Tips for Commercial Tenants Affected by Sandy

Commercial tenants affected by Sandy may be in a difficult situation.  Generally a commercial tenant's rights are limited to the rights set forth in the lease.  Residential tenants have many rights guaranteed by law.  Commercial tenants have very few rights.  If a right or obligation is not in the lease, it is not enforceable.  It is important for a commercial tenant to review their lease AND ANY RIDER to determine the landlord's obligation and their rights.  Commercial tenants that suffered substantial damage due to Superstorm Sandy should specifically review the casualty clause in their lease and any rider that may supplement the casualty provision in the lease.   My comments are based on the standard form developed by the Real Estate Board of New York, Inc.  However, tenants must review any rider to their lease. The rider may contain rights not in the lease.

Generally if a commercial space is only partially damaged the lease remains in full force and effect.  If the space is totally damaged the landlord has the option to make the repairs or terminate the lease.  The standard form lease does not provide the commercial tenant with the option to terminate the lease.  It is important for a tenant to comply with any notice provision in the lease and/or rider in writing.  Most commercial leases require that a tenant give notice to a landlord when the tenant is unable to occupy his or her space. Even though a landlord knows that a space has been destroyed or is so badly damaged that it can't be used, tenants in New York MUST provide WRITTEN notice to their landlord that they don't have access to the commercial space.  Verbally informing a landlord is not enough!  If the commercial space is totally unusable tenants should communicate with their landlord to try to assess as soon as possible whether the landlord plans to repair the premises or terminate the lease.   The commercial tenant may not have the right to cancel the lease but if repairs to the space will take a long time the tenant should consider negotiating the right to terminate the lease, especially if the casualty occurred near the end of the lease term.  There may be also other lease provisions that a tenant may wish to negotiate with the landlord such as a lease extension if the tenant wants to stay in the commercial space.   A thorough and thoughtful review of a lease and rider can often provide answers to most questions that commercial tenants will have.

These tips were presented by Rolando Gonzalez, Esq., Community Development Project, The Legal Aid Society, in his presentation during a CLE webcast on Providing Legal Assistance to Persons Affected by Superstorm Sandy presented by The New York State Bar Association on November 15, 2012.

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