“It’s scary:” Landlords praying tenants pay April rent

Cuomo makes clear that he won’t forgive payments

TRD New York /
Mar.March 31, 2020 08:45 AM
Gov. Andrew Cuomo (Cuomo by John Lamparski/NurPhoto via Getty Images; Illustration by The Real Deal)

Gov. Andrew Cuomo (Cuomo by John Lamparski/NurPhoto via Getty Images; Illustration by The Real Deal)

For the first time during the coronavirus crisis, Gov. Andrew Cuomo acknowledged Monday that he does not intend to forgive the rent for cash-strapped tenants.

The 90-day ban on evictions will suffice, the governor said.

“You can’t be evicted for non-payment of rent, but it’s not that you won’t owe rent. You signed a contract,” Cuomo said. “Even the people to whom you have to pay rent have to pay rent. They have bills to pay.”

His comments came in response to questions following up on his proclamation last week that he “took care of” the rent issue.

Landlords across the state are bracing for a huge drop in rent payments after Cuomo ordered non-essential workers to stay home to curb the pandemic. Deborah Pusatere, leader of the Albany-area landlord coalition Under One Roof, last week launched a campaign to urge tenants to pay their rent.

Pusatere said she and other landlords are frantically reaching out to their tenants to assess the risk of non-payment of April rent, which is typically due April 1. Many property owners are also looking to make arrangements with their lenders.

“Twenty percent of my residents already have told me they just don’t have the money, until they get some money in,” Pusatere said. “But I’m expecting as much as 50 to 70 percent less in rent because a lot of my people work minimum-wage jobs. It’s scary.”

Pusatere owns about a hundred properties in the Albany area and said she has been forthcoming with her lender about the risk in April.

Cuomo adopted a similar policy for homeowners, allowing those short on cash because of the pandemic to defer mortgage payments to state-chartered lenders. But it does not apply to the many New Yorkers who have mortgages with institutions not subject to the jurisdiction of the state’s Department of Financial Services.

Except in some specific cases, landlords and renters are still expected to make rent and mortgage payments due on Wednesday, despite the moratorium on coronavirus-related evictions and foreclosures. Cuomo’s deferral of mortgage payments does not apply to commercial loans secured by property, which owners of multifamily buildings use.

Those with federally-backed mortgages may apply to postpone payments because of coronavirus-related distress.

It is unclear how many renters will come up short April 1, but one tenant leader estimated that in New York alone, “hundreds of thousands of people are not going to pay rent … because they can’t.”

According to the state’s Department of Labor, more than 95,000 people filed for unemployment insurance in the two weeks prior to March 21. Workers who are paid in cash are out of luck, though, and undocumented immigrants will not get the $1,200 checks that most American adults will get under the federal stimulus bill.

Multifamily building owners, meanwhile, are under pressure as well. Their mortgage debt in the U.S. totaled $1.53 trillion in the last quarter of 2019, according to the Mortgage Bankers Association.

Alan Hammer, an attorney at Brach Eichler who specializes in multifamily real estate and operates 1,000 apartments in New Jersey’s Bergen County and eastern Pennsylvania, said he hopes tenants who can pay rent this month will do so.

“If it comes down to feeding your children or paying rent, I say feed your children,” Hammer said. “But that doesn’t mean a tenant who can pay the rent doesn’t.”

Some landlords are also concerned that tenants, with no immediate threat of eviction, will withhold rent even if they can afford it. Calls for a rent strike have been circulated online, but no widespread coordinated effort for one in New York has materialized. Tenant leaders have not discounted the possibility in the future.

“In Rochester this past week, there have been multiple emails and text messages circulating about a rent strike,” said Jaime Cain, an attorney at Rochester law firm Boylan Code who has been organizing landlords against another measure, Good Cause eviction. “It’s not based on need, it’s based on ‘we don’t have to pay you.’ But rent has not been forgiven in New York.”

Apart from the statewide halt on evictions established two weeks ago, State Sen. Michael Gianaris has also proposed a bill that would waive rent for 90 days, and seek to forgive a proportional amount of the mortgage. Some in the real estate industry say the language of the bill is too vague, and they are unclear if it would provide relief to landlords. Yet the bill has gained momentum, garnering the support of Vermont Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez.

Meanwhile, in New York City, Mayor Bill de Blasio has said he will push for a rent freeze and a suspension of the Rent Guidelines Board until after the coronavirus crisis.

Any measure to waive rent payments without offering landlords relief would be terrible policy, according to Joseph Strasburg, president of the Rent Stabilization Association.

“Why aren’t the largest providers of affordable housing in the five boroughs in the conversation when city and state elected officials talk about help for small businesses and rent relief during this pandemic?” Strasburg said in a statement.

Aaron Sirulnick, chairman of the landlords group and owner of thousands of units in Queens through his firm, Ditmas Management, argued that “landlords are small businesses that provide an essential service.”

“All rent-assistance programs must provide immediate relief to both tenants and landlords,” Sirulnick said. “Rent freezes and rent forgiveness means buildings will go belly up — and with them, the city’s rental housing. That’s an abyss from which there will be no recovery.”

Write to Georgia Kromrei at [email protected]


Related Articles

arrow_forward_ios
The Hotel Indigo Lower East Side at 171 Ludlow Street and Rotem Rosen (Credit: Hotel Indigo)

Tallying crisis’ toll on MRR Development’s Hotel Indigo

Tallying crisis’ toll on MRR Development’s Hotel Indigo
Hotel occupancy continued its recovery from the coronavirus, with rates reaching an average of 35% in the U.S. after Memorial Day weekend. (Getty)

Hotel occupancy hovers around 35% after Memorial Day boost

Hotel occupancy hovers around 35% after Memorial Day boost
Toll Brothers CEO Douglas C. Yearley Jr. (Credit: iStock)

Pandemic takes a Toll: Builder’s profits drop 42%

Pandemic takes a Toll: Builder’s profits drop 42%
Assembly Speaker Carl Heastie (Getty)

Assembly speaker fast-tracks rent relief bill

Assembly speaker fast-tracks rent relief bill
New York State lawmakers have approved a moratorium on evictions for the remainder of the Covid-19 emergency. (iStock)

Eviction-ban bill passed by lawmakers as landlords object

Eviction-ban bill passed by lawmakers as landlords object
(Credit: iStock)

TRD Insights: Home lending in the United States was solid before the coronavirus pandemic hit

TRD Insights: Home lending in the United States was solid before the coronavirus pandemic hit
Thor Equities’ Joe Sitt and a rendering of 933 Broadway (Credit: Thor)

Thor Equities sues Mactaggart over latest broken deal

Thor Equities sues Mactaggart over latest broken deal
384-386 Atlantic Avenue and Compass CEO Robert Reffkin (Google Maps; Getty)

Compass used Covid-19 to get out of lease: lawsuit

Compass used Covid-19 to get out of lease: lawsuit
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...