Last week, New York City Mayor Bill de Blasio signed the City Council’s Personal Liability Bill, which prohibits commercial landlords from enforcing personal guarantees on defaults that arose from March 7, 2020 to September 30, 2020. This measure provides a shield for businesses to protect their personal assets from landlords.
While this new law only applies to specific types of liabilities and to a limited category of tenants/businesses, they dramatically limit the rights of commercial landlords which becomes a cause for legal concern.
- The law interferes with private contracts and impedes on the landlords' contractual rights.
- It's important to note that personal liability provisions are often not in the lease agreement themselves, but rather part of separate guaranties which are agreed upon and signed by the tenant.
It's no shock that the current pandemic has upended businesses, retailers, and landlords alike, but Mayor Bill de Blasio's latest bill has given landlords the short end of the stick.
We will continue providing updates on this bill's effect as it continues to unfold. Stay posted!