May 21, 2019

May 21, 2019

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May 20, 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.

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

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About this Author

Michael A. Bruno, Giordano Law Firm, Real Estate Attorney
Shareholder

Mr. Bruno, shareholder in Giordano, Halleran & Ciesla's Real Estate, Land Use & Development 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. Mr. Bruno 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...

732-741-3900
Marc D. Policastro, Giordano Law Firm, Business Attorney
Shareholder

Mr. Policastro 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. Mr. Policastro is originally from New York City and was raised in Holmdel, NJ. Mr. Policastro attended Christian Brothers Academy, University of Richmond and Seton Hall Law School. He now resides with his two children in Little Silver, NJ.

732-741-3900
Donna A. McBarron, Giordano Halleran Law firm, real estate lawyer, redevelopment attorney

Donna A. McBarron is of-counsel to the Real Estate, Redevelopment and Planned Real Estate Department and the Leasing Department. Ms. McBarron has over 15 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. Ms. McBarron received her BA from Rutgers University and her JD from Rutgers University School of Law.

732-741-3900
Associate

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

Prior to joining the firm, Mr. Shemesh worked as an associate in the corporate group of a global law firm, assisting with corporate matters including, but not limited to, mergers and acquisitions, equity financings, corporate governance, private equity transactions, and capital...

732-741-3900