Court Finds Commercial Tenant Not Liable for Façade Restoration Costs Under Lease

In Rogan LLC v. YHD Bowery Commercial Unit LLC, 2015 WL 6510726 (1st Dept. 2015), the Appellate Division, First Department rejected the Landlord’s argument that the Tenant was not obligated to pay any part of the facade restoration assessment levied on the unit.

Paragraph 41(B)(2) of the lease provided that after the condominium conversion, “and in lieu of CAM [common area maintenance] Costs described in Paragraph (B)(1) above,” “Tenant shall pay … [its] Proportionate Share of [the] monthly Common Charges levied against the Commercial Unit; and other special or regular assessments against the Commercial Unit.” However, Paragraph 41(B)(1)(c) provided that “costs for capital improvements, to the extent that same are not in furtherance of reasonable or necessary maintenance of the building,” “shall not be included as CAM Costs.” The court rejected defendant’s argument, without regard to any other provision of the lease, that the obligation set forth in Paragraph 41(B)(2) to pay “other special or regular assessments against the Commercial Unit” required Rogan to pay a proportionate share of the facade assessment.

Moreover, the court found that Landlord’s reliance on a sole provision in support of imposing this payment obligation on plaintiffs, rendered other provisions of the lease meaningless. Such other provisions required all tenants to comply with documents relating to the condominium conversion and clarified that the tenant’s monetary obligations under the lease will not increase as a result of this compliance.

Based on the foregoing, the Appellate Division, First Department affirmed the Supreme Court, New York County (Nancy M. Bannon, J.), Order, entered July 8, 2014, which denied Landlord’s motion for summary judgment on its counterclaims, and granted Tenant’s cross motion for summary judgment declaring that they are not obligated under the parties’ agreements to pay any part of the facade restoration assessment levied against Landlord.

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