By Executive Order 202.11, Governor Cuomo enacted new penalties, in addition to what we discussed in our blog - What Happens When You Ignore the Essential Services Executive Order, if you keep your real estate open in violation of an Executive Order.

The new penalty order states as follows:

During the period when an Executive Order limiting operation of a type of facility or limiting the number of persons who may occupy any space is in effect, any operation of such a facility or occupancy of any such space by more than the number of persons allowed by said Executive Order shall be deemed to be a violation of law and in particular, but not by way of limitation, shall be deemed to be a violation of the Uniform Code or other local building code in effect in the jurisdiction in which the facility or space is located. In the event of any such violation, any state, county, or local police officer authorized to enforce laws within the jurisdiction in which the space or facility is located is authorized to remove persons from such space or facility. In addition, in the event of such violation, any state, county, or local code enforcement official or fire marshal authorized to enforce the Uniform Code or other local building code within the jurisdiction in which the facility or space is located is authorized to issue an appearance ticket, a Notice of Violation, an Order to Remedy such violation, which shall require immediate compliance, and/or a Do Not Occupy Order to any owner, operator, or occupant of any such facility or space. Nothing in this provision shall limit the authority of any governmental unit or agency to take such other and/or additional enforcement actions to the extent necessary to ensure compliance with such occupancy-related directives or facility operation-related directives.

 As such, here is your exposure:

• Charge of "violation of law"
• Charge of "violation of the Uniform Code or other local building code"
• Removal by police
• Receipt of an appearance ticket, Notice of Violation, and/or Order to Remedy
• Receipt of a Do Not Occupy Order to the "owner, operator, or occupant of any such facility or space"

Latest Podcast - Sharing creative lease solutions for commercial landlords and tenants who have lost revenue from coronavirus.

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If you learn that someone is infected with Coronavirus in a unit, do not notify other tenants or conduct cleaning.

Instead, contact your local (County / City) and follow their guidance. Do nothing else.

You are ill-equipped to create a protocol and may further injure your tenants by acting imprudently.

There are privacy concerns, cleanliness concerns, isolation concerns, testing concerns and the like.

Therefore, if you learn of a positive diagnosis in your property, contact your local health department and follow their guidance.

Can a tenant terminate a lease because their purpose was frustrated?

We are getting contacted by restaurateurs who want to get out of their lease because they have to close their sit down / dine in operation and only offer delivery / take out, but can they?

The appellate courts have held that "[i]n order to invoke this defense, 'the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.'"

On that holding, the doctrine of frustration of purpose seems like it may get a restauranteur out of their lease.

In that holding, an office was able to terminate their lease because the CO didn't permit office use. Through analogizing to where an office tenant utilized frustration of purpose to get out of a lease because of an "inability to lawfully use the premises" based upon the CO, it's possible that a restaurateur can utilize the doctrine of frustration of purpose to terminate the lease where the purpose of the lease was to offer sit-down dining and now the same is not allowed as a matter of law.

However, appellate courts have also held that "a frustration of purpose defense 'is not available when the event preventing performance was foreseeable.'"

Expect a lot of restaurants to make this argument going forward and the issue of foreseeability will be everything if it gets to a trial. 

Landlords - Here is your future:

Last night, 2/6/2020, we were thrilled to have a packed house attending our new CE - Recent Legal Matters.


While not specifically a course topic, the DOS Guidance's Additional FAQs (updated: 1/31/2020) was brought up by students. Specifically, students inquired about FAQ #5:

5. CAN A LANDLORD’S AGENT COLLECT A “BROKER FEE” FROM THE PROSPECTIVE TENANT? No, a landlord’s agent cannot be compensated by the prospective tenant for bringing about the meeting of the minds. NY RPL § 238-a(1)(a) provides, in part, “no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks….” The fee to bring about the meeting of the minds would be a “payment, fee or charge before or at the beginning of the tenancy” other than a background or credit check as provided in this section. Accordingly, a landlord’s agent that collects a fee for bringing about the meeting of the minds between the landlord and tenant (i.e., the broker fee) from the tenant can be subject to discipline. 

What good timing for this to come up because our course materials included an explanation of the requirements for an agency (DOS) to issue a regulation, which were not undertaken with respect to this Guidance. As such, the Guidance is NOT law, but, instead an agency's interpretation of law. With respect to the Guidance constituting an interpretation rather than law, we explained how and when an agency's interpretation is given deference by the courts who are the co-equal branch of government with the constitutional authority to be the final voice on interpreting statutes (laws). Incident thereto, we shared the following quotes from case law with our students:

It is well settled that “[a]n agency's interpretation of its own regulation ‘is entitled to deference if that interpretation is not irrational or unreasonable’” &

“the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the  administrative agency and its interpretive regulations... And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight.”

Oh, do we expect a legal battle on this issue. Stay tuned. It's going to get entertaining fast.

On December 20, 2019, A2554 was enacted to "[p]rohibit[] commercial leases from including a waiver of the right to a declaratory judgment action and states that the inclusion of such a waiver in a commercial lease shall be null and void as against public policy."

New Real Property Law section 235-h took effect immediately on signing.

Welcome back Yellowstone Injunctions - it's like you never left us in the commercial arena. Commercial tenants facing eviction should consult with an attorney to get an injunction immediately before they are evicted.

On December 20, 2019, Senate Bill S3585 became law.

This bill's purpose is that it "[r]equires gas and electric utility companies to make available to any landlord and lessor of residential rental premises, upon the request of a prospective tenant or lessor of a residential unit, information concerning gas and electric charges incurred from prior occupants of the dwelling."

The bill's justification explains that "[p]eople should have the right to inquire from a gas and electric company the amount of the bills being paid for heat and electric service by the prior customer before they move into a residence. They should not have to rely on a landlord or homeowner's word about how much it costs to heat a residence."

This new law, Public Serivce Law section 66-p, is effective on 4/18/2020.

On November 6, 2019, Governor Andrew Cuomo signed Assembly Bill 1646 into law. Assembly Bill 1646 amends the Multiple Residence Law and adds a new Section 302-a. The Multiple Residence Law applies to buildings with three or more units outside New York City.

Effective immediately, the new law prohibits the recovery of rent AND the commencement of an action for possession of a dwelling based on nonpayment of rent if the dwelling or structure occupied for human habitation does not have a certificate of occupancy or is not in compliance with the existing certificate of occupancy pursuant to Multiple Residence Law § 302.

The dwelling may be caused to be vacated for any nuisance or if it is occupied by more families or persons than permitted or is erected or occupied contrary to law. Such dwelling cannot be occupied until it or its occupancy has been made to conform to law.

Apart from a landlord being prohibited from recovering rent and possession of the premises through a nonpayment eviction proceeding, landlords should also be aware that violations may also be fined up to $500 or imprisonment up to a period of one year, or both.

It may seem homeowners have a money tree at their house. It’s easy, just rent your house for the weekend and the dollars will shake into your bank account. Better yet, companies like Airbnb can facilitate the process and get landlords timely and secure payments, right? Making money is never so easy. Here are five risks of using Airbnb. In each, you need to decide if an Airbnb host is a residential property landlord or instead a hotel operator, in order to understand your exposure.

Read the full article by Andrew Lieb, Esq. here. 

There are so many get-rich-quick schemes for investing hard-earned savings in real estate to generate a huge passive income through rentals. Wake up--nothing in life is always roses, and not everyone can be Kiyosaki's Rich Dad. This is the list of the Top 5 litigation issues that income-producing property owners face incident to living the landlord's dream.

Full article in The Huffington Post, written by Andrew Lieb, Esq. here.