Commercial Division Blog
Lease Not Terminated Due to Failure Strictly to Comply With Notice Provisions
On August 25, 2016, Justice Kornreich of the New York County Commercial Division issued a decision in Core Services Group, Inc. v. Teams Housing Development Corp. Fund, Inc., 2016 NY Slip Op. 31634(U), holding that a lease was not terminated due to the landlord's failure to observe the lease's notice provisions, explaining:
Teams' motion for summary judgment on its declaratory judgment claim is denied and, in searching the record, the third counterclaim is dismissed. Teams seeks a declaratory judgment declaring that it terminated the Lease, Core must vacate, and that Core must cease and desist from representing that it has authority to place tenants in the Premises. However, Teams did not terminate the Lease in accordance with the notice provision contained in § 11.01.
To operate as a sufficient notice of an option to terminate under a lease, there must be strict compliance with its terms and anything else is ineffective. In a lease, a condition is subsequent where it has not related to the inception of the lease and the commencement of the tenancy, but gives the landlord, upon its happening or not happening, a right to terminate the lease. Teams' failure to pay rent was a condition subsequent because it occurred after the inception of the Lease. A lease does not end immediately upon the breach of a condition subsequent, but continues until the landlord enforces a forfeiture thereof by re-entry.
The evidence does not support Teams' claim that it terminated the Lease in strict conformity with its notice provisions, and in searching the record, its declaratory judgment claim is dismissed. Section 18.01 provides that Teams must give Core written notice of a default. Section 11.01 states that notice shall be given to the Tenant and its attorney by messenger, overnight mail, or certified mail, return-receipt requested. The October Letter stating there was a rent default was emailed to Core, but not its attorney. The November Letter was not sent to Core. Furthermore, there is no evidence that HRA canceled the MOU, the asserted basis for termination in the November Letter. Therefore, the Lease is not terminated and Teams is not entitled to a declaration that Core must vacate, or that Core must cease and desist from representing that it can place tenants in the premises. However, as discussed below, Core defaulted in paying rent. Therefore, if Teams serves a notice of termination for non-payment that complies with the Lease, it can bring a non-payment proceeding in Civil Court.
(Internal quotations and citations omitted) (emphasis added).