When can a New York Metropolis industrial tenant declare harassment by a landlord?
In any industrial lease, one main concern pertains to the work that must be completed to arrange an area for the tenant’s occupancy. Often, the owner will ship the area just about as is, or with sure restricted work accomplished. Then it’s as much as the tenant to construct out the area so it meets their wants.
In that course of, the tenant needs to ensure it might probably change its plans if obligatory because it rethinks the way it will use the area. On the similar time, the owner needs to ensure the tenant doesn’t do something loopy.
To resolve these conflicting issues, the owner will typically pre-approve any of the tenant’s plans which are far sufficient alongside to be accredited when the lease is signed. If the tenant needs to alter something, the tenant would possibly want to return to the owner and get approval of the change.
Often the owner agrees to be “cheap” about approving the tenant’s change. That mainly means the owner should approve it if an abnormal landlord in the identical place—with no specific axe to grind or bizarre idiosyncratic agenda—would approve it.
Typically, although, the lease will say the owner can withhold its consent “in Landlord’s sole and absolute discretion.” That language would possibly counsel that the owner might all the time disapprove something and every thing, with no obligation to be “cheap,” thus stopping the tenant from making any adjustments in any respect.
A pending New York Metropolis litigation suggests {that a} landlord can’t act fairly as unreasonably as a lease might sound to permit. In that litigation, the lease mentioned the owner might disapprove plan adjustments in its sole and absolute discretion. The owner apparently used that authority to disapprove virtually every thing the tenant ever needed to alter.
Lastly, the owner got here up with a brand new and completely different plan for the tenant’s work, which might have price twice as a lot because the tenant’s unique funds. Implicitly or explicitly, it turned clear the owner wouldn’t approve something besides the owner’s new and completely different (and really costly) plan. Ultimately the owner required the tenant to cease work.
The tenant sued the owner on numerous grounds, together with based mostly on a New York Metropolis legislation that prohibits “harassment” of business tenants. That legislation defines “industrial tenant harassment” with unimaginable breadth: it’s something a landlord does or doesn’t do this “would moderately trigger a industrial tenant to vacate.” The legislation then lists some examples, together with any “repeated or enduring acts or omissions that considerably intrude with the operation of a industrial tenant’s enterprise.”
The courtroom had little bother concluding that the owner’s repeated disapprovals, if adequately confirmed, would represent industrial tenant harassment as a result of they continued over time and prevented the tenant from opening and working its enterprise. Ultimately, they’d lead the tenant to vacate the leased area. So the litigation proceeded, with the likelihood that (amongst different issues) a courtroom would possibly order the owner to behave higher.
Ethical of the story: in New York Metropolis, not less than, if a lease says {that a} landlord can act unreasonably, or disapprove issues in its sole and absolute discretion, the owner shouldn’t essentially consider it. That precept might apply to way more than approval of adjustments within the tenant’s development plans. For instance, if a tenant needed to promote its enterprise however a imply landlord disapproved an entire collection of cheap purchasers that the tenant proposed, might the tenant declare “industrial tenant harassment”?
Different circumstances make it clear, nevertheless, that abnormal one-off disagreements a couple of lease or a tenant’s actions don’t rise to “industrial tenant harassment.” The New York Metropolis legislation additionally says a landlord’s efforts to gather hire and implement its cures for nonpayment don’t represent harassment. Lastly, a tenant usually can’t get well greater than $50,000 from a landlord responsible of “industrial tenant harassment.” Subsequently, tenants shouldn’t essentially rejoice over having an all-purpose weapon to be used in opposition to landlords.
The author suggestions his hat to Michelle Maratto Itkowitz for bringing this case to his consideration.
