August 18, 2019

August 16, 2019

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Is a Form of Rent Control Coming To New York City’s Commercial Spaces?

Commercial landlords and tenants should be aware of a bill that could significantly impact the commercial leasing landscape in New York City.  This proposal, named the Small Business Jobs Survival Act (“Act”), would require all commercial landlords to negotiate a new 10-year lease with a tenant whose lease expires on or after January 1, 2019.  Although there are limited exceptions, such as where the tenant is performing an illegal activity on the premises or has failed to pay rent three times after written notice and a 30-day period to cure, this essentially means that all commercial tenants will have the right to renew their leases even if the lease does not give them the express right to do so.  Such a requirement means that landlords lose their ability to free themselves of tenants who, for example, may pay their rent and may not be breaking any laws, but who have otherwise been an undesirable tenant.

In its present form, the bill would require a landlord to notify the tenant at least 180 days prior to the expiration of the lease of the landlord’s willingness to renegotiate a renewal.  The first 90 days is allotted for negotiation, and either party may compel the other to use mediation during that time.  If unsuccessful, the matter is then referred to the American Arbitration Association which then determines the rent.  In addition to the added costs involved in the mediation/arbitration process and losing the ability to fix their own rent, landlords also lose their flexibility in lining up new tenants for the space while they await that process to unfold.

The bill also prevents landlords from retaliating against tenants who exercise their rights under the Act, and could subject landlords to actual and punitive damages, injunctive relief and attorney’s fees.

Finally, the bill caps a commercial security deposit at two months’ rent, once again limiting one of the significant ways in which a landlord can protect itself.

A public hearing is scheduled for October 22, 2018.  Whether the bill is signed into law in this form, or some other form, remains to be seen.

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About this Author

Michael A. Bruno Shareholder Giordano Halleran & Ciesla Real Estate Land Use & Development Law Corporate & Business Litigation Renewable Energy Affordable Housing Energy, Climate Change and Public Utilities Business and Banking
Shareholder

Mike, chair of Giordano, Halleran & Ciesla's Redevelopment practice area and co-chair of our Real Estate practice area, focuses his practice area on real estate transactions and approvals with an emphasis on redevelopment, planned residential development, affordable housing, and mixed use development. Mike represents and counsels companies and developers in every phase of real estate acquisitions, financing and development including redevelopment agreements and long and short term financial agreements and other state, regional and local agency financing programs available in connection...

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Marc D. Policastro Shareholder Giordano Law Firm, Business Attorney
Shareholder

Marc, Chair of the Environmental Department, is a transactional, business attorney, who focuses his practice in development, redevelopment, environmental compliance cases, corporate transactional matters, land use, zoning and business counseling. Admitted to practice in New Jersey and New York, he has represented numerous national developers, manufacturers, cogeneration facilities and utilities, automobile dealerships, lenders, borrowers and municipal boards in myriad land use contexts, including commercial and residential development and due diligence matters. He also focuses on complex remediation cases and general environmental compliance counseling. He has significant experience in ISRA, Spill Act, LSRP, UST and related hazardous substance regulatory matters and redevelopment of contaminated sites. Marc is originally from New York City and was raised in Holmdel, NJ. He attended Christian Brothers Academy, University of Richmond and Seton Hall Law School.

Marc is the author of The Remediation Wire, a blog devoted to a broad range of environmental news, laws, regulations and upcoming events in the environmental field.

Marc is also the co-author of New Jersey Redevelopment Blog, a blog devoted to news and updates regarding all Redevelopment matters, laws, news and updates throughout New Jersey.

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Donna A. McBarron, Giordano Halleran Law firm, real estate lawyer, redevelopment attorney
Of Counsel

Donna is of-counsel to the Real Estate and Leasing Departments. She has over 20 years of experience dealing with complex commercial real estate matters, negotiating commercial leases, and has represented multiple municipalities in connection with their affordable housing litigation and compliance. Donna received her BA from Rutgers University and her JD from Rutgers University School of Law.

732-741-3900
Brian Shemesh Real Estate Lawyer Giordano NJ
Associate

Brian, an Associate in the firm's Real Estate Practice Area, focuses his practice on all land-related matters, including redevelopment projects, commercial real estate transactions, and landlord-tenant disputes.

732-741-3900