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Case Notes

'No Representations' Lease Clause May Not Absolve Landlord

A New York appeals court has reversed the dismissal of a suit brought by a tenant seeking recission of his commercial lease and a declaration that he was not bound by it after finding that a clause in the contract purporting to negate the landlord's responsibility for having a certificate of occupancy that conformed to the needs of the leaseholder's business was not dispositive. Jack Kelly Partners v. Zegelstein , 600351/08.

Recruiting firm Jack Kelly Partners leased a floor of the Lenox Hill Townhouse property in New York City for a term of five years, for $4,000 per month. About two years later, the tenant discovered that the certificate of occupancy for its floor said that only residential uses could be made of it. The tenant asked the landlord to try to update the certificate of occupancy to reflect its use as a commercial property, but the landlord refused, citing to a clause in the lease, which stated, the landlord “makes no representation that the use of the premises specified herein is consistent with permitted uses under the certificate of occupancy.” The tenant vacated the premises in May 2009. The landlord refused to return the tenant's $12,000 deposit, and also threatened to sue for the rents due under the remaining lease term.

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