Landlord's Acceptance of Rent from Entity Other Than Lessee Did Not Waive Lease's Non-Assignment Provisions

On May 6, 2020, the Second Department issued a decision in VRA Family L.P. v. Salon Mgt. USA, LLC, 2020 NY Slip Op. 02639, holding that a landlord's acceptance of rent from an entity other than the lessee did not waive the lease's non-assignment provisions, explaining:

[D]efendants failed to raise a triable issue of fact regarding the plaintiff's alleged waiver of the nonassignment and nonwaiver provisions of the lease. A waiver is the voluntary abandonment or relinquishment of a known right. While waiver may be inferred from the acceptance of rent in some circumstances, it may not be inferred, and certainly not as a matter of law, to frustrate the reasonable expectations of the parties embodied in a lease when they have expressly agreed otherwise. Here, section 9 of the lease provided, as relevant, that the receipt by the landlord of rent, with knowledge of the breach of any covenant thereof, shall not be deemed a waiver of such breach and no waiver by the landlord of any provision hereof, shall be deemed to have been made unless expressed in writing and signed by the landlord. Section 10 of the lease provided, inter alia, that if the lease were assigned, or if the premises were occupied by anyone other than Salon, then the plaintiff may collect rent from the assignee, under-tenant or occupant, but no such collection shall be deemed a waiver of the covenant herein against assignment and underletting or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of the tenant from the further performance by the tenant of the covenants herein contained on the part of the tenant. Thus, contrary to the defendants' contentions, the plaintiff's acceptance of rent from OBS cannot be deemed a waiver or an acceptance of OBS as the assignee of the lease under the clear and unambiguous language of the lease. Similarly, the defendants failed to establish that the plaintiff's alleged direct communications with OBS indicated a clear manifestation of intent to waive the nonassignment and nonwaiver provisions of the lease.

Further, even if the defendants had raised triable issues of fact regarding the plaintiff's alleged inferred consent to the assignment, an assignment of a lease by the lessee does not release the lessee of its obligations under the assigned lease absent an express agreement to that effect or one that can be implied from facts other than the lessor's mere consent to the assignment and its acceptance of rent from the assignee. The defendants failed to raise a triable issue of fact as to the existence of an express agreement, or as to any facts from which such an agreement could be implied, by which Salon was released from its obligations under the lease after the alleged assignment.

(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.