What To Do When A Commercial Tenant Stops Paying Rent

A commercial lease is a contract between the property’s owner (the landlord, or “lessor”) and the business operator seeking to rent space for commercial use (the tenant, or “lessee”). The lease details all obligations that both parties have as part of the agreement. For example, a lessor is required to maintain the property, respond to complaints about the property, and comply with New York building codes.

Meanwhile, the lessee, or tenant, has an obligation to pay monthly rent as part of their agreement. Landlords in New York depend on this rental income to keep up with the high costs of commercial property ownership in New York. If the rental income dries up due to some issue with the tenant, this can cause serious problems for the property owner. When a tenant stops paying rent, the landlord must take steps to enforce their rights as the property owner, but must be careful about how they do it.

Covid-19 Eviction Moratorium Issues

Due to the Covid-19 pandemic, a moratorium on evictions in New York for both private and commercial tenants was imposed in March 2020 and expired on January 16, 2022. Despite expiration of the moratorium, some tenants may believe, mistakenly, that they are still not obligated to pay rent. This continues to cause issues for property owners and tenants alike.

What a Landlord Can Do to Retake Possession of the Property

Lawful steps a landlord can take due to nonpayment of commercial property rent in New York include:

• Rent demand; A demand for payment of rent must be served by a process server at least 14 days before filing a petition for eviction. Typically, this includes a demand for unpaid rent as well as any taxes, utilities, late fees and other charges that the property owner may have a legal right to seek.

• Petition for eviction; If payment has not been made subject to the rent demand, landlords can file a non-payment petition and notice of petition, which formally asks the Court to award the landlord a judgment of possession of the property.

• Litigation; Through this process, the tenant will have an opportunity to respond to the petition and state their case as to why they should be entitled to maintain use of the property. The landlord will have their opportunity to supply proof of non-payment, as well as proof of any other financial damages or costs they have incurred. Usually the property owner will obtain not only a judgment of possession, but an award of damages for unpaid rent and other costs. Preferably for the property owner, they will have an experienced New York real estate attorney on their side to help guide the case to its conclusion.

• Eviction; If the tenant fails to pay the costs due or leave the property, the landlord can request that a warrant of eviction be issued to the City Marshall (or Sheriff). Law enforcement officers would then have the authority to evict a tenant from the premises and deliver possession of the premises to the landlord.

In New York, an eviction is only lawful if it is brought through a court proceeding and a judgment of possession has been obtained by the property owner. Further, only a sheriff, marshal, or constable may carry out an eviction. The property owner cannot come to the property and attempt to evict a tenant themselves. Additionally, “self-help” measures such as shutting off water or power to a building to force a tenant out are also forbidden.

Our New York Real Estate Attorneys Can Assist When a Commercial Tenant Has Stopped Paying Rent 

It is frustrating enough as a property owner when a tenant stops paying rent. However, there is no immediate fix to the problem, and certain legal steps are involved. Fortunately, a real estate attorney with experience in these areas can set you on the right path and help you obtain the result you need. Our Bronx and New Rochelle real estate attorneys have decades of experience in the New York real estate market and can help answer any questions you may have. Call our Bronx office at 718-822-2203, or our New Rochelle office at 914-235-8500, or visit our real estate attorneys online to request a free consultation today.

Source:

hcr.ny.gov/covid-19-eviction-protections-tenants