Real Estate Weekly
Image default
Views

How to evict commercial tenants in 2021 despite the moratorium

By Adam Leitman Bailey and John M. Desiderio

This article addresses and updates the law 15 years later on the self-help remedy that enables commercial landlords to regain possession of leased premises from tenants in material breach of one or more lease covenants. As demonstrated below, courts continue to enforce its proper use, as it provides a useful and available means for landlords to regain immediate possession of rental property despite the pandemic, and governmental moratoriums and court rules restricting the commencement of summary commercial eviction proceedings. Commercial judicial evictions are banned but extra-judicial evictions such as self-help are not only being used as an effective way to evict a commercial tenant but also have been the only means to garner a legal eviction since the pandemic started. 

The Limits on Government Power to Halt Evictions

Although the New York Governor’s executive orders prohibit “the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent,” Executive Order 202.28 issued May 7, 2020 (as further continued through January 8, 2021 by subsequent orders, including Executive Order 202.80, issued December 9, 2020), it is important that commercial landlords and their attorneys understand that the Governor’s orders relate to evictions sought to be effected through judicial proceedings ONLY.

The Governor’s orders imposing the moratorium on initiation of commercial eviction proceedings rest on the authority given him, under Section 29-a of Article 2-B of the Executive Law “to temporarily suspend any statute, local law, ordinance, or orders, rules or regulations, or parts thereof, [such as Article 7 of the Real Property and Proceedings Law which governs the initiation and conduct of summary proceedings to recover possession of real property] during a state disaster emergency,” including “epidemics.” (Emphasis added). Accordingly, Executive Law, Section 29-a, does not provide the Governor with authority to prohibit, alter, or suspend the non-judicial, contractual self-help remedies included in commercial leases. See Schack Collective Inc. v. DeKalb Market Hall, LLC., 63 Misc.2d 1202(A), 130 NYS3d 925 (Table)(NY City Civil Ct., October 2, 2020) for limitations that exist on the governor’s authority to issue executive orders affecting the landlord-tenant relationship.

The Law of Self-Help

It is useful for practitioners representing commercial landlords to review the law applicable to self-help evictions, to be able to utilize this important legal tool, at a time when summary proceedings are either unavailable or otherwise delayed by government edict. In this respect, it is important to note that New York Courts, at all levels, have found self-help evictions to be enforceable when done properly.

The decision in Sol de Ibiza, LLC v Panjo Realty, Inc., 29 Misc.3d 72, 911 NYS2d 567 (1st Dept., Appellate Term, 2010), sets forth the elements generally recognized as the basis for a proper commercial self-help eviction: (1) the subject lease specifically reserves the landlord’s right to reenter the premises upon tenant’s breach of its obligation to pay rent; (2) prior to reentry, landlord serves upon tenant a valid rent demand; (3) reentry was effected peaceably; and (4) tenant was in fact in default in its obligation to pay rent. See also Bozewicz v Nash Metalware Co., 284 A.D.2d 288, 725 N.Y.S.2d 671 [2d. Dept. 2001); Matter of Lee v. Ho-Park, 16 AD3d 986 (3d Dept. 2005); Jovana Spaghetti House v. Heritage Co. of Massena, 189 A.D.2d 1041 (App. Div. 3rd Dept. 1993).

Reserving the Right to Reenter in the Lease

It is clear that, if the lease does not reserve the right of the landlord to reenter upon default in payment of rent or other material breach of the lease, use of self-help by the landlord is not only precluded, but it will be deemed a trespass. See N. Main Street Bagel Corp. v. Duncan, 6 AD3d 590, 775 NYS2d 362 (2d Dept. 2004). This will subject the landlord to treble damages under RPAPL §853.

Moreover, given that RPAPL §853 includes evictions undertaken in an “unlawful manner” in addition to those executed by force, “treble damages can be sustained without a showing of physical force or violence in ejecting the tenant.” Matter of Lee v. Ho-Park, supra.

Serving a Valid Rent Demand

As explained in 542 Holding Corp. v. Prince Fashions, Inc., 46 A.D.3d 309 (App. Div. 1st Dept. 2007), citing Filmtrucks, Inc. v. Express Industries and Terminal Corp., 127 AD2d 509, 511 NYS2d 862 (1st Dept. 1987), “[t]he purpose of a notice to cure is to specifically apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of the lease if the claimed default is not cured within a set period of time.” Where such defaults include unpaid rent, a “proper demand for rent must fairly afford the tenant, at least, actual notice of the alleged amount due and of the period for which such claim is made. At a minimum, the landlord or his agent should clearly inform he tenant of the particular period for which a rent payment is allegedly in default and of the approximate good faith sum of rent assertedly due for each such period.” Schwartz v Weiss-Newell, 87 Misc 2d 558, 561, 386 NYS2d 191 (NYC Civil Court 1976).

Where the rent demand overstates the amount of rent owed, see 133 Plus 24 Sanford Ave. Realty Corp. v. Xiu Lan Ni, 57 Misc. 3d 158(A), 72 NYS3d 517 (2d Dept., Appellate Term, 2017), or fails to separate base rent and additional rent owed, see 542 Holding Corp. v. Prince Fashions, Inc., supra, the rent demand will be deemed invalid, and a subsequent self-help eviction will likewise be invalid.

Moreover, the rent demand must be served in accordance with the requirements of the lease. Some lease agreements require that tenants be notified of the default with an opportunity to cure; others may permit the landlord to terminate the lease automatically upon tenant’s breach. Failure to terminate the tenancy in accordance with the lease will result in a wrongful eviction. See Matter of Lee v. Ho-Park, supra; Stivers v. Brownell, 63 A.D.3d 1516, 881 NYS2d 239 (4th Dept. 2009).

The Tenant in Default

It is clear without question that, if the tenant is not in material breach of the lease, the landlord may not use self-help to regain possession of the leased premises. See, e.g.,  Sol de Ibiza, LLC v Panjo Realty, Inc., supra.  If there is any possible question of whether or not the tenant is in default, self-help should definitely not be employed. Otherwise, as noted previously, the landlord is at risk of being held liable for trespass and for incurring treble damages awarded under RPAPL §853.

Peaceable Eviction

For a landlord’s entry to be “peaceable,” the action of eviction should not entail the use of any activity that is unusual and would tend to bring about a breach of the peace, such as “an entry with a strong hand, or a multitude of people, or in a riotous manner, or with personal violence, or with the threat and menace to life or limb, or under circumstances which would naturally inspire fear and lead one to apprehend danger or personal injury if he stood up in defense of his possession.” Fults v. Munro, 202 NY 34, 42 (1911).

In the absence of force that tends to breach the peace, hiring trucks and men and even a garbage company to evict a tenant does not constitute forcible entry. See Liberty Industrial Park Corp. v. Protective Packaging Corp., 71 Misc.2d 116, 335 NYS2d 333 (Special Term, Kings. Co., 1972),  affirmed, 43 Ad2d 1020 351 NYS2d 944 (2d Dept. 1974). Even when police are called to escort the tenant off the property, the eviction is still deemed peaceable. See Shack Collective, Inc. v. DeKalb Market Hall, supra.

To ensure that the use of self-help is “peaceable,” the authors recommend  that the landlord arrange for the reentry to occur  when the tenant’s business is closed. The landlord’s agents should be certain that no one is present on the leased premises before entering. Upon reentry, the landlord may change the locks or padlock the doors. To thwart any damage claims, (a) The entire reentry operation should be videotaped; (b) all items of tenant property removed from the premises should be photographed and inventoried; and (c) the tenant’s property should then be placed in storage for a reasonable period of time, in accordance with a lease provision that contemplates such action in the event of an eviction.

Conclusion

Under the Governor’s Executive orders and related judicial administrative orders, landlords’ right to evict defaulting tenants through summary proceedings is severely restrained and limited. Nevertheless, those landlords, whose leases properly reserve the right to use self-help to lockout a defaulting tenant and reenter the leased premises, may still exercise their contractual rights peaceably, and the courts will enforce their right to do so.   

(Visited 1 times, 1 visits today)

Related posts

Crisis management in the midst of a crisis

REW

What landlords and tenants need to know about NYC security deposit laws

REW

DEI: Getting woke in the city that never sleeps

REW