Summary
In Ross Realty v. V & A Iron Fabricators, Inc., 5 Misc 3d 72, 787 N.Y.S.2d 602 (App. Term 2004), the Court held that, in a nonpayment proceeding, an accelerated rent clause is enforceable in New York, however where the lease does not require the landlord to re-rent the premises upon its recovery of possession after default in rent and to apply the rent received from re-renting to the benefit of the tenant, the accelerated rent clause is deemed to impose a penalty and is not enforceable.
Summary of this case from Butler v. SheererOpinion
10-21-2004
ROSS REALTY, Appellant, v. V & A IRON FABRICATORS, INC., Respondent.
Rabinowitz & Galina, Mineola (Michael M. Rabinowitz and Michael P. Giampilis of counsel), for respondent.
Michael C. Marcus, New York City, and Somer & Heller, LLP, Commack, for appellant. Rabinowitz & Galina, Mineola (Michael M. Rabinowitz and Michael P. Giampilis of counsel), for respondent. McCABE, P.J., COVELLO and TANENBAUM, JJ.
OPINION OF THE COURT
Memorandum. Final judgment unanimously affirmed without costs. In this commercial nonpayment proceeding seeking to recover, inter alia, June 2003 rent, landlord moved, at the commencement of the trial, to amend its petition to include not only June 2003 rent of $6,578.91 but also accelerated rent of $420,820, allegedly due under the lease at landlord's option, upon a default in rent. The District Court awarded landlord the June 2003 rent plus costs but declined to award landlord the accelerated rent, finding that there had been a surrender and acceptance or a surrender by operation of law subsequent to the default in rent. Landlord challenges this finding on appeal, arguing that it is not supported by the record. We agree with landlord that the proof established neither an express nor an implied surrender. In this regard, we note that tenant's vice-president admitted that landlord never agreed to release tenant from the lease and that the record shows that landlord did no act that was inconsistent with an intention to hold tenant to the lease (see generally 2 Dolan, Rasch's Landlord and Tenant — Summary Proceedings § 26:6 [4th ed]). However, we affirm the final judgment on other grounds. Accelerated rent clauses such as the one relied upon by landlord (Belnord Realty Co. v Levison, 204 App Div 415 [1923]) generally are enforced in New York (Fifty States Mgt. Corp. v Pioneer Auto Parks, 46 NY2d 573 [1979]). However, where, as here, the lease does not require the landlord to rerent the premises upon its recovery of possession after a default in rent and to apply the rent received from the rerenting to the benefit of the tenant, the accelerated rent clause is deemed to impose a penalty and is not enforceable (Rand v Conklin, NYLJ, Jan. 7, 1994, at 29, col 1 [App Term, 9th & 10th Jud Dists]; Silver v Brody, NYLJ, Apr. 23, 1993, at 25, col 6 [App Term, 9th & 10th Jud Dists]; Kabro Assoc. of Woodbury v Off-Campus of Woodbury, NYLJ, Nov. 16, 1992, at 32, col 5 [App Term, 9th & 10th Jud Dists]; see Benderson v Poss, 142 AD2d 937 [1988]; cf. Belnord Realty Co. v Levison, 204 App Div 415 [1923], supra). Accordingly, the District Court did not err in refusing to award landlord the accelerated rent sought.