New York Real Estate Lawyers Blog
As a result of the recent election of Donald J. Trump to the Presidency, the area around Trump Tower in New York City has been subject to greatly increased security, including closures of streets, as well as guards and other restrictions on pedestrian access to the shopping areas around Trump Tower. Of course, this additional security has had a detrimental effect on businesses located in and around Trump Tower.
What legal recourse do these businesses have regarding their leases? This post will discuss the legal issues related to businesses and their leases in situations when access to their properties may be limited.
New York Courts have interpreted commercial leases to incorporate a warranty of habitability for the premises. The warranty of habitability means that the landlord warrants that the property is fit to be used for its intended purpose. For example, if the ceiling collapses at a store, causing the store to be closed, then the landlord is generally responsible for making the necessary repairs. Should access to a portion of the store be limited by damage caused by a fire, or other such event, the tenant may be entitled to a partial rent abatement until full access is restored.
Legally, this concept is known as partial constructive eviction. If a portion of the property being rented becomes unusable, due to physical conditions such as excessive noise, dust, flooding, or similar situations, the tenant may be entitled to a rent reduction for the period of time that the property is unusable. Of course, this may only apply to part of the property, so the rent abatement may be partial rather than total.
The tenants in and around Trump Tower may be entitled to such a rent reduction, depending on the provisions contained in their leases. They may argue that that their rental stores are unusable due to the additional extra security, that they are not able to conduct their businesses in a commercially reasonable manner, and that they may be unable to receive deliveries and other services, such as garbage collection, causing harm to their businesses. In such situations, the parties may negotiate prior to litigation to modify the lease in question through a written amendment, so that the rent reflects the new conditions. If the parties cannot agree, a court would have to determine whether the conditions being complained of caused their rental properties to be unusable for the purpose intended, and, if so, the amount of rent to be reduced.
Commercial renters may consider breaking their leases in this situation. This means that they close their stores and go out of business, or move to another location. Whether they are allowed to do this legally also depends on the specific language in their leases. Future rent may be due even if the tenant vacates the premises. A landlord may bring an action for unpaid rent if they are unable to re-rent the premises within a reasonable amount of time. Any entity considering this course of action should have legal counsel review their lease to determine their rights and responsibilities. In some situations, the landlord may have required that an individual personally guarantee the lease obligations. This means that if a lawsuit is brought for unpaid rent, that the individual may be legally liable.
Whether your store is located near Trump Tower or elsewhere in the New York area, our firm has extensive experience representing parties with commercial leases and welcomes all inquiries in this area.