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NYC Law Providing Relief for Commercial Tenants Faces Constitutional Scrutiny
New York City Mayor Bill de Blasio delivered another striking blow to property owners when he signed into law N.Y.C. Council Int. No. 1932-A (2020) on May 26, 2020.
The new legislation, which amends the NYC Administrative code, prohibits landlords from enforcing personal guaranties on certain commercial leases for defaults occurring between March 7, 2020 and Sept. 30, 2020. 2020 N.Y.C. Local Law No. 55, N.Y.C. Admin. Code §§22 -1005 (5/26/2020). The personal guarantor is absolved of liability if the tenant meets one of the following three conditions: a) the tenant was required to cease service of food or beverage for on-premises consumption or to cease operation under executive order 202.3 issued by New York Governor Andrew Cuomo; b) tenant was a non-essential retail establishment subject to in-person limitations spelled out by Governor Cuomo in executive order 202.6; or c) the tenant was required to close to members of the public pursuant to executive order 202.7. See, id.
It was made clear that the intent of the legislation was to assist businesses such as restaurants, bars, salons, barbershops, movie theaters, gyms, etc. who were forced to close in March 2020 as a result of the COVID-19 pandemic. However, the devastating effect of this new legislation on property owners seemingly was overlooked.
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