Judgment day is coming for New York tenants: Landlords, owed more than $3 billion in back rent, may once again be able to file evictions.
Brooklyn landlord Sharon Redhead says she’s due about $65,000 — but she won’t be calling on housing court to resolve that debt.
Come Sept. 1, eviction proceedings for nonpayment of rent — stayed by a statewide moratorium since March 2020 — are fair game, and lawyers and advocates are expecting housing courts to flood over with filings. (It’s unclear how the CDC’s new moratorium, announced Aug. 3 and set to expire Oct. 3, will affect proceedings; the CDC said the ban would apply to counties “experiencing substantial and high levels of community transmission levels.”)
But for the city’s small property owners, the calendar may not be a savior. Owners with portfolios ranging from 50 to 200 units do not see an eviction proceeding heaped on a backlog of filings tens of thousands deep as a way to salvage their businesses from the financial damage of the pandemic.
So why bother?
“Part of the business practice is not taking tenants to court,” said Redhead, a second-generation owner of 50 units across four buildings in Flatbush. “It’s expensive for us, it’s expensive for the tenant because they have to take time off from work, and it doesn’t usually resolve the problem. Eviction court is a last resort.”
Cost of eviction
To maintain her properties and cover her tenants’ rent, Redhead says she has wiped out her savings and maxed out a $50,000 line of credit.
An eviction case will generally set her back two months’ worth of a unit’s rent, or anywhere from $1,500 to $2,500 in attorneys’ fees, she said. For a filing to be worth it, a tenant has to be several months behind.
And in her experience, a hearing generally doesn’t result in eviction. Instead, a judge will order a payment arrangement between the landlord and tenant to cover arrears.
“It’s like 90 percent of the time, eviction cases end in an alternative to removal,” said Jay Martin, executive director of the Community Housing Improvement Program, an organization that represents New York City landlords.
“Unless it’s a domestic abuse case or a very egregious nonpayment proceeding — and we’re talking years.”
The City Council found that only 9 percent of over 230,000 eviction petitions filed in 2017 were executed by a city marshal.
Instead, Martin said, cases often end with a repayment arrangement. Other times the city will cover the balance. Or the tenant will just move out, negating the need for a ruling.
Redhead has already arranged payment plans without the court’s help. Tenants with rental arrears pay what they can when they have it. It’s a practice she had in place before the pandemic.
“I’ve had tenants who’ve had arrangements for four years, and they’re still trying to catch up,” she said. Many of her tenants are rent-stabilized and have lived in her buildings for at least 15 years.
“I know they’re working and life happens, so you work with them.”
Normally, the wait for an eviction to pan out — if it does — is long. Valentina Gojcaj, who owns over 200 units in 16 buildings across the Bronx and Upper Manhattan, said she has had cases drag on for a year and a half.
One landlord, who filed an eviction case in September after his tenants assaulted him, said his lawyer told him July 1 he’d likely wait 14 months to see a judge.
Martin Meltzer, a real estate attorney and partner at Belkin Burden Goldman, estimated that cases filed in June could see the light of day in December or early spring.
“I think that would be optimistic,” he said.
Filings mount
The Office of Court Administration declined to provide figures on how many evictions have been filed since the start of the pandemic. However, the Eviction Lab, a research project at Princeton University that tracks evictions nationally, estimates that over 63,000 have been filed in New York since March 15, 2020.
Gojcaj said that for her, that wait has most often culminated in the city paying the tenant’s rent debt through the Human Resources Administration’s One Shot Deal program. One Shot Deal provides emergency funding to New Yorkers who cannot meet an expense because of an unforeseen circumstance, such as a medical bill.
“You go through all of these procedural processes to get money from the city so that somebody can not be evicted instead of the city just letting a tenant go into HRA and say, ‘This is my situation. I know my landlord’s trying to work with me, but I can’t afford my rent,’” Gojcaj said.
All the while, bills come due, repairs need to be funded and after a year and a half of nonpayment, many of New York’s small owners are not in a financial position to waste time or money trying to get cash from their tenants in housing court.
Limited options
Of course, there are situations where landlords see eviction as their only option. As with the landlord whose tenants assaulted him, some small owners, especially those with tenants who have not been in communication about rent payments, see the moratorium’s end as a lifeline.
Claudia Avin and Paul Chineye, owners of a brownstone in Bedford-Stuyvesant, said the renter who moved into their duplex via a short-term Airbnb agreement in November 2019 has not paid rent since February 2020 and is not on a lease.
The couple hired a lawyer in late February to start an eviction proceeding against the tenant, but just missed the boat — the moratorium fell right before they filed. In the time the tenant has occupied the apartment, Avin and Chineye said, he’s cost them $65,000 in unpaid rent.
They applied for funds through the state’s emergency rental assistance program, or ERAP, but said the tenant refuses to apply, so their hands are tied.
“I think what he’s waiting for is to actually get some sort of eviction order, which he’s hoping won’t come for maybe months. Because I don’t even know if he’s really interested in even applying for ERAP,” said Avin. “So it’s been a nightmare.”
The funds available through the state’s $2.7 billion rent relief program are what small property owners hoped would make them whole again. But a stalled rollout, glitchy platform and strict requirements mean many in need will not get what they are due.
Red tape
Ellen Davidson, an attorney with the Legal Aid Society, has attributed some of the portal’s hiccups to the state agency running it.
“The Office of Temporary and Disability Assistance is an agency for helping people with benefits, but I don’t know that they have an expertise on how landlord-tenant matters work,” she said.
Property owners in New York routinely operate under separate LLCs for each building they own. The portal requires owners to create a separate account for every LLC and connect a different email to each account. Then, the landlord must upload the documents associated with each tenant applying for ERAP.
Gojcaj set up 16 email accounts to apply for the 57 tenants across her portfolio who owe $750,000 in back rent.
“Now we have to monitor those emails every single day — it’s administratively impossible,” she said. “We’re very small. It’s just me and two other people here trying to get through all of this.”
Radio silence
Meanwhile, Gojcaj said, only 12 of those 57 renters have applied for the program. She has emailed and texted the rest, asking them to fill out forms, but says many will not respond.
Among those who have applied, applications are still pending, and Gojcaj has not heard from the state agency on whether the forms will be accepted.
Gov. Andrew Cuomo declared that pending applications would be cleared by Aug. 7 and that the state would pay out all accepted applications by Aug. 31. As of late July, the state had released only $117,000 in test payments to 10 households.
Tenants who applied for ERAP — regardless of whether they receive funds when the moratorium is lifted — cannot be evicted. But the program’s botched rollout means many renters are not aware that relief exists or have not successfully been able to apply.
The end of the eviction ban will jeopardize their security.
Seventeen percent of New York state’s households are at risk of eviction, making it the eighth most at-risk state in the country, according to UrbanFootprint, a tech firm that advises governments. Within the metropolitan statistical area that includes New York City and Newark, New Jersey, a fifth of households are at risk.
Nationally, low-income renters constitute the majority of those at risk, and Black tenants are nearly twice as likely to be evicted as white renters.
Quitting time
Some landlords have seen ERAP’s failure to execute as their sign to get out of the game.
But the decision is not just a financial one.
Redhead’s parents, who immigrated from Grenada, bought the buildings she owns in the 1970s. She remembers sweeping lobbies and opening up letters as a little girl.
But with the debt she’s taken on, Redhead says, she’s never been closer to selling — she’s even fielded a call from the city offering to take her buildings off her hands.
Now, the crush of property taxes, water bills and the looming cost of heating season with oil prices at a peak spells imminent disaster.
“We own everything outright, which is even sadder at this point because we’re still at our end without mortgages,” she said. “Imagine somebody who has a mortgage.”
Gojcaj says if she doesn’t receive funds for either ERAP or One Shot Deal, she won’t be able to cover hers. The taxes on one of her buildings alone are $60,000, and she’s only bringing in about $68,000 in rent.
“So that building is underwater,” she said. “That building cannot survive.”
Both owners predict a selloff of buildings to larger owners. Larger firms and investors backed by institutional funds can handle the higher prices, and have the will and resources to take tenants through the eviction process.
“Those corporate entities are not understanding when Miss Jones has a death in the family and she needs some time to pay her rent, or Miss Smith lost her job and she needs to catch up,” said Redhead.
“On the fifth of the month, they’re knocking at your door, and on the sixth, they’re filing a case.”