News outlets have recently reported that Lady Gaga’s father is refusing to pay the rent due on the commercial restaurant space occupied by him in Grand Central Terminal. Essentially, he has claimed that physical conditions interfere with the successful operation of his business. These conditions allegedly include a growing homeless population that monopolizes seating intended for customers consuming food, rodents and aging facilities such as bathrooms and seating. This post will discuss whether the tenant in this instance has a valid defense for refusing to pay his rent and other options that may be available to him.
In this case, the particular restaurant is in the center of the food court and does not require a patron to enter an area exclusively used by those being served. It inherently allows for non-customers to occupy the restaurant space along with paying customers and may legitimately adversely affect business conditions. The landlord in this case, the MTA, owns and manages the rest of Grand Central Terminal, making it potentially able to control adverse business conditions.
Generally, commercial leases negotiated by this author anticipate a tenant’s potential request for a rent reduction when property conditions deteriorate and forbids such action. Most commercial leases provide that the landlord does not warrant property conditions and that a tenant therefore cannot withhold rent for diminished property conditions and the like. Also, since this restaurant space was readily viewable and accessible prior to its being rented, the tenant could have anticipated the issues that he has recently raised and was aware of property conditions.