Another Victory

This week, the Appellate Division rendered its decision in ESRT 501 Seventh Avenue, LLC v. Regine LTD. Notably, the Court found that the late fee provision in a commercial tenant’s lease, which enabled the landlord to assess a monthly 5% charge on all outstanding arrears, was unenforceable as being excessive. The trial court initially rendered the provision enforceable, however, on appeal, the Appellate Division reversed the decision after argument presented by Jacqueline Handel-Harbour.

SKH Heiberger persuaded the Court that pursuant to NY Penal Law §190.40 these monthly charges violated the law, as they amounted to a per annum rate in excess of 25%, a grossly disproportionate rate when viewed in light of the actual amount of unpaid rent. The Court agreed that such charges were usurious as a matter of law. This crafty legal reasoning resulted in the Court vacating a judgment for almost one million dollars. The Court’s reversal highlights the importance of consulting with leasing counsel prior to drafting a commercial lease.

For assistance with drafting your commercial lease, you can contact our team to help walk you through all of the essentials.