Commercial Tenants, Small Businesses Protected By Lease Legislation

June 14, 2019

Assemblyman Steve Otis (D- Rye) and Senator John Liu (D- Queens) announced today passage of their legislation A.2554/S.5614 that will ensure small business owners have the right to go to court to challenge the unjust termination of their lease.

The goal of the legislation is to reinstate an important 1968 NYS Court of Appeals decision that has protected commercial tenants from lease terminations executed without due process through the courts to make sure the rights of tenants and landlords are accurately determined before an eviction takes place.

Senator Liu stated, “This law provides a huge protection for small business owners in their commercial tenant lease. Commercial tenants will not have to fear an abrupt eviction from an overzealous landlord."

Assemblyman Otis commented, “This legislation will protect small businesses from arbitrary lease terminations by providing commercial tenants their day in court. Business stability is enhanced by letting a court weigh in when lease terms are under dispute and summary eviction is sought by a landlord. I am pleased we are restoring these protections for commercial tenants.”

The legislation reinstates the law in the 1968 Yellowstone decision which gave tenants the right to seek a declaratory judgment and an injunction to delay speedy eviction until a court can determine which party is responsible for lease terms in question. Typically, tenants could resist lease termination by taking their landlord to court and having a judge determine whether the tenant had actually violated the terms of the contract. Two years ago an appellate court allowed the protections of the Yellowstone decision to be waived in a lease.

Earlier this year, the Court of Appeals agreed both decisions included strong dissenting opinions and invited the legislature to clarify the law in state statute. Without the legal protections offered by this legislation, there is nothing to stop landlords from then taking advantage of their tenants and unjustly forcing them out.

This legislation states that the inclusion of such a waiver in a commercial lease shall be null and void as against public policy. Commerce is better served by having business disputes resolved with the benefit of due process. This legislation restores what has been viewed as an important protection for business stability that has existed since 1968.