NY State Senate Bill 2021-S3133

Archive: Last Bill Status - In Senate Committee Cities 1 Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to cities 1
Jan 27, 2021	referred to cities 1

2021-S3133 (ACTIVE) - Details

Current Committee:: Senate Cities 1
Law Section:: New York City Administrative Code
Laws Affected:: Add Title 22 Chap 12 §§22-1201 - 22-1211, NYC Ad Cd
Versions Introduced in 2019-2020 Legislative Session:: S6570

2021-S3133 (ACTIVE) - Summary

Prevents landlords from raising commercial rents during a lease without a determination by an arbitrator that such rent increase is not fraudulent and is fair.

2021-S3133 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S3133

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend the administrative code of the city of New York, in
relation to commercial rent protections

 
PURPOSE:

To ensure that commercial tenants in New York City have access to the
courts to seek declaratory judgment relief when their landlord asserts
they've defaulted notwithstanding any lease provisions that purport to
waive the right to seek such relief.

 
SUMMARY OF PROVISIONS:

Section one of the bill amends Title 22 of the administrative code of
the city of New York by adding a new chapter 12 regarding commercial
tenancies.

Section two of the bill sets forth a severability clause.

Section three of the bill sets forth the effective date.

 
JUSTIFICATION:

On May 7, 2019, the Court of Appeals decided by a 4-3 majority in 159 MP
Corp v Redbridge Bedford that when the parties to a commercial lease are
sophisticated and counseled, any provisions of the lease that waive the
right of commercial tenants to seek declaratory judgment relief are not
void and unenforceable as a matter of public policy, upending a long-
standing doctrine to the contrary.

The majority's rationale was that these agreements should be enforced
according to their plain language pursuant to our strong public policy
favoring freedom of contract. Our State's commitment to freedom of
contract is so powerful, they reasoned, that it cannot be overcome by
competing public policies unless, for example, the legislature has
expressly adopted a statute prohibiting waiver.

The majority's decision will result in the elimination of the "Yellow-
stone injunction," a common-law precedent that has existed in New York
for more than half a century. That injunction allows commercial tenants
to determine their responsibilities under the terms of their lease
agreements without risking eviction. The Yellowstone injunction
expresses this State's public policy and is grounded in a century-old
principle broadly favoring the availability of declaratory relief in
preference to more protracted, costly and antagonistic litigation.

After this Court of Appeals decision, commercial building owners and
landlords will undoubtedly include a waiver of declaratory and Yellow-
stone relief in their leases as a matter of course. Those clauses will
enable them to terminate leases based on a tenant's technical or dubious
violation whenever rent values in the neighborhood have increased suffi-
ciently to entice landlords to shirk their contractual obligations or
act in bad faith.


The 4 to 3 majority opinion insists that its decision represents the
application of the well-settled public policy supporting freedom of
contract, but that policy consideration ought to be balanced against
other equally compelling matters of public concern. The majority's deci-
sion will deny commercial tenants access to the courts, alter the land-
scape of landlord-tenant law and of neighborhoods throughout the state -
for decades to come, absent legislative action.

 
LEGISLATIVE HISTORY:

2020: S6570 (Kavanagh) / A8266 (Lentol) - CITIES/cities
2019: S6570 (Kavanagh) / A8266 (Lentol) - RULES/cities

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law. Effective immediately the addition, amendment and/or
repeal of any rule or regulation necessary for the implementation of
this act on its effective date are authorized to be made and completed
on or before such effective date.

2021-S3133 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3133
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 27, 2021
                                ___________
 
 Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Cities 1
 
 AN ACT to amend the administrative code of the  city  of  New  York,  in
   relation to commercial rent protections
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Title 22 of the administrative code of the city of New York
 is amended by adding a new chapter 12 to read as follows:
 
                                 CHAPTER 12
                           COMMERCIAL TENANCIES
 
   § 22-1201 DEFINITIONS. A. "COMMERCIAL PREMISES" SHALL MEAN A  BUILDING
 OR SPACE OCCUPIED FOR NON-RESIDENTIAL PURPOSES INCLUDING, BUT NOT LIMIT-
 ED  TO,  MANUFACTURING, RETAIL, PROFESSIONAL SERVICES, OFFICES, ASSEMBL-
 ING, PROCESSING, CULTURAL AND NOT-FOR-PROFIT ENTITIES THAT  ARE  PRESENT
 IN THE CITY OF NEW YORK, WHO HAVE A VALID COMMERCIAL LEASE.
   B.  "LANDLORD" SHALL MEAN ANY OWNER, LESSOR, SUBLESSOR OR OTHER PERSON
 ENTITLED TO RECEIVE RENT FOR THE USE  OR  OCCUPANCY  OF  ANY  COMMERCIAL
 PREMISES, OR AN AGENT THEREOF.
   C.  "RENT"  SHALL  MEAN  ANY  AND ALL CONSIDERATION, INCLUDING BUT NOT
 LIMITED TO PASS-ALONGS, RECEIVED BY THE LANDLORD IN CONNECTION WITH  THE
 USE OR OCCUPANCY OF ANY COMMERCIAL PREMISES.
   D.  "TENANT"  SHALL  MEAN TENANT, SUBTENANT, LESSEE, SUBLESSEE, OR ANY
 OTHER PERSONS LAWFULLY ENTITLED TO USE OR OCCUPANCY  OF  ANY  COMMERCIAL
 PREMISES.
   § 22-1203 COMMERCIAL RENT REQUIREMENTS. A. THE RENT FOR ANY COMMERCIAL
 PREMISES  SHALL  NOT BE INCREASED BY THE LANDLORD DURING THE TERM OF THE
 LEASE, WITHOUT THE WRITTEN CONSENT OF THE TENANT, FOR ANY REASON WITHOUT
 A DETERMINATION BY AN ARBITRATOR THAT SUCH RENT INCREASE IS NOT  FRAUDU-
 LENT AND IS NOT ABOVE THE FAIR MARKET VALUE OF THE COMMERCIAL PREMISES.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD06387-01-1

 S. 3133                             2
 
   B. ALL ARBITRATION CONDUCTED FOR THE PURPOSES OF THIS SECTION SHALL BE
 SUBJECT  TO THE PROVISIONS OF ARTICLE SEVENTY-FIVE OF THE CIVIL PRACTICE
 LAW AND RULES. THE LANDLORD AND THE ARBITRATOR SHALL MAKE A  GOOD  FAITH
 EFFORT  TO  ALLOW  THE TENANT TO ATTEND AND BE HEARD AT A HEARING AND TO
 HAVE REASONABLE TIME TO PREPARE FOR SUCH HEARING.
   C.  IN THE EVENT THAT A TENANT DOES NOT BELIEVE A RENT INCREASE WAS IN
 COMPLIANCE WITH SUBDIVISION A OF THIS SECTION, THE TENANT  MAY  BRING  A
 CIVIL  ACTION IN A COURT OF COMPETENT JURISDICTION FOR INJUNCTIVE RELIEF
 AND SUCH OTHER REMEDIES AS MAY BE APPROPRIATE. IF  THE  COURT  FINDS  IN
 FAVOR  OF  THE  TENANT, IT SHALL AWARD SUCH PERSON, IN ADDITION TO OTHER
 RELIEF, REASONABLE ATTORNEY'S FEES AND COSTS.
   § 22-1205 RETALIATION. NO LANDLORD SHALL IN ANY WAY RETALIATE  AGAINST
 ANY  TENANT  FOR  THE TENANT'S ASSERTION OR EXERCISE OF ANY RIGHTS UNDER
 THIS CHAPTER.  ANY SUCH RETALIATION MAY SUBJECT THE LANDLORD TO  A  SUIT
 FOR ACTUAL AND PUNITIVE DAMAGES, INJUNCTIVE RELIEF, AND ATTORNEY'S FEES.
   §  22-1207  WAIVER.  NO  PROVISION  IN ANY LEASE, RENTAL AGREEMENT, OR
 AGREEMENT MADE IN CONNECTION WITH A LEASE WHICH WAIVES OR DIMINISHES ANY
 RIGHT OF THE TENANT UNDER THIS CHAPTER IS VALID.
   § 22-1209 INCONSISTENCY WITH OTHER LAWS. IN THE EVENT  OF  ANY  INCON-
 SISTENCY WITH ANY OTHER LAWS OF THE CITY OF NEW YORK, THIS CHAPTER SHALL
 TAKE PRECEDENCE.
   §  22-1211 COMMERCIAL LEASE REQUIREMENTS. A. THE LEASE FOR ANY COMMER-
 CIAL PREMISES SHALL NOT CONTAIN A WAIVER OF  THE  RIGHT  TO  SEEK  COURT
 INTERVENTION OR JUDICIAL REDRESS FOR ANY ISSUE ARISING UNDER THE LEASE.
   B.  ANY PROVISION IN ANY LEASE, RENTAL AGREEMENT, OR AGREEMENT MADE IN
 CONNECTION WITH A LEASE WHICH WAIVES OR DIMINISHES ANY OF THE RIGHTS  TO
 JUDICIAL  INTERVENTION  OR  REDRESS  UNDER  THIS CHAPTER SHALL BE DEEMED
 INVALID.
   § 2. Severability. If any clause, sentence, paragraph, section or part
 of this act shall be adjudged by any court of competent jurisdiction  to
 be  invalid  and  after  exhaustion  of all further judicial review, the
 judgment shall not affect, impair or invalidate the  remainder  thereof,
 but  shall  be  confined in its operation to the clause, sentence, para-
 graph, section or part of this act directly involved in the  controversy
 in which the judgment shall have been rendered.
   §  3.  This  act shall take effect on the ninetieth day after it shall
 have become a law.  Effective immediately the addition, amendment and/or
 repeal of any rule or regulation necessary  for  the  implementation  of
 this  act  on its effective date are authorized to be made and completed
 on or before such effective date.

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Senate Bill S3133

Sponsored By

Archive: Last Bill Status - In Senate Committee Cities 1 Committee

2021-S3133 (ACTIVE) - Details

2021-S3133 (ACTIVE) - Summary

2021-S3133 (ACTIVE) - Sponsor Memo

2021-S3133 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S3133

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Sponsored By

Brian Kavanagh

Archive: Last Bill Status - In Senate Committee Cities 1 Committee

2021-S3133 (ACTIVE) - Details

2021-S3133 (ACTIVE) - Summary

2021-S3133 (ACTIVE) - Sponsor Memo

2021-S3133 (ACTIVE) - Bill Text download pdf

Comments