With so many small businesses in Queens adversely impacted by the coronavirus outbreak, Assemblywoman Catalina Cruz introduced the Commercial Lease Efficiency and Resolution (CLEAR) Path Forward Act, a bill designed to reduce commercial evictions and encourage tenants and landlords to renegotiate terms of commercial leases outside of the courtroom.
The legislation is specifically designed to mitigate business interruptions and unnecessary commercial evictions due to the loss of revenue as a result of the COVID-19 pandemic.
“Our district is the epicenter of this epidemic, forcing the small businesses who are so important to our community to shut down for months,” Cruz said. “This bill would ensure that these unforeseen circumstances are deemed legally beyond their control. The majority of these businesses are immigrant-owned, and are often a pathway for entry into the middle class.”
Under existing New York law, a party to a commercial lease may excuse compliance with the lease where circumstances beyond their control make it impossible to perform. When Governor Andrew Cuomo called for the unprecedented shutdown of non-essential businesses due to the COVID-19, businesses throughout the region were forced to close their doors.
This action, while necessary for the health and protection of the general public, resulted in a severe loss of revenue for local businesses, with many of them facing mounting debt due to the inability to pay high rents for storefronts that are inoperable.
“Prior to the epidemic, many of these business owners were struggling to stay afloat as rent began to rise,” Cruz said. “Now, with the state shutting them down, they are in danger of losing their only source of income and face mounting debt and possible eviction. The CLEAR Path Forward Act will encourage renegotiation of lease terms where possible so that businesses could remain open.”
“The legislation provides a roadmap for landlords and tenants to negotiate a settlement, prevent litigation and avoid evictions. In such cases where the parties cannot reach a settlement, the bill provides clear criteria for the court to evaluate whether there should be a reduction of the rent or termination of the lease,” Cruz added. “The bill also unequivocally provides that COVID-19 was an unforeseeable event to prevent inconsistent judicial rulings across the state.
“Eighty-nine percent of businesses in New York City have fewer than 20 employees — these are the local neighborhood businesses that are most in danger from the unprecedented economic circumstances caused by COVID-19,” said state Senator Brad Hoylman, who carries the measure in the upper chamber. “No one wants New York City to be a place where only chain stores and outlet malls can survive. Our legislation will help prevent unnecessary litigation and encourage out-of-court negotiations between commercial tenants and landlords to create a path forward for our small businesses.”