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NYC Nonpayment Proceedings Post-HSTPA: From ‘Good Cause’ to ‘Extreme Hardship’

By Massimo F. D'Angelo


This article reviews the “good cause” standard under RPAPL §749(3) and examines the possible role in nonpayment proceedings of the newly minted RPAPL §753, as we enter the coming era of landlord-tenant litigation.

By “John” Zhuo Wang and Massimo F. D’Angelo

March 04, 2020


The passage of the Housing Stability and Tenant Protection Act of 2019 (HSTPA) on June 14, 2019, fundamentally altered the landscape of landlord-tenant proceedings by enacting “sweeping changes to the rent laws and adding greater protections for tenants throughout the State.” Dugan v. London Terrace Gardens, L.P., 177 A.D.3d 1, 8 (1st Dept. 2019). While the economic impact of the HSTPA on New York City real estate remains hotly debated, it cannot be disputed that the practical effect and legislative intent of the new law prolongs the eviction process.

One aspect of housing law that has not changed, however, is that tenants in nonpayment proceedings are required to show “good cause” pursuant to RPAPL §749(3) to stay the execution of a warrant of eviction. But the legislature also amended RPAPL §753(1), and in doing so, may have afforded an additional remedy to the tenant in a nonpayment proceeding based upon a showing of, among other things, “extreme hardship.” This article reviews the “good cause” standard under RPAPL §749(3) and examines the possible role in nonpayment proceedings of the newly minted RPAPL §753, as we enter the coming era of landlord-tenant litigation.

The Traditional ‘Good Cause’ Standard in Nonpayment Proceedings. The vast majority of summary proceedings commenced in the Housing Part are for nonpayment of rent commenced pursuant to RPAPL §711(2). Although every case is different and stands on its own facts, as one appellate court has noted, the “garden variety” nonpayment proceeding is often resolved by a stipulation of settlement involving a payment plan whereby the landlord is granted a final judgment of possession for the amount of the arrears to date and a warrant of eviction; however, the execution of the warrant is stayed based upon tenant’s compliance with the payment plan. Dkegg Holdings v. Dalnoky, 18 Misc.3d 141(A) (App Term, 1st Dept. 2008); see, e.g., Hotel Cameron v. Purcell, 35 A.D.3d 153 (1st Dept. 2006); Chelsea 19 Assoc. v. James, 67 A.D.3d 601 (1st Dept. 2009); see also 1029 Sixth v. Riniv, 9 A.D.3d 142, 150 (2004), appeals dismissed 4 N.Y.3d 795 (2005).

In many instances, the tenant subsequently returns to court by way of an Order to Show Cause (OSC) seeking to stay execution of the warrant. Prior to the passage of the HSTPA, the only basis for such relief was a showing of “good cause” under RPAPL §749(3). (It bears noting that the court’s general stay powers pursuant CPLR §2201 also serve as a statutory basis to stay execution of a warrant, but only in the context of holdover proceedings for chronic rent delinquency (see 326-330 E. 35th St. Assoc. v. Sofizade, 191 Misc.2d 329, 332 (App Term, 1st Dept. 2002); Giffuni Bros. v. Gross, 2003 NY Slip Op 51473(U) (App Term, 1st Dept. 2003); Herald Towers v. Perry, 2003 NY Slip Op 50564(U) (App Term, 1st Dept. 2003); Century Apartments Assoc. v. Kleinman, 2002 NY Slip Op 50303(U) (App Term, 1st Dept. 2002).)

Specifically, RPAPL §749(3) provides that “[n]othing … shall deprive the court of the power to stay or vacate such warrant for good cause shown prior to the execution thereof, or to restore the tenant to possession subsequent to execution of the warrant.” Although determining whether “good cause” exists is left to the sound discretion of the motion court (Harvey v. Bodenheim, 96 A.D.3d 664 (1st Dept. 2012)), the determination itself is never a simple matter. Notably, the decisional law requires that the court engage in a “delicate balancing of the equities,” weighing, inter alia, the type of tenancy, length of the tenancy, and payment history. Archstone Camargue I v. Korte, 971 N.Y.S.2d 642 (App Term 1st Dept. 2013); Parkchester Apartment Co. v. Heim, 607 N.Y.S.2d 212 (App Term 1st Dept. 1993); Pomeroy Co. v. Thompson, 784 N.Y.S.2d 278 (App Term 1st Dept. 2004). In cases where the tenant is a long-term, rent-regulated tenant, the appellate courts have evinced an express policy of “holding out to a tenant the opportunity usually afforded in a nonpayment proceeding to cure the breach of [the tenant’s] rent obligations.” 2246 Holding v. Nolasco, 52 A.D.3d 377, 378 (1st Dept. 2008); see also Dino Realty v. Khan, 46 Misc.3d 71, 72 (App Term 2d Jud. Dist. 2014).

The proper application of good cause gets tricky, especially where the factors to be balanced present “close calls.” For instance, suppose the tenancy is short-term or unregulated but the arrears are low relative to the amount of monthly rent, or the tenancy is long-term and regulated but the history of the tenancy is marred by a pattern of rent delinquencies. Further, many tenants also apply for rental assistance or subsidies from government agencies or charities—adding another layer of complexity—while simultaneously seeking a stay pending determination of those applications. Thus, another factor in the good cause analysis becomes whether the tenant has exercised diligence in seeking rental assistance. Nolasco, 52 A.D.3d at 378 (citing “diligent efforts”); 117 W. 142 v. Villanueva, 51 Misc.3d 149(A) (App Term 1st Dept. 2016) (same); Bushwick Properties v. Wright, 34 Misc.3d 135(A) (App Term, 2d Jud. Dist. 2011) (same). Lastly, oftentimes, the parties themselves decide to settle the OSC by entering into additional stipulations extending deadlines for payment of arrears.

It is only when an agreement cannot be made that the parties must argue the motion to stay the eviction under the good cause standard. Oral argument therefore invariably centers on the likelihood that the tenant will be able to pay past arrears in addition to the amounts that have come due. This pattern may persist until the arrears are paid in full or, alternatively, the motion court finds that no good cause can be shown.

As read from the passionate dissents in some “close call” cases both for and against granting a stay (BNS Buildings v. Morgan, 16 Misc3d 136(A) (App Term, 2d Jud. Dist. 2007) (Weston, J., dissenting); 191 St. Assoc. v. Cruz, 50 Misc3d 137(A) (App Term, 1st Dept. 2016) (Ling-Cohan, J., dissenting)), the good cause standard pits values such as the legal obligation to pay rent and an eviction as “merely the contracted-for consequence” of a tenant’s failure to abide by a stipulation (see Chelsea 19 Assoc. v. James, 67 A.D.3d 601, 602 (1st Dept. 2009)) against the policy “to prevent unnecessary evictions, particularly of rent-stabilized tenants” (Khan, 46 Misc.3d at 72; Nolasco, 52 A.D.3d at 378) and the “well-settled equitable principle that the courts do not look favorably upon the forfeiture of leases” (see generally Sharp v. Norwood, 223 A.D.2d 6, 11 (1st Dept. 1996), affd., 89 N.Y.2d 1068 (1997)).  It is in this longstanding tension that the legislature enacted the HSTPA amending RPAPL §753(1).

A New Remedy: ‘Extreme Hardship’ Under RPAPL §753(1). From the requirement that default notices be sent when rent is late to converting the three-day rent demand period to a 14-day one, there can be little doubt that the effect of the HSTPA was to prolong housing cases. Indeed, one of the stated justifications for the new law was to “allow more leniency throughout any eviction proceeding, including stays of eviction and executions of warrants; and ensure that any eviction that is executed is done so in the interest of justice.” Legis. Mem. in Support of NY State Senate Bill, 2019 Sess. Law News of NY Ch. 36 (S. 6458) [McKinney’s]. To this end, tenants and occupants who are subject to a nonpayment proceeding may now look to another statutory basis for a stay of the eviction: RPAPL §753(1).

RPAPL §753(1) provides in relevant part, as follows:

In a proceeding to recover the possession of premises in the City of New York occupied for dwelling purposes … the Court, on application of the occupant, may stay the issuance of a warrant and also stay any execution to collect the costs of the proceeding for a period of not more than one year, if it appears that the premises are used for dwelling purposes; that the application is made in good faith; that the applicant cannot within the neighborhood secure suitable premises similar to those occupied by the applicant and that the applicant made due and reasonable efforts to secure such other premises, or that by reason of other facts it would occasion extreme hardship to the applicant or the applicant’s family if the stay were not granted.

In determining whether refusal to grant a stay would occasion extreme hardship, the court shall consider serious ill health, significant exacerbation of an ongoing condition, a child’s enrollment in a local school, and any other extenuating life circumstances affecting the ability of the applicant or the applicant’s family to relocate and maintain quality of life. The court shall consider any substantial hardship the stay may impose on the landlord in determining whether to grant the stay or in setting the length or other terms of the stay …

Importantly, the previous version of §753(1) limited relief “upon the ground that the occupant is holding over and continuing in possession of the premises after the expiration of his term and without the permission of the landlord” (emphasis added). By eliminating this phrase in the HSTPA’s recent amendment to subdivision one, it appears that a stay may also be obtained in a nonpayment proceeding under §753(1). In other words, the HSTPA empowers tenants as well as any “occupants,” the right to seek a stay based upon not only their ability to pay, but also their “extenuating life circumstances.” Viewed in conjunction with the good cause standard under RPAPL §749(3), which already grants relief based on proof relating to the ability to pay arrears, RPAPL §753(1) may be read as requiring the motion court to consider a tenant’s life circumstances in granting a stay of the warrant even though the applicant has shown no ability to pay the arrears. See RPAPL §753(2) (“[s]uch stay shall be granted and continue effective only upon the condition that the person against whom the judgment is entered shall make a deposit in court of the entire amount, or such installments thereof from time to time as the court may direct, for the occupation of the premises for the period of the stay.”).

Although an exception to obtaining RPAPL §753(1) relief exists if the landlord can show a tenant’s conduct is objectionable, it is limited to “a proceeding to recover possession upon the ground that an occupant is holding over.” RPAPL §753(3) ([t]he provisions of this section shall not apply to a proceeding to recover possession upon the ground that an occupant is holding over and is objectionable if the landlord shall establish by competent evidence to the satisfaction of the court that such occupant is objectionable.”). In any event, this arguable enlargement of the court’s discretion—whether welcome or not—employs a new set of equitable factors in assessing whether to stay the eviction even in “garden variety” nonpayment proceedings. Indeed, in seeming recognition to petitioners who would be inordinately financially burdened by this new avenue of relief, the penultimate sentence in RPAPL §753(1) permits the court to consider “any substantial hardship the stay may impose on the landlord.”

Conclusion

The amendment to RPAPL §753 appears to acknowledge that the landlord-tenant relationship is unique among other relationships defined solely by contract because the stakes are so high. To the tenant, the apartment represents not just where they live and sleep but also a foundation for stability in everyday life. Conversely, to owners, the apartment represents not only a business investment but also a viable road for financial security. How the courts choose to interpret and apply §753(1)’s “extreme hardship” factors and whether the balancing of the equitable scales weigh more in favor of tenants or landlords, remains to be decided.

“John” Zhuo Wang is a judge of the Housing Part, New York City Civil Court. Massimo F. D’Angelo is a partner at Adam Leitman Bailey, P.C.

Original Article

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS