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New York's 2019 Rent Laws: Impact on Commercial Landlords
On June 14, 2019, Gov. Andrew Cuomo signed legislation modifying existing rent laws and enacting significant landlord-tenant reforms including the Statewide Housing Security and Tenant Protection Act of 2019 (collectively, the 2019 Rent Laws). To date, the real estate industry has focused primarily on the sweeping impact the new laws will have on residential tenancies and the deregulation of rent-stabilized apartments. The reforms, however, also dramatically impact commercial tenancies by altering non-residential summary proceedings and significantly hampering the ability of commercial landlords to respond effectively and quickly to tenant defaults.
New York Summary Proceedings: Background
Summary proceedings were intended to provide landlords with a simple and expeditious method of regaining possession of leased space without the need for a lengthy ejectment action. There are two primary types of summary proceedings-non-payments and holdovers. Prior to commencing a non-payment proceeding, a landlord must serve a statutory rent demand setting forth a good-faith estimate of the rent due. To commence a holdover proceeding, a landlord must first terminate the lease by serving a notice of termination based on a breach by a tenant of a lease provision known as a conditional limitation. Both proceedings can ultimately result in a tenant's eviction and entry of a monetary judgment for unpaid arrears.
Effect of 2019 Rent Laws
Delay
The 2019 Rent Laws significantly delay resolution of both non-payment and holdover proceedings. For example, under prior law, a three-day rent demand was required before commencing a non-payment case. The amended laws now mandate a 14-day notice. RPAPL §711(2). In addition, the deadline for a tenant to answer a non-payment petition has been extended from five to 10 days. RPAPL §732(3).
The 2019 Rent Laws also add a new requirement that "if a [landlord] fails to receive payment of rent within five days of the date specified in the lease agreement, such [landlord] shall send the [tenant], by certified mail, a written notice stating the failure to receive such rent payment." RPL §235-e(d). If a landlord fails to send this additional notice prior to commencing a proceeding based upon the failure to pay rent, the tenant can raise such omission as an affirmative defense. Id. It is unclear, however, if this new notice is required as a predicate to commercial summary proceedings because the requirement is contained in a section that appears to deal exclusively with residential issues. Furthermore, it is uncertain whether this additional notice must be sent prior to service of rent demands and notices to cure. Until these ambiguities are resolved, landlords should send this additional notice prior to serving predicate notices for non-payment of rent.
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