Owner Couldn't Use Self-Help to Evict Tenant

Facts: A tenant rented space to operate its dental practice. After the building was bought by a new owner that intended to turn the building into a hotel, the tenant received a notice of cancellation. The lease gave the owner the right to cancel the lease if it intends to apply for a permit to demolish “all or substantially all” of the building, and provided that if the owner cancels the lease and thereafter fails to obtain such a permit before the effective date of the cancellation, then the cancellation is void.

A month before the lease cancellation date, the owner asked a trial court for a preliminary injunction compelling the tenant to remove patient records from its premises. The owner indicated that, after the cancellation date, it intended to cut off public access to the building and withhold utilities from the tenant’s premises in order to perform the conversion work—essentially evicting the tenant.

The tenant asked the court for a preliminary injunction to stop the owner from using self-help to evict it.

The court denied the owner’s request. It also granted a temporary restraining order for the tenant pending an evidentiary hearing.

After the hearing, the court denied the owner’s motion and granted the tenant’s motion because it found that at this early stage of the litigation, the tenant would probably succeed in establishing that the owner did not obtain a permit to demolish “all or substantially all” of the building before the effective date of the cancellation, which would render the cancellation notice void. The owner appealed.

Decision: A New York appeals court upheld the lower court’s decision.

Reasoning: The appeals court noted that an owner may, under certain circumstances, use self-help to peaceably re-enter commercial premises and regain possession. This common-law right to re-enter, however, can be exercised only if the lease expressly reserves that right. Here, the lease didn’t contain any specific provision allowing the owner to use self-help to evict the tenant, the appeals court pointed out.

The appeals court did, however, modify the injunction so as to allow the owner to enter the tenant’s premises to perform work on one of the building’s elevator shafts to accommodate an elevator cab compliant with the Americans with Disabilities Act.

• 1414 Holdings, LLC v. BMS-PSO, LLC, April 2014