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Lease Default Provisions Face Scrutiny During COVID-19
The COVID-19 pandemic is affecting the choice between ejectment actions and holdover proceedings in significant ways.
As rent defaults skyrocket in 2020, practitioners reviewing the default provisions in their clients' commercial leases must ask themselves a crucial question: Does the provision set out a conditional limitation or a condition subsequent? The answer to this arcane question — which can trip up even experienced attorneys — will determine the forum in which an owner can recover possession. The common assumption among many practitioners is that all landlord-tenant cases can be brought in the Civil Court. However, while this is true in connection with a lease termination based upon a conditional limitation, landlord-tenant courts — in which proceedings are governed by the Real Property Actions and Proceedings Law (RPAPL) — lack subject matter jurisdiction if the termination results from a condition subsequent.
The distinction between a conditional limitation and a condition subsequent was perhaps best explained by the court in Lamlon Dev. Corp. v. Owens:
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