Denial of Lease Renewal Option not an Unjust Forfeiture

On June 7, 2018, the First Department issued a decision in Robert B. Jetter, M.D., PLLC v. 737 Park Ave. Acquisition LLC, 2018 NY Slip Op 04085, holding that a denial of a lease renewal was not an unjust forfeiture, explaining:

Jetter argues that denial of its renewal option would work an unjust forfeiture within the meaning of J.N.A. Realty Corp. v Cross Bay Chelsea (42 NY2d 392 [1977]) and its progeny. He may raise this argument for the first time on appeal. However, on the merits, it is unavailing. The parties' lease gives Jetter a renewal option provided that it has not incurred late payment charges more than three times and has not caused, inter alia, any lawsuit to have been commenced against the landlord. Jetter's incurrence of late fees on more than three occasions was not due to "neglect or inadvertence." Rather, it was the result of a deliberate choice to withhold rent. The Court of Appeals has cautioned that J.N.A. is a narrow doctrine. Therefore, we decline to extend it to the instant situation, where Jetter is arguing that it was justified in withholding rent. Moreover, even setting late fees aside, Jetter did not satisfy the second condition to renewal, since it has sued the landlord in the instant action.

(Internal quotations and citations omitted).

We frequently litigate disputes over the purchase and sale of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.