New York city passes law regarding personal liability provisions of leases for commercial tenants impacted by COVID-19

On May 26, New York City enacted a law, effective immediately, temporarily prohibiting the enforcement of personal liability provisions in commercial leases or rental agreements involving a COVID-19 impacted tenant located within the city. Threatening to or attempting to enforce such a provision would be considered a form of harassment.

A personal liability provision is a provision that provides for one or more natural persons who are not the tenant under such agreement to become, upon the occurrence of a default or other event, wholly or partially personally liable for certain payments, expenses, taxes and charges owed by the tenant.

Such personal liability provisions shall not be enforceable if the following two conditions are satisfied:

  1. The tenant satisfies one of the following conditions; (1) businesses that were required to stop serving food or beverages on-premises; (2) businesses that were required to cease operations altogether; (3) retail businesses that were required to close and/or subject to in-person restrictions; and (4) businesses that were required to close to the public.
  1. The default or other event occurred between March 7, 2020 and September 30, 2020.

Please contact us if you have any questions on how this new law may relate to your business.