Give Tenant Realistic Time to Comply with Lease

If a tenant isn’t in compliance with its lease terms because it’s waiting for certain items or obligations that take time, don’t automatically jump to a lawsuit. The cure period you’ve allowed the tenant to become compliant might not be realistic if the requirements it’s trying to secure take longer than that.

A New York landlord found out the hard way that because the tenant was in the lengthy process of complying with the lease, but simply wasn’t able to secure what it needed, a court would use a longer cure period as a solution.

In that case, a tenant that operated a gym received a notice from the owner of its space ordering it to obtain the proper permits to operate its business, which were required by its lease. The tenant asked a New York trial court for a Yellowstone injunction, which would toll—that is, pause—the period to cure the alleged violations of the lease. The tenant claimed that it was still in the process of obtaining the necessary approvals and permits. A New York trial court granted the Yellowstone injunction.

The court noted that the purpose of a notice to cure is to specifically apprise the tenant of claimed defaults in its obligations under the lease and of the forfeiture and termination of the lease if the claimed default isn’t cured within a set period of time.

A Yellowstone injunction maintains the status quo so that a commercial tenant, when confronted by a threat of termination of its lease, may protect its investment in the leasehold by obtaining a stay tolling the cure period so that upon an adverse determination on the merits the tenant may cure the default and avoid a forfeiture of the lease.

Here, the tenant was able to show that it is attempting to and has the ability to cure the alleged defaults, by diligently pursuing the permits necessary to operate under the lease; it simply needs more time to do so [Pureform Movement, LLC v. 2374 Concourse Assoc., LLC, November 2016].