Did COVID-19 Shutdown of Renovation Excuse Delay? Hearing Required to Determine Responsibility

Copyright by, and republished with permission of, Apartment Law Insider.

Covid-19 has seriously impacted almost every aspect of residential and commercial life in one manner or another—but, as a recent case illustrates,  especially in those situations where a  contemplated timeline for work was obstructed or delayed by governmental edicts that that imposed an involuntary “pause”. There, a landlord needed access to an apartment to complete  a project; the issue wound up before the court; the tenants agreed to vacate the unit for a stipulated period of time to accommodate the work;  the project stalled due to the pandemic; and the parties were back in court to consider the consequences.

On August 1, 2019, Timothy and Kiko Tabor stipulated on the court record with 148 Duane LLC that they would relocate from their apartment for 12 months, with 148 Duane covering the costs of their relocation, including paying up to $25,000 a month for comparable housing less the amount of their current rent. The parties also agreed that "[i]n the event that the relocation needs to be extended beyond the twelve-month period because [148 Duane] failed to complete the construction within that time period there will be a per-diem penalty of $500 per day without prejudice to the [Tabors] seeking additional remedies before this Court." The parties clarified that the penalty applied if the building's essential services, defined as those that make the apartment habitable, were still out.

148 Duane contended that due to the COVID-19 health crisis and resulting restrictions, it was impossible to complete the work legally and safely within the stipulated period. It agreed to continue paying the Tabors’ relocation costs until the completion of the work, but maintained that it should not be required to pay the per diem penalty, as the unanticipated COVID-19 restrictions caused the delay and the court had discretion to modify the stipulation. The parties' original lease provides:

• INABILITY TO PROVIDE SERVICES: Because of a strike, labor trouble, national emergency, repairs or any other cause beyond Owner's reasonable control, Owner may not be able to  provide or may be delayed in providing any services or in making nay repairs to the building. In any of these events, any rights You may have against Owner are only those rights which are allowed by laws in effect when the reduction in service occurs. Owner is not required to provide any service besides those specifically written in this Lease. Owner may provide additional services and You will not be entitled to a reduction in rent.

148 Duane submitted the affidavit of the senior vice president of the managing agent of the building which he stated that he was the project manager for the repairs and renovations at the building and the Tabors’ apartment. He alleged that, on March 22, 2020, construction stopped due to the issuance of executive orders in response to the COVID-19 pandemic. And that, on April 2, 2020, the Department of Buildings (DOB) issued a notice that all work on non-essential construction was suspended.

148 Duane applied for permission from the DOB to continue work on the building, and on April 28, 2020, obtained a certificate of authorization, permitting work of a limited scope to continue. The SVP asserted, however, that restrictions had slowed down construction, and that maintaining physical distancing limited the amount of people in confined spaces. The COVID-19 reopening safety plan, which was filed with the DOB, provided that only one individual would work in any confined space; workers who fail to comply with mask and glove regulations would be removed from the premises; and alternate crews would be employed to reduce group sizes. . He also contended that the work would have been completed but for the COVID-19 restrictions, and that it would be impossible to restore the building and apartment to a habitable condition until "approximately early next April [of 2021]" And additional time might be required should additional COVID-19 restrictions be issued.

The Tabors did not oppose 148 Duane’s request for an extension of the time to complete the work, but sought the continued payment of the rental difference for the relocation apartment for a one-year renewal period and the payment of the per diem penalties provided in the stipulation. They observed that the stipulation did not provide for excuses or exceptions to the imposition of a penalty, and that construction was halted from March 22, 2020 until April 28, 2020.  And contended that the delay in construction was not solely due to the COVID-19 pandemic, but also to the imposition of a mechanic's lien following 148 Duane’s failure to pay construction-related vendors. The Tabors denied that the penalty provided for in the stipulation was obviated by the lease, and asserted that a hearing, if necessary, would reveal that there was no legitimate excuse for seeking a waiver of the penalty. Without the penalty, the Tabors argued,  148 Duane would further delay completion of the work.

The Court found issues of fact concerning whether the failure to complete the work within the time period provided in the stipulation was excused. And a hearing was necessary to determine whether the imposition of $500 per diem penalty was warranted. After the hearing, the could would be required to address the causes and consequences of the delay, including the COVID-19 mandated shutdown.

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