In our biz, it is virtually axiomatic that the acceptance of rent can work to defeat a landlord's efforts to terminate a tenancy. That's why some were taken aback by the outcome of 1251 Ams. Assoc. II, L.P. v Rock 49th Rest. Corp. , a case decided by the Appellate Term, First Department, back in November of last year.
In that particular dispute, a New York County Civil Court judge dismissed a holdover proceeding due to the landlord's acceptance of rent a day after the tenancy had been terminated. On appeal, the Appellate Term, First Department, reversed.
Since the rent was due in advance and prior to the tenancy's expiration, the appellate court was of the belief that the post-termination acceptance of the monies neither triggered a reinstatement of the tenancy nor warranted the proceeding's dismissal. As the court observed:
Landlord's acceptance of tenant's tender of the April 2005 rent on April 6, 2005 did not vitiate the notice terminating the commercial tenancy as of April 5, 2005. Since the governing lease required tenant to pay rent "in advance on the first day of each calendar month," tenant was obligated to pay rent for the entire month, even though the lease was terminated as of April 5, 2005 ....
That much we get. If rent was due and payable on the 1st, in advance, then the tenant's late rent payment and the acceptance of that tender should not operate to the landlord's detriment.
What confused us was the latter part of the decision which referenced a discontinued nonpayment proceeding. Apparently, although the landlord had already served a notice of termination, it then opted to start a nonpayment case.
Since "nonpayment" and "holdover" proceedings are mutually exclusive remedies -- with the former acknowledging the ongoing existence of a landlord-tenant relationship while the latter does not -- a nonpayment case brought after a tenancy's termination will usually serve to revive the landlord-tenant relationship and result in the holdover's dismissal.
Not in this instance. The AT1 treated what usually would have been a "fatal irregularity" as something of little import. Here's what the appellate court concluded:
Nor did the brief pendency of the nonpayment proceeding - discontinued on consent on April 11, 2005 - nullify the previously served termination notice underlying the within holdover proceeding (cf. Zitomer Pharmacy v MacFarlane 64th St. Dev. Corp., 191 AD2d 333 [1993]).
Was it the discontinuance of the nonpayment "on consent" which made a difference in this case? And, why would that matter? (The damage -- of serving and filing a rent demand and verified pleadings which alleged the existence of an ongoing tenancy -- was done.)
Talk about a gift!
For a copy of the Appellate Term's decision, please use this link: 1251 Ams. Assoc. II, L.P. v. Rock 49th Rest. Corp.