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Columns & DepartmentsLandlord Tenant LawLitigatorsNew York Real Estate Law Reporter

Landlord & Tenant

By ljnstaff |
January 01, 2018

Rent Credit for Delay Held Unenforceable As a Penalty
Free People of PA v. Delshah 60 Ninth, LLC
NYLJ 10/25/17, p. 21, col. 3
Supreme Ct., N.Y. Cty.
(Ostrager, J.)

In an action by tenant for damages resulting from landlord's delay in providing possession, tenant sought to enforce a rent-credit provision in the commercial lease. After a jury trial, the court declined to enforce the provision, concluding that the credit was an unenforceable penalty.

The parties entered into a lease of commercial space that contemplated landlord would deliver possession on Aug. 1, 2015. The lease provided that if landlord did not deliver possession on time, tenant would be entitled to rent credits pursuant to a formula that provided for one day of free rent for each day beyond the scheduled delivery date for a specified period, followed by two days of free rent for further delays, and ultimately three days of free rent. Landlord did not deliver possession until July 12, 2016. Under the formula, tenant would be entitled to 825 days of free rent, which amounts to more than $3 million in damages. Tenant sought that amount.

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