Commercial Tenant Claiming Constructive Eviction Liable for Rent Because it Remained in Possession of the Leased Premises

On February 4, 2020, 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, 2020 NY Slip Op. 50195(U), holding that a commercial tenant claiming constructive eviction was liable for unpaid rent because it remained in possession of the leased premises, explaining:

It is well settled that a commercial tenant may be relieved of its obligation to pay the full amount of rent due when it has been actually or constructively evicted from either the whole or a part of the leasehold. An actual eviction occurs when the landlord ousts the tenant from physical possession of the leased premises by physical expulsion or exclusion. When there has been no physical expulsion or exclusion of the tenant, but the landlord's wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises, there may be a constructive eviction. The tenant must abandon possession in order to claim that there was a constructive eviction. A constructive eviction may be partial, rather than total, in which case the tenant need only abandon, or not use, a portion of the premises affected. A landlord's breach of its duty to repair may give rise to a claim for a constructive eviction if the breach results in a substantial and material deprivation of the plaintiff's use of the premises. This does not automatically trigger a 100% rent abatement, however, because a tenant in possession still remains obligated to pay rent. In such circumstances, the landlord may not recover the full amount of the rent. Rather, the rent will be proportionately abated, even for commercial premises.

In opposition to the prior motion, the defendant Integrated Medical Professionals, PLLC ("IMP") claimed that it was constructively evicted from approximately 25% of the leased premises due to the failure or refusal by the plaintiff 42-78/86 Realty LLC ("Realty") to make necessary repairs thereto. The court found that there was a triable issue of fact as to whether Realty's failure to make necessary repairs substantially and materially deprived IMP of the beneficial use and enjoyment of 25% of the demised premises. The record reflects that, for the period from March 2018 through June 2018, IMP withheld from Realty 100% of the rent and additional rent due under the lease, which amounted to $103,910.04. Since IMP claimed that it was constructively evicted from only 25% of the leased premises, it was not entitled to a rent abatement of 100%. Twenty-five percent of $103,910.04 equals $25,977.51. Accordingly, Realty is awarded partial summary judgment on the first cause of action in the amount of $77,932.53 ($103,910.04 minus $25,977.51), with interest from June 1, 2018.

(Internal quotations and citations omitted).

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.