumstances. By denying a landlord or property owner the right to question, contest or seek a hearing on a self-certified, hardship declaration, the landlord or property owner has been deprived of due process – and, further, deprived of their rights set forth under various contracts, such as lease and rental agreements and/or mortgages.

In addition, the Supreme Court's order does not eliminate a tenant's right to assert a hardship, but merely heightens the standard to ensure there are checks and balances to confirm the hardship before staying a landlord’s right to evict. 

It is important to note that the Court’s rationale as to the constitutionality of Part A of CEEFPA should apply equally to Part B, which governs certain mortgage foreclosures and tax foreclosures in New York. Specifically, Part B contains language identical to Part A staying foreclosures through August 31, 2021, where the homeowner or mortgagor provides a hardship declaration. Likewise, the language in "COVID-19 Emergency Protect Our Small Businesses Act of 2021" ("POSBA") tracks the language in CEEFPA. 

Based upon all this, mortgagees and servicers may have grounds to contest the "hardship declaration" stays in applicable foreclosure matters based on the Supreme Court’s order in Chrysafis. While any such challenge would likely not be resolved prior to the scheduled expiration date of August 31, CEEFPA's effective date has already been extended on multiple occasions. And with the recent rise in COVID cases throughout New York and surrounding metropolitan area, it is very possible that it will be extended yet again, along with the scheduled POSBA expiration.

View a copy of the Supreme Court’s decision.

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