@Stan C.,
First and foremost, let me say I hear you and feel the frustration you have. I am blessed to live in a state (Missouri) where we didn't have any state-wide moratoriums. Our courthouses shut down for a while (2 months or so) in my county, but evictions are now rolling on and the backlog is getting caught up. I am also blessed to not have any tenants default on me. Everyone is paid up, on time.
I don't think it would be worth your time and money to sue on this one. The "loophole" many states used is to say, "We are not telling tenants they don't have to pay rent; they still owe the rent; land lords simply cannot evict." Sounds, fair, right?
Yeah, whatever. Any land lord who has been in this game a few years know that once tenants get 1 or more months behind, that money is gone and never to be seen again 9 times out of 10. That is one reason why I don't hesistate to file eviction when someone is past 7 days late. There is no mandatory grace period in my state, but as a practical measure I file on day 8 simply to limit my losses in case we do get to a set out. Even if I get them served papers and get a money judgement, it takes years to get the money collected and my collection agency charges 50% fees.
So there is no good reason to wait. We need the non-payers out NOW.
But you couldn't. You got bit in the butt 3 days before "curb" day. Again, my sympathies. But let's no compound the loss by filing a lawsuit.
My advice to you is learn from this experience for the next time around. Tighten up your screening standards. Only take tenants who have a proven track record of paying. Don't take people who hop from place to place and job to job. You want someone with at least 1 year on the current job. The job shouldn't be a McJob they can leave tomorrow and go find another one. Think professionals who have a vested interest in the community and keeping their noses clean, or perhaps a foreman at a local plant who has had to put in 3-5 years working his way up from the bottom.
No self-employed. Sorry, they're fine people, but not stable enough as a general rule. Unless they've been around 10+ years, too risky for me.
Also, no judgment proof tenants. Social security, pensions, and retirement plans are exempt from garnishment. Those are automatic no-go for me. Hopefully, NY doesn't have income discrimination laws and you can require garnisheeable income.
Check the credit report. Scores aren't very useful, but you want to know are they paying their bills? Unpaid cell phones, utilities, credit cards, etc. are signs of a life of chaos. Even student loans: they took those loan out. No one forced them too. They should be making an effort on paying them. If I see more than one account in Collections, it's a hard "no-go" for me.
Call current AND past land lords. Current land lords sometimes lie to get rid of bad residents, but if they say bad things then odds are they are telling the truth. Past land lords will ask you where the "&$%#" person is so they can collect on damages and unpaid rent. I'm not saying I've given out info on applicants who skipped out on past LLs, but I am saying past LLs have no reason to lie to you. Only trust 3rd party LLs. If the applicant lived with their MeeMaw, she is going to say nice things, right?
Anyway, all this boils down to what YOU can control. You can control who gets into your units. There are good, responsible people out there. When you find a good tenant they will do everything in their power to pay you, or they will leave as agreed without court forcing them out. They value their reputation. That's about the best we can do, given the current political environment.
Control what you can. Best wishes!