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What Rights Do Commercial Tenants Have When Facing Eviction?

For a commercial tenant, obtaining and keeping a lease is critical to the success of the business. Losing a commercial lease through forfeiture based on an alleged lease violation can threaten a business’s survival. To make things worse, with the eviction moratorium at an end when a landlord threatens to terminate the lease or serves a notice to cure or notice of default, the tenant may have only a matter of days to resolve the problem before facing eviction.

What is a notice to cure?

The notice to cure is the first notice to be sent which informs the commercial tenant that he or she has ten or fifteen (depending on the terms of the lease agreement) days to correct the lease violation. If the commercial tenant cures the violation, then the landlord cannot take further steps to evict the commercial tenant. But, if the commercial tenant fails to cure then the next step would be for the landlord to give the commercial tenant a notice of termination.

What is a notice to terminate?

The notice of termination alerts the commercial tenant that according to the notice to cure, the commercial tenant failed to cure the violation and the landlord now chooses to terminate the tenancy. The notice of termination will inform the commercial tenant that the tenancy has been terminated because the commercial tenant failed to cure the lease violation and the commercial tenant has a certain number of days to vacate the premises.  If the commercial tenant does not move out of the space, then the landlord may begin the eviction proceedings against the commercial tenant in court.

What to do if served with a notice to cure?

Fortunately, if a commercial tenant receives a notice to cure, there is a legal remedy known as a Yellowstone injunction. A Yellowstone Injunction is a New York Supreme Court proceeding initiated by the commercial tenant when the landlord seeks to terminate the lease because of an alleged default by the commercial tenant. The Yellowstone Injunction is a type of temporary restraining order that prevents the landlord from terminating the lease during which time the commercial tenant must cure the default. Getting a Yellowstone Injunction can buy the commercial tenant some time to seek a court determination as to whether they have breached the lease, and to cure any alleged default. 

How to obtain a Yellowstone Injunction

To obtain a Yellowstone injunction, a commercial tenant must demonstrate that: (1) it holds a lease; (2) the landlord served a notice to cure; (3) the commercial tenant sought the Yellowstone injunction before the expiration of the cure period; and (4) the commercial tenant has the ability and desire to cure the alleged default. New York courts are inclined to grant Yellowstone injunction applications to avoid a forfeiture of a tenant’s interest in a valuable asset – a commercial lease. Tenants are best able to take advantage of this inclination by emphasizing their “ability and desire” to cure the alleged default.

Filing the Yellowstone Injunction and tolling the cure period is crucial for a commercial tenant. A court will only approve an injunction before the notice to cure deadline passes. Once the notice to cure period has passed, and the landlord has terminated the lease, the court will not grant the injunction. Curing the default may be as straightforward as executing an estoppel certificate, or it may be as time-consuming as installing a new exhaust system. Whatever the alleged default is, getting more time to cure the default and negotiate with the landlord is vital.

Have questions about an upcoming Commercial Eviction? 

If you are trying to stop an eviction, time is of the essence, and the matter of utmost importance is maintaining your business. Clair Gjertsen & Weathers PLLC has been helping people through this complex process for the last 40-years.  We offer free initial consultations to see which option is the best fit for you to stop a foreclosure auction sale to keep your home.  Please give us a call at 914.472.6202.

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