Motion to Intervene Granted Where Lender Had A Contractual, Current Right To Cure The Tenant’s Default

On May 7, 2024, Justice Andrew Borrok granted a lender’s motion to intervene in an owner-tenant dispute on the basis that the lender had a contractual, current right to cure any default by the tenant. In NG Crown 20 E. 46th Street LLC v. 18-20/22 East 46th Street LLC, Index No. 656817/2022, the lease in dispute provided that, in the event of a default by the tenant, the lender has “certain current rights,” including the right to cure any tenant default. The owner opposed the motion by arguing it was either premature or otherwise untimely. The Court disagreed, finding that a motion to intervene could be made. It explained:

As relevant, and significantly, the Lease provides that in the event of a default by the Tenant, the Lender (as leasehold mortgagee) has certain current rights, including the right to cure any Tenant default, and, following a termination of the lease, the Lender has the [right] to enter into a lease with the Landlord on the same terms and conditions of the Lease by providing notice and paying any and all amounts due. . . . The Owner is simply not correct that the Lender does not have current rights under the Lease.

The attorneys at Schlam Stone & Dolan frequently advise clients concerning landlord/owner-tenant disputes involving complex financing and contractual rights. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.