Landlords Lose Challenge to City’s COVID-19 Small Business Protections

If you own a mixed-use building with retail tenants, you may be interested to know about a recent federal decision from the Southern District of New York. In July, two commercial landlords sued the city over laws passed to protect retail tenants during the pandemic. The federal lawsuit challenged a package of laws passed by the City Council and signed by the mayor to protect small businesses impacted by the COVID-19 pandemic.

One law temporarily bars landlords from going after the personal assets of restaurant and store owners who owe rent. The lawsuit alleged that the law was unconstitutional, denying landlords’ First Amendment rights and violating the contract clause of the Constitution, among other laws. Commercial leases often have clauses that allow the landlord to target the personal assets of tenants who walk out on a lease.

United States District Judge Ronnie Abrams ruled that the laws are constitutional. “Plaintiffs have expressed some legitimate concerns, and the Court recognizes the toll the pandemic has taken on them, in addition to their tenants, all New Yorkers, and millions more around the world,” Abrams wrote in her decision. “Nonetheless … the Court cannot conclude that these three challenged laws violate any of Plaintiffs’ constitutional rights.”