Landlords, Have You Thought About Self-Help?
Since the outbreak of the COVID-19 in March 2020, a seemingly-never-ending eviction moratorium has plagued New York’s landlords. While we are now ten months into the pandemic and slowly getting rid of the unrealistic expectation that everything will go back to “normal” in a short period, the hopeless landlords who are owed sizable rent and real estate taxes start to set their eyes on something not that ordinary: Self-Help.
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Given the current moratorium on evictions due to COVID-19 and the limited operation of the housing court, NYC’s commercial landlords might want to explore the rarely considered the option of Self-Help to remove their tenants quickly, that is, compared to the typical housing court eviction. The common law doctrine of self-help has been recognized by the New York courts from time immemorial. In this article, we will walk you through the law of commercial landlords’ self-help rights under the New York laws and analyze certain factors to consider as to whether a commercial the landlord should utilize self-help to regain possession of the property.
Before anything, we have to stop your racing thoughts if you are a residential property landlord. New York already outlawed the “self-help” against RESIDENTIAL tenants. Self-help can ONLY be utilized against COMMERCIAL tenants. So, residential landlords, sorry but not sorry, because you may have another tool at your disposition: ejectment action, which we may share in another article.
Now, you might be really interested if you are a commercial landlord. Before you get your hopes up, let us look at the elements of the rights of self-help. Essentially, in order for a commercial the landlord to use Self Help, the following elements must be satisfied:
Lease terms: The lease must expressly provide relevant terms that the landlord has a right to reenter and regain possession of the premises upon the tenant’s defaults on the lease;
Proper notices served: Landlords must serve proper notices upon their tenants in the specified manners according to the relevant terms of the lease; and
Peaceful reenter: Landlord’s reenter and repossession must be performed peacefully.
For the first element: Lease Terms, a simple sample language goes as follows:
If tenant shall make default in the payment of the rent reserved hereunder, or any item of ‘additional rent’ herein mentioned, or any part of either or in making any other payment herein provided for, or if the notice last above provided for shall have been given and if the condition which was the basis of said notice shall exist at the expiration of said ten days’ period, the Landlord, may immediately, or at any time thereafter, re-enter the demised premises and remove all persons and property therefrom, either by summary dispossess proceedings, or by any suitable action or proceeding at law, or otherwise, without being liable to indictment, prosecution or damages therefor.
Note that if there is any ambiguity in the lease, the courts may refuse to approve the use of self-help, and therefore, landlords should always make sure the leases expressly allow self-help and the language is clear. This is also a reminder that landlords should consider including a proper self-help clause if the lease is not signed yet.
For the second element: Proper Notice, most leases do require landlords to give tenants default and termination notices before they can utilize remedies of self-help. For instance, if your tenant defaults on paying the rents, maintaining certain insurances as required, or subletting the property without your authorization, as the landlord, you are generally required to serve a notice to cure (notice of default), allowing the tenant reasonable time and opportunity to cure the default. If your tenant still fails to cure the default within the given period, then you can serve you tenant a notice to terminate the lease based on the default.
Lastly, for the third element: Peaceful Reentry, here are steps that you should take to ensure your self-help eviction be performed peacefully:
1. Because the whole process MUST be non-violent and peaceful, you should carefully choose the timing to change the lock. If anyone, presumably your tenant, pops up and protests against the process, you may not be able to carry out the mission and change the lock peacefully.
2. If there are equipment or personal items left behind when you change the lock, as the landlord you must use caution when handling these items. Usually, all items need to be kept for at least 30 days before you can dispose of them. If not managed properly, you may be held liable for conversion or trespass.
3. In some cases, it may be helpful to obtain a declaratory judgment or an order from the Supreme Court to facilitate the process, and to reduce the risk of unnecessary police intervention. (note that Supreme Court actions, unlike housing court proceedings, are not subject to the eviction moratorium)
All the legal requirements aside, there are many factors that should be considered by landlords before taking the matter into their own hands and changing the locks. In other words, even if your lease expressly allows self-help and you properly served all the notices, there are still certain question you should ask yourself to evaluate if your tenant presents a rather low risk to wage war over a self-help eviction.
1. What type of businesses does your tenant operate?
There are certain types of business that common sense dictates self-help is out of question. For example, you should never utilize self-help to evict tenant that operates a medical facility or day care center, while you might consider using self-help against a yogurt store or a hair salon because there are not that much at stake.
2. Does your tenant want to keep the lease?
Situation 1: if your tenant wants to keep the lease and is in a mood for a fight and will utilize every possible way to save the lease — HIGH RISK
Situation 2: if your tenant wants to move out but has some personal vendetta against you, then it might also be risky to use self-help, although for a very different reason — HIGH RISK
Situation 3: if your tenant is not successful in his business and is not interested in fighting for the lease, or he simply has better business opportunities somewhere else — MEDIUM OR POSSIBLY LOW RISK.
3. Is your tenant resourceful?
This question mostly relates to your tenant’s financial situation, or, in some scenario, if he/she has a lawyer friend/family who can help at a rather low cost. Let us assume that your tenant has good money and plenty of time for a court litigation, you should think twice before using self-help since you might be dragged into a lengthy and tedious lawsuit. However, if your tenant is short in money, the business is dying, self-help can be a reasonable option.
When answering these questions, it is imperative to gather as much information as you can from your tenant, the tenant’s managing agent, and the building manager, so that you can give careful thought to your decision on whether to take the expressway of Self-Help.
Tosum up, here are the key takeaways:
· Self- help eviction CANNOT be against RESIDENTIAL tenants; ONLY against COMMERIACL tenant.
· Check if your commercial lease allows self-help.
· Gather relevant information to evaluate if your tenant presents a low or medium risk fighting a self-help eviction. We DON’T recommend self-help if Situation 1 and 2 as mentioned above.
· Serve proper notices on your tenants after evaluating risks involved and deciding to proceed self-help.
· Perform your self-help eviction PEACEFULLY.
Self-help may be a powerful tool that can bypass the long-drawn-out court eviction, yet it can be tricky and risky. Hence, in using this remedy, landlords must be extremely careful. The planning and execution of Self-Help goes far beyond just legal knowledge as sophisticated manner and wisdom are definitely needed in handling your potentially distressed tenant, the police that may be involved, and in certain cases, the general public that are concerned over the lock change.
After all, wisdom demands not only the proper application of the law but the soundness of a decision as to the application of experience, knowledge, and good judgment, and wisdom, and wisdom alone, is probably the most important success factor in using the remedies of self-help.