Prohibits enforcement of personal liability provisions against individuals in the event of default on a commercial lease, where the commercial tenant was restricted from operating under certain executive orders relating to the COVID-19 pandemic.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6539B
SPONSOR: Kelles PURPOSE:
The purpose of this bill is to relieve certain guarantors of commercial
leases of the financial responsibilities to pay rent, utility expenses,
or taxes owed by the tenant under such agreement, or any other fees,
charges, or payments owed by the tenant under such agreement, resulting
from the COVID-19 crisis.
SUMMARY OF PROVISIONS:
Section one amends the real property law to add a new section 235-i that
relieves certain guarantors of commercial leases of the financial
responsibilities of paying rent, utility expenses, and taxes owed by the
tenant if the guarantor became partially or wholly liable for such
financial obligations by some event occurring between March 7, 2020
through August 31, 2021. Specifically, guarantors of commercial leases
are relieved of these financial responsibilities if the tenant was
required to cease operations or cease serving patrons food or beverages
under Executive Order 202.3 of 2020, if the tenant was a non-essential
business subject to in-person limitations under guidance issued by the
New York State Department pursuant to Executive Order 202.6 of 2020, or
if the tenant was required to close to members of the public under Exec-
utive Order 202.7 of 2020.
Section two sets the effective date.
EXISTING LAW:
JUSTIFICATION:
Businesses in New York State, particularly small businesses, have been
devastated by the economic consequences of COVID-19 pandemic. Commer-
cial renters that have been forced to close their businesses or reduce
in-person capacity in accordance with Executive Orders issued by the
Governor to limit the spread of the coronavirus in the state have been
struggling to meet their financial obligations to commercial landlords.
This bill protects certain guarantors of those commercial leases from
ever being held liable for financial obligations which occurred through-
out the course of the COVID-19 declared disaster emergency through to
August 31, 2021.
LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
6539--B
2021-2022 Regular Sessions
IN ASSEMBLY
March 19, 2021
___________
Introduced by M. of A. KELLES, GALLAGHER, EPSTEIN, MITAYNES, DICKENS,
ENGLEBRIGHT, JACKSON, SILLITTI, COLTON, SIMON, J. RIVERA, GONZALEZ-RO-
JAS, OTIS -- read once and referred to the Committee on Judiciary --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee -- again reported from said committee
with amendments, ordered reprinted as amended and recommitted to said
committee
AN ACT to amend the real property law, in relation to personal liability
provisions in certain commercial leases
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The real property law is amended by adding a new section
2 235-i to read as follows:
3 § 235-i. Personal liability provisions in commercial leases. A
4 provision in a commercial lease or other rental agreement involving real
5 property located within New York state that provides for one or more
6 natural persons who are not the tenant under such agreement to become,
7 upon the occurrence of a default or other event, wholly or partially
8 personally liable for payment of rent, utility expenses, or taxes owed
9 by the tenant under such agreement, or any other fees, charges or
10 payments owed by the tenant under such agreement, shall not be enforcea-
11 ble against such natural persons at any point if:
12 (a) The tenant was:
13 (i) required to cease serving patrons food or beverage for on-premises
14 consumption or to cease operation under executive order number 202.3
15 issued by the governor on March sixteenth, two thousand twenty;
16 (ii) a non-essential business subject to in-person limitations under
17 guidance issued by the New York state department of economic development
18 pursuant to executive order number 202.6 issued by the governor on March
19 eighteenth, two thousand twenty; or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09802-07-1
A. 6539--B 2
1 (iii) required to close to members of the public under executive order
2 number 202.7 issued by the governor on March nineteenth, two thousand
3 twenty; and
4 (b) The default or other event causing such natural persons to become
5 wholly or partially personally liable for such obligation occurred
6 between March seventh, two thousand twenty and August thirty-first, two
7 thousand twenty-one.
8 § 2. This act shall take effect immediately.
