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A lesson on Yellowstone Injunctions from Prestige Deli & Grill Corp. v. PLG Bedford Holdings, LLC.
Recently, the Appellate Division of the Supreme Court of New York made a ruling that could prove helpful for commercial landlords who want to protect their properties from tenants who breach their leases and fail to pay. In Prestige Deli & Grill Corp. v. PLG Bedford Holdings, LLC, the landlord served a notice to cure on the tenant, accusing them of violating the lease by not paying rent and failing to install grease traps.
When the cure period elapsed, the landlord then served a notice of termination to the tenant. The tenant attempted to get a Yellowstone Injunction by commencing an action for declaratory and injunctive relief, but the court reversed the initial grant of the injunction. It turned out, the tenant did not meet the requirements of the Yellowstone Injunction and also did not request relief before the cure period ended. As a result, the court ruled in favor of the landlord.
Understanding Yellowstone Injunctions & Lease Terms
A Yellowstone Injunction is a legal remedy available to commercial tenants in New York, which serves to maintain, essentially, the status quo and prevent the termination of a lease when confronted with a threat of termination due to an alleged breach of the lease terms.
In order to obtain a Yellowstone Injunction, a tenant must demonstrate that:
- They hold a commercial lease
- They received a notice of default, a notice to cure, or a threat of termination from the landlord
- They requested injunctive relief before both the termination of the lease and the expiration of the cure period set forth in the lease and the landlord’s notice to cure
- They are prepared and maintain the ability to cure the alleged default by any means, short of vacating the premise
Practical Advice for Commercial Landlords: What You Can Learn from the Case
Draft Clear Lease Agreements and Notices
This is critical for all landlords. It is essential that your lease agreements and notices clearly outline the terms, conditions, and cure periods.
A cure period refers to a specified time frame when a tenant must rectify, or rather “cure”, the breach of the lease terms as identified by the landlord. This period gives the tenant an opportunity to address any alleged violations, which can include non-payment of rent or failure to comply with other lease obligations, to avoid the potential termination of the lease. The lease agreement generally outlines the duration and conditions of the cure period.
At Woods Lonergan, our attorneys have a wealth of experience in a variety of commercial real estate matters. If you need assistance drafting your property’s lease agreements and notices, consult with our legal team today to learn how you can fully protect your property.
Your Rights and Obligations as a Commercial Landlord
No matter how big or small your commercial property is, it is important to understand your rights and obligations as a landlord. Make sure to familiarize yourself with legal remedies available to tenants, such as Yellowstone Injunctions.
Having a comprehensive knowledge of the potential remedies increases your readiness to handle any potential disputes that may arise. Our attorneys are here to provide you with the guidance and support you need to remain up to date on the latest laws, regulations, and court decisions that may impact your role as a commercial landlord. Our real estate team will advise you on the best possible way to protect your interests. Trust us to provide you with the thoughtful, insightful representation you need.
Communicate and Collaborate with Your Tenants
The best way to prevent issues from arising is to maintain open communication with your tenants. Address their potential issues before they escalate. Also, make sure to maintain records of your communications with tenants.
Key Takeaways from The Prestige Deli & Grill Corp. v. PLG Bedford Holdings, LLC
Though a favorable outcome for the defendant, commercial landlords in New York should still pay attention to this case. The Prestige Deli & Grill Corp. v. PLG Bedford Holdings, LLC highlights:
- Why it’s important to understand Yellowstone Injunctions as a commercial landlord and how you can prepare for a Yellowstone Injunction in your lease terms
- By drafting a clear lease agreement, understanding your rights and obligations as a commercial landlord, and maintaining open communication with tenants, you can better navigate these lease disputes and protect your assets
Our real estate attorneys are dedicated to helping our clients be well-prepared to address any potential lease or business disputes. Consult with Woods Lonergan today to help you navigate the intricacies of a Yellowstone Injunction and help you stay informed of upcoming legal changes that can impact your commercial property portfolio.
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