Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Rent Acceleration Clauses in New York

By Stewart E. Sterk
February 28, 2015

When is a rent acceleration clause in a commercial lease enforceable? The Court of Appeals addressed that question in 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Association, Inc. (NYLJ 12/19/14, p. 23., col. 5), and gave an answer that is unlikely to be helpful to anyone but litigators: A rent acceleration clause is enforceable unless it constitutes a penalty. The court, however, provided little guidance about when a rent acceleration clause would constitute a penalty.

The Case

Landlord leased the premises to the Association for one year for use as a dormitory by Globe Institute of Technology (Globe), a for-profit educational institution. Landlord and the Association then extended the lease for a nine-year period, and Globe signed a guarantee making it jointly and severally liable with the Association. The lease included a rent acceleration clause providing that upon tenant's default, landlord “shall be entitled to recover, as liquidated damages a sum of money equal to the total of ' the balance of the rent for the remainder of the term.” The lease also provided that “[i]n the event of Lease termination Tenant shall continue to be obligated to pay rent and additional rent for the entire Term as though th[e] Lease had not been terminated.”

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?