HUD Steps Back on Disparate Impact: Why Courts, Not Agencies, Should Set the Rules

The Federal Government just made a smart move in proposing to remove HUD's discrimination effect regulations in housing (under the Fair Housing Act), which now exist at 24 CFR 100.5(b). Specifically, the notice of rulemaking in the Federal Register explains that setting standards to determine if discrimination occurred is better left to the Courts, who ruled on the issue of disparate impact discrimination and set standards in the 2015 case of Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. Therefore, as HUD puts it, as to its regulations, it has "determined they are unnecessary." Not only are they unnecessary, but have regulations on top of case law is confusing where landlords and brokers must look to varying sources to know how to behave and what is disallowed. Hopefully more regulations that establish standards to determine breaches of law will be deleted and we can go back to a less regulated world with more case holdings guiding behavior based on the specific facts at hand.

Have questions about fair housing compliance, discrimination claims, or enforcement risk? Talk to a litigation team that lives in the case law. Contact Lieb at Law, P.C. 

DEI, the False Claims Act, and the New Enforcement Reality for Employers

National Law Review article published this week highlights a significant shift in federal enforcement strategy: the U.S. Department of Justice is now actively using the False Claims Act (FCA) to scrutinize workplace DEI initiatives at companies that receive federal funds or hold government contracts.

Read the article here:
https://lnkd.in/ee_mvzCg

According to the article, DOJ is issuing civil investigative demands to major employers and treating DEI-related inquiries as potential fraud investigations, not policy disagreements. The focus is no longer limited to what a DEI policy says on paper, but how it operates in practice.

For employers and the attorneys, this represents a material change in exposure.

The FCA has traditionally been used to police false billing and fraudulent payment claims. DOJ is now advancing a novel theory: that maintaining certain DEI practices while certifying compliance with federal anti-discrimination laws can constitute a false or misleading claim for payment. This approach has been reinforced by executive orders, DOJ guidance, and public statements from senior DOJ leadership.

Whether courts ultimately endorse this theory remains to be seen. In the meantime, investigations are underway, and the cost of responding to a CID alone can be significant. Documentation, internal decision-making, and how DEI concepts are operationalized are now front and center.

This is exactly why Attorney Andrew Lieb recently served as a featured instructor for a New York State Bar Association CLE titled Risk-Informed DEI: Balancing Legal Exposure and Organizational Culture. The program was designed to address the reality employers and counsel are facing now.

The CLE focuses on practical, defensible frameworks for advising employers in this environment. That includes identifying where FCA risk may arise, understanding how regulators evaluate DEI implementation rather than labels, and developing documentation and compliance strategies that align with both legal obligations and organizational goals.

For attorneys advising employers, and for organizations that contract with or receive funding from the federal government, DEI is no longer a purely cultural initiative. It is a legal risk management issue that requires careful, informed handling.

Details on the NYSBA CLE, including registration and CLE credit information, are available here:
https://lnkd.in/eHK9FHfk

As enforcement continues to evolve, employers should not assume that rebranding or surface-level changes are sufficient. The question regulators are asking is how programs actually function, how decisions are made, and what representations are being made to the government. Getting that analysis right now can make the difference later.

NYS' Deceptive Acts and Practices Law Expanded and the AG will be Coming for Business

NYS' Deceptive Acts and Practices Law has been expanded to include "Unfair, Deceptive, or Abusive Acts and Practices" and it is now called the FAIR Act - "fostering affordability and integrity through reasonable (FAIR) business practices act" - with the changes being effective on February 17, 2026. The biggest change being that the law's, GBL 349, consumer-oriented requirement has been dropped as a requisite for the Attorney General to bring a claim, but not for private claims. Under the amended law, a business' act is now also violated for being "unfair" and "abusive." 

Unfair means that the act "causes or is likely to cause substantial injury which is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or to competition." 

Abusive means if: 

"(i) "it materially interferes with the ability of a person to understand a term or condition of a product or service; or

(ii) it takes unreasonable advantage of:

(A) a lack of understanding on the part of a person of the material risk, costs, or conditions of a product or service;

(B) the inability of a person to protect such person's interests in selecting or using a product or service; or

(C) the reasonable reliance by a person on a person engaging in the act or practice to act in the relying person's interests." 

Businesses hit with claims under this amended law, remember YOU HAVE FIVE BUSINESS DAYS after receipt of a certified mail from the attorney general to advise as to why an action or proceeding should not be instituted. 

If you receive a certified letter from the NY Attorney General under the FAIR Act, you have five business days. Call Lieb at Law immediately.

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Employment Discrimination Law Updated in NYS - Discriminatory Effect is Enough

On December 19, 2025, the New York State Human Rights Law was extended by S8338, in adding a new subdivision 5-a to Executive Law 296, which provides for proving discrimination in employment without discriminatory intent, just discriminatory effect. Under the law, a discriminatory effect means that a practice "actually or predictably results in a disparate impact on a group of persons, because of their membership in a class protected under this section."  

To prove a case under subdivision 5-a, known as disparate impact discrimination, there is now a burden shifting formula:

• First, the Complainant must prove that "a challenged practice caused or predictably will cause a discriminatory effect."
• Second, the Respondent must prove "that the challenged practice is job related for the position in question and consistent with business necessity." 
• Third, the Complaint must prove "that the business necessity could be served by another practice that has a less discriminatory effect."

If a workplace policy disproportionately harms a protected group, intent no longer matters. Talk to Lieb at Law about your exposure or your claim.

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Is McDonnell Douglas Dead in NYS' Human Rights Law?

On December 19, 2025, NYS enacted A4040A and S8338, which defines standards for disparate impact discrimination claims in housing and employment respectively, but each also slipped in an easter egg, at new Executive Law 296(5-a)(e), which dramatically changes how disparate treatment discrimination claims will be defended under state law. Specifically, the subsection provides that "[a] demonstration that a practice is supported by a legally sufficient justification, as defined in paragraph (c) of this subdivision, may not be used as a defense against a claim of intentional discrimination." To be certain, under McDonnell Douglas Burden Shifting, which has been utilized to prove intentional discrimination since 1973, the defense of a case was the submission of proof of a non-discriminatory reason for the challenged act. It appears that defense is now dead in NYS - this is a seismic change in NYS discrimination law with ripples unknown. 

If you’re bringing or defending a discrimination case in New York, the rules just changed. Speak with Lieb at Law before you rely on outdated defenses.

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Housing Discrimination Law Updated in NYS - Discriminatory Effect is Enough

On December 19, 2025, the New York State Human Rights Law was extended by A4040A, in adding a new subdivision 5-a to Executive Law 296, which provides for proving discrimination in housing without discriminatory intent, just discriminatory effect. Under the law, a discriminatory effect means that a practice "actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, creed, color, national origin, citizenship or immigration status, sexual orientation, gender identity or expression, military status, sex, age, disability, marital status, status as a victim of domestic violence, lawful source of income or familial."

To prove a case under subdivision 5-a, known as disparate impact discrimination, there is now a burden shifting formula:

• First, the Complainant must prove that "a challenged practice caused or predictably will cause a discriminatory effect."
• Second, the Respondent must prove "that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent."
• Third, the Complaint must prove "that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect."

If a housing policy shuts people out without saying it outright, that can now be illegal. Talk to a fair housing litigator at Lieb at Law, P.C. 

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Training Repayment Just Became Illegal in New York - Clawbacks Limited in NYS by the Trapped at Work Act

New York State has enacted the Trapped at Work Act by A584C, effective on December 19, 2025. This law expressly precludes employers from recovering on clawbacks for reimbursement of the cost of training and the law extends to protect not just employees, but also independent contractors, interns and many other workers. To be certain, while the law expressly prohibits and renders void any employee promissory note that is required as a condition of employment, it also excludes from its auspices, while expressly permitting, agreements under which a worker has to repay "sums advanced to such worker by the employer" that were not relevant to training. That said, the law provides workers with the ability to recover attorneys' fees if they prevail by rendering a promissory note sought to be enforced by the employer through suit, void. Additionally, the government can seek $1K to $5K per violation fines for violations. 

Facing a training clawback or promissory note? Talk to a New York litigator at Lieb at Law, P.C. before you pay a dime.

New NY Foreclosure Law Forces Lenders to Apply Your Payments

A very important foreclosure law bill, Assembly Bill A2739, which we discussed at How New York Assembly Bill A2739 Could Give Homeowners a Leg Up in Foreclosure Defense was signed and is effective as of December 12, 2025.

Now, homeowners in default a real edge against foreclosure. The law requires mortgage lenders to accept and immediately apply payments made in reliance on a payoff statement – no more excuses, no more “we’ll hold it in suspense.” As long as you pay where and how your lender says to, your money counts toward your loan balance.

If you’re facing foreclosure and want to make sure every payment counts, contact Lieb at Law, P.C. – because now, your money can finally work for you.

Law on Access to Adjoining Property for Improvements or Repairs Updated in NYS

Starting on December 5, 2025, RPAPL 881 offers a new framework under S3799C for a property owner seeking a court ordered license in a special proceeding to access their neighbor's property in order to make improvements or repairs. As the bill jacket explains, sometimes "owners and their neighbors cannot work out a solution without going to court" and the prior law, from 1968, is now being updated to be more predictable. The framework makes it easier to name lessees into the proceeding as their rights will be adversely impacted and they are a necessary party to such lawsuits. It also clarifies that a licensee can be obtained for a preconstruction survey to document the existing condition of the property, to address vibration, cracks, optical monitoring devices, protective coverings for the property, scaffolding, bracing, building supports, flashing, and construction staging necessary to complete work, amongst others. The new law also requires the licensee to maintain commercial general liability insurance for damages to persons or property with the adjoining owner as an additional insured. Finally, to the good stuff, "[t]he licensee shall be required to reasonably compensate the adjoining owner for the loss of use and enjoyment of the adjoining premises including diminution in value." plus, "to reimburse the adjoining owner for reasonable fees incurred in connection with the review of relevant documents for the installation, maintenance, inspection, repair, replacement or removal of devices, structures, materials or equipment on the adjoining property."

If you’re facing a construction-access fight with a neighbor, or you need to secure compensation for loss of use, we handle RPAPL 881 litigation. Contact Lieb at Law to protect your rights and your property.

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How New York Assembly Bill A2739 Could Give Homeowners a Leg Up in Foreclosure Defense

As of December 8, 2025, Assembly Bill A2739 has cleared the Senate and Assembly and is now sitting on Governor Kathy Hochul’s desk. If she signs it, this little-known bill could give homeowners in default a real edge against foreclosure. The law would require mortgage lenders to accept and immediately apply payments made in reliance on a payoff statement – no more excuses, no more “we’ll hold it in suspense.” As long as you pay where and how your lender says to, your money counts toward your loan balance. That’s a big deal because right now, lenders can refuse partial payments or take them without actually reducing what you owe.

Here’s the exciting part: combine this law with the state’s mandatory settlement conferences, and homeowners suddenly have a legally backed, game-changing strategy to slow down foreclosure. You can make installment payments to chip away at your default and potentially save your home – all without needing a full payoff, a modification, or a short sale. It’s a way to fight back while saving time, money, and headaches.

If the bill becomes law, homeowners should be prepared for possible delays or added complexity when requesting payoff statements and making payments. If you’re facing foreclosure and want to make sure every payment counts, contact Lieb at Law, P.C. – because now, your money can finally work for you.

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Brokerages Are Now on the Hook for Agent Telemarketing: What Hollis v. eXp Means for You

Every real estate brokerage should be watching Hollis v. eXp Realty closely, where the court denied eXp Realty’s motion to dismiss, allowing Plaintiff's claims of both direct and vicarious liability to move forward. In this case, eXp is being held responsible for both their own unsolicited telemarketing (like, cold calling and cold texts) and more importantly, the unsolicited telemarketing undertaken by their agents/associated licensees.

The case involves allegations on unsolicited calls made in violation of the Telephone Consumer Protection Act ("TCPA"), which comes with steep penalties of $500 to $1,500 per unlawful call or text. Historically, many real estate brokerages believed that they were insulated from liability because agents/associated licensees were treated as independent contractors so they were not responsible under vicarious liability. However, in the Court's latest ruling, a clear shift occurred where brokerages were told that they can be held accountable when agents/associated licensees, who they supervise, violate the TCPA.

After the denial of their motion-to-dismiss, eXp Realty and the agent defendant filed their answers, and the case is now moving through the discovery process. 

Every brokerage should treat this case as a wake-up call. Now is the time to act. Implement or update TCPA compliance policies, train agents/associated licensees on proper lead-generation practices, prohibit unsolicited autodialed calls and texts, audit marketing systems, CRMs, and third-party vendors, and document compliance and supervision efforts. 

Failing to supervise agents/associated licensees marketing activities is no longer an option, brokerages can be on the hook for agent misconduct.

If your brokerage needs a TCPA compliance audit or guidance on agent supervision, contact Lieb at Law, P.C.

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What Brokers Need to Know About NY’s New Restrictive Covenant Removal Law

Starting on June 3, 2026, NYS A1820A requires sellers of real estate to remove restrictive covenants that discriminate on the basis of race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income or ancestry. To do this, Real Property Law 327-a requires sellers of servient property (where the covenant has its effect) to submit "a restrictive covenant modification document" to the County Clerk and the purchaser at or prior to closing. A restrictive covenant is a private zoning agreement that (in this scenario) runs with the land. 

Additionally, by June 3, 2027, Condos, Co-ops, and HOAs must "delete or amend any covenants, conditions and restrictions that exist in a recorded document which discriminate on the basis of race, color, religion, sex, sexual orientation, familial status, martial status, disability, national origin, source of income, or ancestry." 

If discriminatory restrictions surface in a deal, our litigation team handles these cases. Contact Lieb at Law, P.C. for a case evaluation. 

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You Can't be Fired in NYS for Requesting a Reasonable Accommodation

On December 5, 2025, NYS passed A4898, which amends the New York State Human Rights Law at Executive Law 296(7) to expressly prohibit retaliation against an individual who requests a reasonable accommodation. 

The Bill Jacket explains the scenario which this new law seeks to address as being that "an employee must be granted an accommodation in the workplace, but an employer claims they can legally be fired for asking for it in the first place." This law closes that loophole in all scenarios where an accommodation is required under the law, including at a "workplace, housing, and in certain public settings such as health clinics, hospitals, restaurants, government buildings, retail stores, and more" because "it is a violation under the Human Rights Law to deny a request for an accommodation based on disability (Executive Law § 296(3)(6), (2-a)(d), (14),(10), pregnancy-related condition (Executive Law § 296(3)(a)), religious observances (Executive Law § 296(10)), or domestic violence victim status (Executive Law § 296(22)(6)(1))."

If you’re facing retaliation for asking for an accommodation, Lieb at Law, P.C. handles these cases. Talk to our discrimination team today.

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Foreclosure Abuse Prevention Act (FAPA) Is Now Retroactive. Here’s What That Means for NY Foreclosures.

The Foreclosure Abuse Prevention Act (FAPA), which was enacted in December 2022, stops mortgage lenders from abusing the 6-year statute of limitations in foreclosure actions. FAPA achieves this by confirming that once a lender accelerates a mortgage, demanding the entire loan balance, the acceleration is not automatically revoked (de-accelerated) if the lender voluntarily discontinues the action, thereby preventing the lender from attempting to start a new foreclosure case years later.

However, what happens when this acceleration / de-acceleration stuff happened before 2023? 

 

The NYS Court of Appeals (the state's highest court), just ruled that FAPA has "retroactive effect" in Van Dyke v U.S. Bank, Natl. Assn. to the extent that it is invoked in a case where "a final judgment of foreclosure and sale has not been enforced." 

So, even for older cases, FAPA needs to be evaluated. 

If you have such a loan, you should consider bringing a quiet title action to remove the mortgage from your homeownership. If you’re facing a foreclosure or challenging an old acceleration, get legal help now from Lieb at Law, P.C. Our litigation team can review your timeline and use FAPA to protect your home. 

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NY’s New False Advertising Amendment Puts Businesses at Risk

On January 20, 2026, NYS plugged a real problem with false advertising throughout the State by amending General Business Law § 350-a, by A4575, to add new subsection (2), which now provides:

Any written or electronic communication which simulates a document authorized, issued or approved by any court, official, agency of this state or a political subdivision thereof, or of another state or official governmental entity, foreign or domestic, or which creates a false impression as to such document's source, authorization or approval, shall be considered false advertising unless the person, firm, corporation or association, or agent or employee thereof, has received express permission from such court, official, or agency for the use of such document. This subdivision shall be construed to prohibit any false representation or implication, written or verbal, that a person, firm, corporation or association, or agent or employee thereof, selling a commodity or service is vouched for, approved of, bonded by, operating with or on behalf of, or otherwise affiliated with this state or a political subdivision thereof, or of another state or official governmental entity, foreign or domestic, unless such person, firm, corporation or association, or agent or employee thereof, has received express permission from such state or political subdivision for such affiliation.

Businesses are now on notice to stop stating or implying that they have anything to do with being approved by government, unless they receive permission to do so. If you've ever gotten something about obtaining your deed for your house to avoid deed theft, you know exactly what this is all about. So often citizens are manipulated by companies who appear official when they are not. Under the statute, any person injured by such false advertising may bring an action to enjoin the unlawful act or practice and recover damages. Specifically, the statute (GBL § 350-d) provides for recovery of actual damages or $5,000, whichever is greater. Additionally, courts have discretion to increase the award of damages to an amount not exceeding three times the actual damages, up to $15,000, if the defendant is found to have willfully or knowingly violated the statute. Reasonable attorney's fees may also be awarded to a prevailing plaintiff. To make matters worse for businesses who falsely advertise, class actions for actual damages under GBL § 350-a are permissible, provided the plaintiffs waive claims for minimum or punitive damages. 

Businesses better audit their advertising today.  Facing a false-advertising class action? Get a defense team that actually knows GBL § 350-a. Contact Lieb at Law.

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Can a CEO Fire You for Cheating? The Legal Issues Behind the Natalie Dawson Story

Is Cardone Ventures Discriminating by This Post and These Actions?

American CEO Natalie Dawson, president of Cardone Ventures, has sparked debate after revealing she fired two employees for cheating on their partners. Speaking on The Diary of a CEO podcast, Dawson explained that she immediately terminated the employees upon learning about the infidelity, believing that personal dishonesty reflects professional unreliability.

For her, integrity in personal and professional life is intertwined, and she considers cheating employees a liability to the company culture and environment. While some support her commitment to ethics, others criticize her for blurring private and work boundaries.

#NatalieDawson #CEO #Integrity #WorkplaceEthics #Leadership #Infidelity #USNews #CorporateCulture #Accountability #BreakingNews #fblifestyle 

It really depends on the facts, but if you were terminated, you should take a deep look into this one.

Specifically, how did the CEO learn about the infidelity? Was it from an out-of-wedlock pregnancy? If yes, that can constitute sexual harassment under Title VII because only a woman can get pregnant.

Here is another angle: Is this CEO acting on religious grounds and trying to impose her beliefs on her staff? If so, that may constitute religious discrimination. A federal court explained earlier this year:

“The plaintiff must assert that an adverse employment action was taken because of a discriminatory motive based upon the employee’s failure to hold or follow her employer’s religious beliefs.”

— Owens v. City of New York Dep't of Educ., No. 21-2875, 2022 WL 17844279, at *2 (2d Cir. Dec. 22, 2022))." Maas v JTM Provisions Co., Inc., 1:23-CV-00076-JPH, 2025 WL 823671, at *4 [SD Ohio Mar. 13, 2025]

Think your firing crossed a legal line?

Lieb at Law handles discrimination and wrongful termination cases across NY, NJ, and CT.
Talk to an attorney today.

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Federal Court Finds Religious Discrimination in Old Westbury Zoning Code

The United States District Court for the Eastern District of New York (EDNY), in Lubavitch of Old Westbury, Inc. and Rabbi Aaron Konikov v. Incorporated Village of Old Westbury, New York delivered a strong reminder to municipalities: zoning codes cannot discriminate against religious institutions. 

The long running dispute centered on the "adoption of a land use statute aimed at places of worship". In striking down the law, EDNY emphasized that "[o]fficial action 'burdening religious conduct that is not both neutral and generally applicable, however, is subject to strict scrutiny,'" which is violated where "they treat any comparable secular activity more favorably than religious exercise." Here, the Court found exactly that - a violation. 

Seventeen years of litigation later, the question remains: why wasn’t the Chabad simply allowed to build its house of worship? From a reading of this case, it’s hard to see why the Village of Old Westbury has fought so long rather than just letting them build it.

If your religious organization is facing discriminatory land use restrictions, attorneys at Lieb at Law, P.C. can help evaluate your case. 

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NYC School Bias Case Dismissed — The Court Demands Specific Proof of Causation

NYS' highest Court, the Court of Appeals, ruled in IntegrateNYC, Inc. v. State of New York that claims that NYC Public Schools discriminate by their "admissions and screening policies, curriculum content, and lack of diversity among the teacher workforce... fail as a matter of law." However, the real takeaway was that even, under a "liberal standard applied on a motion to dismiss" where facts are presumed true, a Plaintiff cannot make conclusions of causation without allegations of fact in a discrimination lawsuit. Simply, Plaintiffs need to get granular to win and if defending, a defendant would be well served to point out that it's all conclusory when dismissal is sought. 

This case was brought under the Education Article and the Equal Protection of Law of the NYS Constitution and the NYS Human Rights Law [Executive Law 296(4)]. For each claim, the Court reminds us of the requirements as follows:

• "A claim brought under the Education Article... [requires] 'first, that the State fails to provide [plaintiffs] a sound basic education in that it provides deficient inputs—teaching, facilities and instrumentalities of learning—which lead to deficient outputs such as test results and graduation rates'...[s]econd, plaintiffs must sufficiently allege causation—that the deficient outputs are “causally connected” to the claimed input deficiencies... [where] the deficiencies complained of must represent a 'district-wide failure'... [and it] requires allegations of a “gross and glaring inadequacy” in the quality of education being provided."
• "To state an Equal Protection claim based on disproportionate impact of a facially neutral action or policy, a plaintiff must show '[p]roof of racially discriminatory intent or purpose'."
• Under the NYSHRL, it is "an unlawful discriminatory practice for an educational institution to deny the use of its facilities to any person otherwise qualified, or to permit the harassment of any student or applicant, by reason of his race . . ."

In making its decision, the Court pointed out that it is undecided whether "disparate educational outcomes alone could in some circumstances sustain such a claim." But, more importantly, the Court made a stark observation that should be noted by all Plaintiffs and Defendants in discrimination cases - a complaint fails where it does not include specifics. A complaint will be dismissed where it relies on "plaintiffs' conclusory allegations, such as here, where Plaintiff just plead 'but for the discriminatory admissions testing,' Black and Latino students 'would not have been excluded'." The Court needed more and without it, the case was dismissed. 

Think you have a discrimination case? Use our Discrimination Case Checker to see if your claim meets the legal standards set by New York’s highest court.

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Employee Resource Groups are Discriminatory per DOJ - Here Comes Reverse Discrimination Claims

The US Justice Department Released its Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination. Yet, the real takeaway is not about funding at all. Instead, the key is that Employee Resource Groups are discriminatory. Specifically, the Guidance reads that an initiative that "designates a 'safe space' or lounge exclusively for... a specific racial or ethnic group" is an example of unlawful practices. In that vein, DOJ recommends that "[a]ll worplace programs, activities, and resources should be open to all qualified individuals, regardless of race, sex, or other protected characteristics. Avoid organizing groups or sessions that exclude participants based on protected traits. Some sex separation is necessary where biological differences implicate privacy, safety, or athletic opportunity." If you were excluded from such a program, activity, or resource based on your sex or race, or any other protected characteristic, you may now have a claim for discrimination according to DOJ. 

If you were excluded from a workplace group or denied access to an employee program based on your sex, race, or another protected characteristic, contact Lieb at Law, P.C. to discuss your potential discrimination claim. Our attorneys handle complex workplace discrimination cases across New York, New Jersey, and Connecticut.

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NYS' Highest Court Addresses a Good Guy Guaranty Conditioned on Tenant's Surrender

Does a surrender require acceptance for it be effective in landlord / tenant law? Well, that really depends on the lease as we recently learned from NYS' highest court, the Court of Appeals. Before the Court was a good guy guaranty being litigated. "[A] 'good guy' guaranty is a limited guaranty in which the guarantor’s obligation extends only up to the point that the tenant surrenders the premises to the landlord, leaving the tenant solely responsible for rent due from that point forward" according to the Court in 1995 CAM LLC v. West Side Advisors, LLC, et al. This is a huge reminder because in commercial real estate litigation, tenants are often dumbfounded to learn that the good guy guaranty does not excuse the tenant from liability, just the guarantor. Regardless, the case before the highest court was far more nuanced and involved another real issue that frequently arises in commercial real estate litigation - the interplay of a tenant vacating a tenancy and a landlord accepting a surrender. Stated otherwise, the Court needed to determine whether the guarantor's "liability ends with [tenant's] surrender of possession, or with [landlord's] acceptance of surrender." In deciding this issue, and while being mindful that the contractual language at issue could change the result, the Court found that the landlord's acceptance of surrender was irrelevant to the issue because acceptance would result in the landlord never accepting and the lease running its course and therefore, the good guy language of the lease would be superfluous. Therefore, the Court reminded us that "[i]mportantly, an interpretation that renders language in the guaranty superfluous is “a view unsupportable under standard principles of contract interpretation” (Lawyers’ Fund for Client Protection of State of N.Y. v Bank Leumi Tr. Co. of New York, 94 NY2d 398, 404 [2000]).

Litigation over a lease or guaranty?
Lieb at Law’s litigation team represents landlords in high-stakes real estate disputes across New York, New Jersey and Connecticut. Contact us to build your case.

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