Eastern District of New York Provides Guidance on Challenges to Tenant Hardship Declarations Under CEEFPA Print PDF
On November 29, 2021, the U.S. District Court for the Eastern District of New York provided guidance for landlords wishing to challenge hardship declarations filed under the COVID-19 Emergency Eviction and Foreclosure Prevention Act. (“CEEFPA”).
In Chrysafis v. Marks, No. 21-CV-2516 (GRB) (EDNY Nov. 29, 2021), a group of landlords challenged the constitutionality of CEEFPA’s provisions allowing tenants to file hardship declarations that would stay any eviction until January 15, 2022.
While the Hon. Gary R. Brown ultimately ruled that these plaintiffs lacked standing to challenge the constitutionality of CEEFPA – because they made no effort to actually challenge the actual hardship declarations – his decision offers welcome clarity as to what it may take to mount a successful challenge to a suspected bad faith hardship declaration.
By way of background, on August 12, 2021, in this same action, the plaintiffs successfully obtained an order from the U.S. Supreme Court “enjoining the enforcement of Part A of CEEFPA,” which provided for a stay of eviction proceedings if a tenant files a hardship declaration. The Supreme Court also remanded the matter back to the District Court. (Chrysafis v. Marks, 141 S. Ct. 2482 (2021).)
On September 1, 2021, the Governor of New York signed into law a revised version of CEEFPA, in an effort to address the Supreme Court’s concern that landlords had no way of contesting hardship declarations. The revised statute now includes a provision that explicitly allows a landlord to make a motion “attesting a good faith belief that the [tenant] has not experienced a hardship … and the court shall grant a hearing to determine whether to find the [tenant’s] hardship claim invalid.”
Back in the Eastern District, the plaintiffs argued that the “procedures made available by the new statute are illusory,” because landlords cannot obtain the requisite information to challenge a hardship declaration. Judge Brown rejected this argument, and in doing so provided a thorough analysis as to the standard for challenging a hardship declaration and the various grounds warranting a hearing on such a challenge.
As to the standard for entitlement to a hearing, Judge Brown opined that it is a low bar. Based on his extensive review of cases addressing challenges to the hardship declarations, Judge Brown found that “courts have been construing the statute liberally, safeguarding landlords' right to challenge hardship declarations.” As Judge Brown noted, several courts previously held that “the Legislature did not require landlords to, for example, show ‘knowledge’ of a tenant's hardship status to obtain a hearing. Rather, landlords only have to show a ‘belief,’ albeit one that has a good-faith basis.” In addition, landlords may serve upon tenants discovery – including requests for admissions, as authorized by CPLR 408 – to obtain information as to the purported hardship, which could be used to obtain a hearing to contest the hardship declaration.
Judge Brown also noted that more than 700 hearings challenging hardship declarations have been scheduled in State Court proceedings and offered numerous examples where the courts granted hearings to challenge hardship declarations. These situations include:
- Social media posts suggesting the absence of COVID-related hardships;
- Presence of government-sourced rent payments;
- Observing tenant commuting to work without mask and no other signs of financial or medical distress;
- Corporate tenant’s dissolution combined with certification of continued New York residence; and,
- Tenant defaulted prior to the pandemic.
On a macro level, it is clear that courts are more likely to sustain challenges to hardship declarations where they are supported by fact-specific arguments demonstrating that tenants have improperly sought protections under the CEEFPA. When these facts are present (ideally supported by sworn testimony and documentary evidence), courts are not allowing tenants who are not truly facing a COVID-related hardship to stay eviction proceedings with impunity.
Landlords who have reason to believe that the tenant improperly submitted a hardship declaration do not have to sit idly by and await the expiration of the hardship period. The Legislature, in using a balanced approach, set a low bar as to the evidence the landlord must establish to request a hearing to challenge the hardship declaration. And that evidence can be gathered by the landlord’s own observations, or through discovery.