The Yellowstone injunction, a unique feature of New York's legal landscape since 1968, has played a significant role in the dynamics between commercial landlords and tenants. Originating from the New York Court of Appeals’ decision in First Nat. Stores, Inc. v. Yellowstone Shopping Ctr., Inc., 21 N.Y.2d 630 (1968), this legal mechanism enables commercial tenants to halt the running of a cure period for an alleged default until a court can determine the validity of the default claim. This injunction is crucial for tenants, as it allows them to address and potentially rectify alleged lease violations without the immediate threat of eviction.
When a commercial tenant receives a notice of default concerning its lease, it is crucial to act immediately to seek a Yellowstone injunction before the cure period concludes. To prevent the lease from being terminated, the commercial tenant should immediately file a declaratory judgment action to adjudicate the alleged default and a motion in that action to impose a Yellowstone injunction. The tenant must demonstrate that: (1) it holds a commercial lease, (2) it received from the landlord either a notice of default, a notice to cure, or a threat of termination of the lease, (3) it requested injunctive relief prior to the termination of the lease, and (4) it is prepared and maintains the ability to cure the alleged default by any means short of vacating the premises.
In the case of Elite Wine & Spirit LLC v. Michelangelo Preserv. LLC, 213 A.D.3d 143 (1st Dept., 2023), the Court granted the tenant's Yellowstone application because the tenant engaged in good-faith efforts to remedy the defaults alleged by the landlord. In the case of Middletown Flea Mkt., LLC v. Middletown Plaza Holdings, LLC, , 216 A.D.3d 1084 (2nd Dept., 2023), the commercial tenant's motion for a Yellowstone injunction was properly denied where it failed to demonstrate that it was willing and able to cure its defaults, particularly its failure to carry appropriate insurance for its contractors as required by the parties' lease agreement.
The New York Court of Appeals once held that commercial tenants could waive their right to seek a Yellowstone injunction in the terms of a lease. However, the New York State Legislature subsequently enacted New York Real Property Law § 235-h, which declares Yellowstone waivers null and void as against public policy.
The Yellowstone injunction stands as an indispensable resource for commercial tenants in New York, protecting them from premature eviction while they contest alleged defaults. This judicial safeguard emphasizes the importance of fairness and due process in landlord-tenant relations, ensuring that tenants have a fair chance to rectify issues without the drastic consequence of losing their business premises. If you are a commercial landlord seeking to terminate a commercial lease or a commercial tenant seeking to avoid termination, contact Sophie Wang or any of the attorneys at Muchmore & Associates PLLC for an initial consultation.
About Author
Sophie Wang graduated from the University of California, Berkeley School of Law in 2013, where she served as an editor of the Berkeley Business Law Journal. Sophie graduated summa cum laude with a Bachelor of Laws from East China School of Political Science and Law. Read more.
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