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NYC Covid Rent Relief Laws Shove Risk Onto Landlords, Suit Says

July 10, 2020, 8:40 PM

Rent relief laws enacted by the New York City Council to protect tenants from “threatening” landlords during the pandemic have unconstitutionally passed the financial burdens of the economic fallout onto property owners, according to a lawsuit filed in the Southern District of New York on Friday.

If landlords can’t generate enough revenue to pay their tax bills in July and December, the city “will be starved of an enormous revenue stream that, among other things, funds salaries for teachers and firefighters, trash collection, and the City’s public hospitals,” property owners Marcia Melendez and Ling Yang warned in their complaint.

The business owners further cited their mortgage obligations and payments owed to plumbers and electricians who service the rental properties in support of their argument that the Council has left landlords illegally bearing the brunt of the pandemic-related downturn.

Melendez was born in Jamaica and immigrated to the U.S. as a teenager, according to her complaint. The co-plaintiff, Yang, alleges that she didn’t speak any English when she emigrated from China in 1994 and that she spent her early years in America working in restaurants and as a housekeeper.

They worked hard to build their distinct small businesses and “scrape together the money” for the down payments on their respective real estate properties in Brooklyn and Flushing, they said.

Now the New York City Council and Mayor Bill de Blasio (D) have made it unlawful to “threaten” a commercial or residential tenant about rent obligations that accrue between March and September 2020, they say. Violations could result in hefty fines: $2,000 to $10,000 for residential tenants, and $10,000 to $50,000 for commercial tenants, according to the complaint.

But the laws don’t define “threaten,” so the landlords don’t know what sorts of rent collection efforts are lawful, and which aren’t, they say. They claim the laws are chilling their commercial speech and want the U.S. District Court for the Southern District of New York to declare the laws to be unconstitutionally vague and unenforceable.

A third law, the Guaranty Law, “forever prohibits” landlords like Melendez and Yang from enforcing personal guaranties against tenants in rent disputes arising out of the pandemic, they say. They claim to have secured leases with current tenants by way of a personal guaranties and accuse the city of infringing their contractual rights without due process of law.

Melendez and Yang admit that legislative action was needed to provide economic relief during the pandemic but allege that the three laws are unconstitutionally overbroad and don’t have a sufficient factual basis to support their enforcement.

Causes of Action: First and 14th Amendments of the U.S. Constitution; the contracts clause of the U.S. Constitution; the free speech and due process clauses of the New York State Constitution.

Relief Requested: Declaratory and injunctive relief; attorney’s fees; costs.

Response: The NYC Law Department and the mayor’s office didn’t immediately respond to a request for comment.

Attorneys: Patterson Belknap Webb & Tyler LLP represents the plaintiffs.

The case is Melendez v. City of New York, S.D.N.Y., No. 20-cv-05301, complaint filed 7/10/20.

To contact the reporter on this story: Porter Wells in Washington at pwells@bloomberglaw.com

To contact the editor responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com

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