City Council to the Rescue?

Originally Published : April 23, 2020

Corey Johnson is a GOOD GUY!!

Dear HL Clients,

If Speaker Corey Johnson can muscle the bill that he introduced in the City Council into law that removes the personal (Good Guy) guaranty from our restaurant leases, he may just get my vote when he runs for mayor. This would be the single greatest achievement in City Council history. Can you imagine the effect this would have on lease negotiations?  

Just picture sitting at the negotiating table with your landlord and it isn’t even the slightest bit tilted to the other side.  No matchbook or napkin needed to cure the wobble as it’s already nice and smooth and level.  A level table for real?  Has it ever been that way in NYC?  Where a landlord and tenant both needed each other equally and neither had any undue leverage over the other?  An arm’s length agreement in the truest sense of the term?  We can dream.  And maybe we can help get it done.  I have reached out to Speaker Johnson’s team and my local Councilman Stephen Levin to see how we can be of service and will report back.  In the meantime, call your council member and let them know how you feel.

For more on the pending legislation:

City Council Good Guys and Gals by Shieva Salehnia, Esq.

The New York City Council yesterday introduced a COVID-19 relief package in its efforts to protect essential workers, residential tenants and small businesses. Two pieces of legislation in particular, if passed, could help our clients as small business owners and commercial tenants by relieving personal liability related to their leases and protecting them against landlord harassment. 

The first and most significant bill will make moot any personal liability provisions in commercial leases (including the guaranty) for tenants impacted by COVID-19, and was sponsored in part by the City Council Speaker himself, Corey Johnson. 

The bill defines “impacted by COVID-19” broadly to include, among other circumstances: 

  1. if an individual was forced to close its business as a direct result of COVID-19; 
  2. if a business was forced to adhere to the seating and occupancy limits created by the executive orders from the mayor or the governor issued from March 7, 2020 and onward (the “COVID-19 period”); or 
  3. if the revenue of the business during any 3-month period of the COVID-19 period is less than the same 3-month period revenues in the 2019 year, or are less than 50% of the aggregate revenues for the months of December 2019, January 2020, and February 2020.

If the bill is passed, it would mean that no personal guaranty for a commercial lease or license, whether a “good guy” guaranty or otherwise, would be enforceable against a tenant, provided the default or other event allowing the landlord to enforce the lease occurs or has occurred during the COVID-19 Period.

This bill also includes important language to protect commercial tenants from landlord harassment, including in the forms of interruption of services to a tenant, preventing tenants from accessing their covered premises, or threatening a tenant with the personal liability that will be eliminated in the remainder of the bill. 

The second important bill that was proposed yesterday will allow for landlords who engage in the harassment of commercial tenants impacted by COVID-19 to be fined a civil penalty between $10,000 and $50,000.

If these pieces of legislation pass, commercial tenants will be able to exercise their guaranties without the fear of being personally liable for costs like the total sum of rent that would have been due to the landlord for the remainder of the lease term, the landlord’s attorneys’ fees, or brokerage commissions.

Both bills will now need to be reviewed, debated and approved by the City Council’s Committee on Small Business, which is set to meet on April 29, 2020 to discuss them. We will keep you updated as the City Council’s COVID-19 relief package moves forward through the Council’s committees and back to the Council for a final vote.

[If you need any assistance reviewing your lease in light of COVID-19, negotiating with your landlord over the terms of your lease, or if you have any other questions or concerns related to your lease, please contact the head of our Real Estate group, Mayan Bouskila at [email protected].]

Joey Regs says:

In the timeless words of Matthew McConaughey, “Alright alright alright.” It looks like our electeds were able to get it together quickly and we could see the PPPot refilled as soon as Monday. $310 Billion more dollars in the coffers.  Will it be enough for all of us?  Nope.  Will it help? Sure. 

While this replenishment isn’t enough for everyone and we’re still not getting the clear rules and guidance that we all crave at this point either, the Treasury and the SBA are being a bit more vocal about who can and should be applying for the loans this time around.  It’s specifically NOT the bigger small businesses and it’s specifically NOT those businesses that have other reasonable access to capital.

We’re also getting a bit more insight into how the dollars will be allocated inside of the PPPot.  $60 Billion of the $310 billion will be allocated to small/community banks: $30 Billion for banks with between $10 Billion and $50 Billion in assets; and $30 Billion for banks  with up to $10 Billion in assets.  The other $250 Billion will be left for all of the big boys to pull from.  The word from the big banks is that they expect to drain that $250 Billion in 24-48 hours.

The EIDL is also getting a replenishment as part of this new stimulus package – to the tune of $10 Billion.  Will that be enough?  Nope.  Will that help? Yeah, sure.  Will the cash advances continue?  Yes.

Fingers crossed for all of us still waiting for the cheddar.  

Insider update from our friends at the Department of Consumer Affairs AKA the agency that governs Sidewalk seating in NYC...

Due to the emergency executive order signed by the Mayor, the DCA cannot send any applications (renewals or new) to external places, such as Community Boards.  As such, timelines on all of these applications are suspended and stalled indefinitely. If a payment was submitted online for any sidewalk cafe application, new or a renewal, applicants can email their documents in to the DCA, but all DCA personnel can really do at this point is review the materials for correctness and completeness. Once the order is lifted and life in the city goes back to “normal,” they will unfreeze the timelines and get back to business as usual.  

Joey Regs out.


Register for our Landlord/Tenant Webinar: Peace on the Lower Easthere:
It’s Tuesday, April 28th at 1:00

I dreamed of a pug that would not stop biting me.  I would playfully toss it in the lake and it would swim back and bite my hands as I tried to play with it. And this went on until Lauren woke me up because I was doing the herky-jerky and she was concerned.

Good night and weird dreams,