New Commercial Landlord Goes to Nonpayment Petition on Small Amount of Outstanding Rent and Large Amount of Principal
July 24, 2015
We recently represented an entity that had just purchased a building in Manhattan. A number of the storefront retail tenants paid the rent late. One store, a telecom store, was perpetually two to three months late. Moreover, the store just never got around to paying the real estate tax escalations. The owner hired Itkowitz PLLC to serve a rent demand. Upon receiving the rent demand, the tenant paid almost everything due. The tenant promised to catch up soon. The landlord decided not to proceed to the filing of a nonpayment summary proceeding. You can probably guess what happened next?
Two months went by and the tenant fell further behind again. We were instructed to serve another rent demand. Upon receiving the rent demand, the tenant paid almost everything due, leaving a slightly bigger balance than last time. The tenant promised to catch up soon. Are you seeing a pattern?
We gave the landlord options. They went like this.
Option 1: Proceed to a Summary Nonpayment Proceeding
Pro: Aggressive; will send the message that the landlord is not the bank; has a higher likelihood of getting the tenant to pay then not suing.
Con: Costs legal fees. Case may not get too far; a defense to a nonpayment proceeding is payment, so when tenant pays, the case will be over.
Option 2: Wait and see if the Tenant Catches Up
Pro: Maybe tenant will catch up, and stay caught up. In which case, why waste the legal fees and energy.
Con: This tenant is getting the message, much like an errant small child, that misbehaving comes without consequences. It pays to dispel that message.
The landlord chose to serve a nonpayment petition, for less than a full month’s rent. The tenant was surprised. We explained to the tenant that the rent was not optional. The tenant caught up and stayed that way.
