Constructive Eviction Suspends Obligation to Pay Rent

On October 8, 2019, Justice Emerson of the Suffolk County Commercial Division issued a decision in Board of Mgrs. of Manhasset Med. Arts Condominium v. Integrated Med. Professionals, PLLC, 2019 NY Slip Op. 51588(U), holding that a constructive eviction suspends a tenant's obligation to pay rent, explaining:

Contrary to Realty's contentions, withholding the entire amount of the rent is the proper remedy when there has been a partial eviction by a landlord. Eviction suspends the obligation of payment because it involves a failure of the consideration for which rent is paid. If such an eviction, though partial only, is the act of the landlord, it suspends the entire rent because the landlord is not permitted to apportion his own wrong. The reason for the rule is that the tenant has been deprived of the enjoyment of the demised premises by the wrongful act of the landlord. Thus, the consideration for the agreement to pay rent has failed. This is true even when, as here, the tenant remains in possession of the premises.

Moreover, the language of a "hell or high water" clause, which requires the tenant unconditionally to pay all rent and make other payments due under the lease without any reduction, set off, abatement, or diminution, is not a bar to the assertion of a constructive-eviction defense. Under New York law, a party who has been constructively evicted is relieved of its obligation to pay rent because the constructive eviction terminates the lease. Thus, if IMP was constructively evicted, the lease was terminated and IMP was relieved of its obligation to pay the base rent and additional rent under the "hell or high water" clauses of the lease.

(Internal quotations and citations omitted) (emphasis added).

We frequently litigate disputes over the sale or leasing 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.