Commercial Tenant’s Waiver of Yellowstone Relief Upheld by Appellate Court

In New York, the Yellowstone injunction is a form of legal relief used by commercial tenants who have been served with a notice to cure by their landlord to obtain an extension from a court to cure the default and prevent the landlord from terminating the lease until the dispute is settled or determined by the court.

The Yellowstone injunction takes its name from the landmark case National Stores, Inc. v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968). In National Stores, Inc., New York’s highest appeal court ruled that a commercial tenant, after receiving a notice to cure from its landlord, could seek a court injunction preventing the landlord from terminating its lease. Tenants have been filing applications for Yellowstone injunctions ever since.

Most lease defaults require a landlord to serve its tenant with a notice to cure. Generally, after the notice to cure expires, the landlord can then serve a notice terminating the tenant’s lease and then commence a summary eviction proceeding in civil landlord-tenant court which has limited jurisdiction and cannot issue a Yellowstone injunction extending the tenant’s time to cure. As a result, a tenant served with a notice to cure will often preemptively commence an action in the Supreme Court of the county where the property is located because the Supreme Court has the power to extend a tenant’s time to cure via a Yellowstone injunction (unlike the civil landlord-tenant court). County Supreme Courts routinely grant Yellowstone injunctions as long as the tenant can show it received a notice to cure and the time to cure has not expired (and provided there is a valid lease between the parties, and the tenant has expressed the desire and ability to cure the alleged default).

Once a Yellowstone injunction is granted, the tenant’s cure period will not run until the Supreme Court determines whether a default exists and often the cure period will be extended. If a tenant fails to file a Yellowstone injunction and the cure period expires, the tenant risks losing its lease in a civil landlord-tenant court proceeding because this court (unlike the Supreme Court) does not have the equitable power to extend the time to cure, and once a lease is terminated it generally cannot be revived. As a result, the Yellowstone injunction has been an important legal remedy used by tenants to challenge or extend the time to cure lease defaults without risking forfeiture of their lease.

However, recently, an appellate court ruled that a tenant which had a lease provision waiving its right to obtain a Yellowstone injunction could not extend or toll the time to cure its lease defaults for failure to obtain various permits and failure to allow sprinkler inspections by the FDNY. In 159 MP Corp. v. Redbridge Bedford, LLC, 71 N.Y.S.3d 87 (2nd Dept. 2018), the appellate court held that a commercial tenant’s waiver via a lease provision of the right to seek declaratory relief was legally enforceable, and by waiving its right to declaratory relief, the tenant also waived its right to seek a Yellowstone injunction. Further, the lease waiver language dictated that any dispute between the parties must be adjudicated in a summary eviction proceeding in civil landlord-tenant court.

The decision in 159 MP Corp. is significant because although many landlords have waiver provisions in their commercial leases similar to the waiver provision in the lease in 159 MP Corp., courts have been inconsistent in enforcing such provisions. Now, there is clear appellate law precedent making such Yellowstone waiver provisions binding and enforceable. This greatly enhances a landlord’s ability to enforce lease provisions and covenants such as requiring tenants to correct violations, complete alterations properly and maintain required insurance because, once a landlord serves a notice to cure, a tenant has a limited window to cure the default and, should it fail to do so, the tenant may have its lease terminated and then be evicted without the safety net of a Yellowstone injunction to fall back on.

As a result, it is advisable for landlords to include a provision in their leases waiving their tenants’ rights to seek declaratory relief and a Yellowstone injunction and, if a current lease does not have such a provision, it would be beneficial to add one in subsequent lease renewals. On the flip side, if you are representing a tenant, you should try to carve out some ability to obtain a Yellowstone injunction. Going forward, lease provisions affecting a tenant’s right to obtain a Yellowstone injunction will likely become one of the more focused on and important terms in commercial lease negotiations.

Battle Between NYC and Airbnb Resumes

Since 2010, renting out apartments in multiple dwelling for a term less than 30 days has been illegal in New York State under § 4 of the New York Multiple Dwelling Law (the “N.Y. Mult. Dwell. Law”).  As discussed in our December 20, 2016 post “Airbnb Settles with New York State: New Developments in Short-Term, Rental Law,” in 2016, Airbnb challenged a new provision added to the short-term rental law, § 121 of the N.Y. Mult. Dwell. Law, which levied fines for posting advertisements for apartment rentals under 30-days. Airbnb challenged the new provisions because the law did not clearly identify who would be fined for violations of the law. The lawsuit settled after the NY Attorney General’s office clarified that the fines would not be levied against companies such as Airbnb who are merely hosting sites for rental posting and that, instead, the fines would be imposed against hosts who post short-term rental listings.

Airbnb’s battle in NY was recently reignited. On August 6, 2018, Mayor de Blasio signed into law an amendment to NYC’s Administrative Code that requires accommodation booking service companies, like Airbnb, to report the names and addresses of the hosts using their sites to the NYC Office of Special Enforcement (the “OSE”) every month; refusal to comply could result in civil penalties. The law is aimed at facilitating the OSE’s efforts to catch individuals who violate § 121 of the N.Y. Mult. Dwell. Law.  While Airbnb is still considering its options for challenging the new law enacted on August 6th, Airbnb is already challenging the scope of a subpoena served by NYC in connection with an existing short-term rental dispute. The subpoena requires Airbnb to turn over host and guest information for the last seven years in relation to NYC’s ongoing lawsuit against Big Apple Management, who allegedly illegally converted apartments into short-term rentals for tourists in seven of its buildings.

Unless Airbnb successfully challenges the latest amendment to the NYC’s Administrative Code, we can expect the OSE to take more aggressive efforts to curtail illegal short-term leasing by requiring Airbnb and similar companies to provide host information to facilitate enforcement. NYC landlords and co-op and condo boards can file a complaint with the OSE through NYC 311 by phone or online if there is suspected illegal short-term leasing activity in their buildings.  

This article was co-authored by Dominique Miller and Stephen M. Lasser, Esq.

Up in Smoke : Recently Passed Smoke Free Air Act Requires NYC Buildings to Implement Building Wide Smoking Policy Before August 28th, 2018

In order to discourage smoking throughout New York City, on August 28, 2017 the New York City Council passed Chapter 5 of the New York City Health Code, the Smoke Free Air Act.  The legislation includes NYC Administrative Code 17-506.1 which requires all class A multiple dwelling buildings, including cooperatives and condominiums, to create and distribute a building-wide smoking policy on or before August 28, 2018.  Failure to implement a smoking policy could result in violations punishable with civil fines.

The new law does not provide guidance as to the specific details to be included in the smoking policy.  Rather, it merely states that a smoking policy must be implemented, it must exempt current rental tenants and permanently exempt existing rent regulated tenants and must state, in detail, the indoor and outdoor areas where smoking is permitted or prohibited.  In addition, a copy of the smoking policy must be disclosed to the building residents annually by providing a copy of the smoking policy to all residents or posting the policy in a prominent location in the building.

In addition, cooperative and condominium boards must incorporate the smoking policy into the building’s governing documents.  Cooperative and condominium boards may also want to consider making their building smoke free, including within individual apartments.  However, implementing such a restrictive smoking policy covering apartment interiors would require a super majority vote of its owners to amend its proprietary lease or by-laws, respectively.

In any event, buildings should make certain the smoking policy is comprehensive and clear, accounting for the entire property, including, but not limited to, hallways, stairwells, terraces, all outdoor areas surrounding the building, sidewalk entryways, patios, rooftops, and courtyards.  This will help avoid issues when the smoking policy must be enforced.  In addition, the new law requires buildings to keep records of the smoking policy itself and proof of the annual notification of the smoking policy to the residents.  Any further changes to the smoking policy must also be disclosed to the building residents and properly documented.

Below is a sample smoking policy for informational purposes.

SAMPLE SMOKING POLICY

 

SMOKING POLICY

#. Smoking is not permitted in any of the common areas of the Building or within 25 feet the Building’s entrance.  [(Optional) Notwithstanding the foregoing, Building residents may smoke on the Building’s roof deck and in the Building’s courtyard backyard, provided they are considerate and try not to interfere with the use of these areas by other Building residents.]

Shareholders and all other Building residents, including their visitors and guests, shall only be permitted to smoke within an apartment if the shareholder takes all necessary measures to prevent smoke and odors from emanating from the apartment, including, but not limited to, installation and use of an air filtration system of a capacity satisfactory for the apartment, sealing of duct work, electrical outlets and switches and the closing of all gaps within the apartment capable of allowing smoke to emanate from the apartment. The Board of Directors, in its sole discretion, shall from time-to-time determine the adequacy of such measures.

For purposes of these House Rules, the definition of “smoking” includes the use of cigarettes, cigars, pipes, hookahs, electronic cigarettes and other smoke or vapor causing devices.

If a shareholder receives a notice of violation of this Smoking Policy and fails to comply or have the residents in his or her apartment comply with any requested remedial measures set forth herein within thirty (30) days of receipt of the notice, the shareholder of the offending apartment will be fined $250.00.  If the offending shareholder or resident continues to violate this Policy after the imposition of the $250.00 fine set forth herein, additional fines of $250.00 will be assessed against the shareholder of the offending apartment thirty (30) days later or on the first day of the next calendar month, whichever comes later, and such $250.00 fines will continue to be assessed on the first day of each calendar month thereafter until the smoking issue is reasonably resolved based on an assessment by Building Management and the Board of Directors.

This website and the blogs and articles therein are made available by the attorney or law firm publisher for educational purposes only and to give you general information and a general understanding of the law, not to provide specific legal advice.  By using this website and blog you understand that there is no attorney-client relationship between you and the website and blog publisher. The website and blog should not be used as a substitute for specific legal advice from a licensed attorney.