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Adam Leitman Bailey, P.C. Obtains Ruling Reaffirming That an Agreement to Agree Is Not Enforceable and That a Subtenant Holding Over Is Liable to the Landlord for Use and Occupancy

In this case, the tenant entered into a sublease with the subtenant.  The landlord approved the sublease. All parties contemplated that the subtenant would eventually become the prime tenant. The subtenant needed to expend funds to build-out the space for its needs so it entered into an agreement with the landlord regarding the possibility of a future lease or a return of the monies it spent on the build-out if certain conditions were met.

However, prior to and after the expiration of the prime lease, the landlord made several efforts to get the subtenant to enter into a new lease. However, the sub-tenant played fast and loose with the terms. Finally, the landlord grew tired of the subtenant’s games, and terminated the tenancy of the prime tenant (now a month-to-month). Thereafter, the landlord brought a holdover proceeding against both. The tenant surrendered but the sub-tenant argued that pursuant to the agreement, it was entitled to remain and obtain a lease on terms it believed were favorable to it.

Adam Leitman Bailey, P.C. successfully argued that the subtenant had no rights to a new term since the agreement was merely an “agreement to agreement” which, under the law, is not enforceable. The lower court agreed and granted the landlord a judgment of possession which the Appellate Term affirmed on appeal.

The lower court also ruled that the landlord was entitled to use and occupancy against the subtenant. On appeal, the sub-tenant argued that it could not be held liable because it had no direct privity with the landlord. Adam Leitman Bailey, P.C. successfully argued that notwithstanding a lack of contractual privity, the sub-tenant had to pay for its use and occupancy during its holdover period.  The Appellate Term agreed with the firm’s position.

Dov Treiman and Christopher Halligan represented the landlord before the civil court.  Jeffrey R. Metz and Joanna C. Peck represented the landlord on the appeal before the Appellate Term.

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