What Cuomo’s ‘on PAUSE’ Order Means for the Real Estate Industry
Governor Andrew Cuomo on Friday announced a new directive that all non-essential businesses and not-for-profit entities statewide must close in-office personnel functions effective at 8 p.m. on Sunday, March 22, 2020. While the directive impacts many aspects of the real estate industry in New York City and New York State, it does not require the universal closure of commercial buildings or cessation of construction activities.
The directive, which is part of the “New York State on PAUSE” executive order, exempts “Essential Businesses” from the in-office closure requirement. Guidance issued to accompany the executive order from the Governor’s office and New York State Department of Economic Development defines what constitutes “Essential Businesses” and how hybrid enterprises (which have both essential and non-essential facets) should operate.
The real estate industry is a hybrid of essential and non-essential operations. Guidance issued by the New York State Department of Economic Development provides as follows: “With respect to business or entities that operate or provide both essential and non-essential services, supplies or support, only those lines and/or business operations that are necessary to support the essential services, supplies, or support are exempt from the restrictions.” Aspects of the real estate industry that constitute “Essential Businesses” include:
• building cleaning and maintenance
• government owned or leased buildings
• essential services necessary to maintain the safety, sanitation and essential operations of residences or other essential businesses, which include the following essential services most pertinent to residential properties and any commercial properties occupied by an essential business:
○ building cleaners or janitors
○ general maintenance whether employed by the entity directly or a vendor
While the guidance does not provide details on all scenarios likely faced by the real estate industry, it is clear that operations must continue at residential buildings and any commercial buildings occupied by “Essential Businesses” or the government (a full list is available here; examples include health care, pharmacies, grocery/convenience stores, human services, child care, news media, technology support, logistics, warehouse/distribution and fulfillment, banks, insurance companies, accounting firms, other financial institutions and “services related to financial markets” – which we regard as including Fintech and law firms that serve the financial services industry). It is also clear that, with respect to commercial buildings that do not contain essential businesses, building cleaning and maintenance operations may continue.
It is important to note that all continuing in-person real estate operations must implement rules that help facilitate social distancing of at least six feet, in addition to adhering to other health and safety rules and regulations. For example, the Realty Advisory Board on Labor Relations has worked with the 32BJ to make sure that the union has communicated with its members about cleaning for COVID-19. In fact, 32BJ has provided to its members “COVID-19 Rights at Work FAQs” and “COVID-19 Guidance,” which address many of these issues, including that the employer must provide its cleaners with appropriate equipment (masks, gloves, disinfectants, etc.) and training that includes the use of such equipment and information about proper ventilation and the length of time in which people must be out of the space that is being cleaned. There are other unions, including Local 94, which also have engaged their members about these issues.
For More Information
This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.