Land Use Prof Blog

Land Use, Human Health, and Equity Project, Post 11: The Recovery Lease: Preventing Evictions of Commercial Tenants During the Pandemic

Elisabeth Haub Law School of Law

Pace University

Land Use Law Center

Supervisor: John R. Nolon, Distinguished Professor

Blog No. 11 of the Land Use, Human Health, and Equity Project

 

Editors: Jessica Roberts, Jillian Aicher, Colt Watkiss

Contributing Researcher: Chris Makowski[*]

The Recovery Lease: Preventing Evictions of Commercial Tenants During the Pandemic

By: Chris Makowski

INTRODUCTION

As blog no. 7 in this series emphasized, small business recovery is crucial to urban vitality and urban success. Currently, the COVID-19 pandemic threatens the existence of small businesses and their commercial neighborhoods. Even though time-limited moratoria on commercial evictions are currently in effect in some states, commercial tenants must pay any rent in arrears when the protection lifts. Tenants are further vulnerable to evictions for non-payment of rent because necessary procedural protections often are omitted in commercial leases. Unlike before the pandemic, landlords may struggle to fill vacancies as small businesses struggle to stay afloat. Because of the interconnected problems facing both tenants and landlords, both parties should consider reforming their leases to protect their mutual interests during pandemics and other unforeseen events. Municipalities can help by providing technical assistance and mediation services.

Listed below are some lease provisions that may better serve the interests of both parties during catastrophic events:  

1. Assignment & Subletting: Many commercial leases limit rights to sublet or assign the tenancy. Provisions can be included in commercial leases to permit these opportunities subject to reasonable limitations. This allows for the addition or substitution of a new tenant who is more financially stable.

1. Duty to Mitigate: Though rare in commercial tenancies, this provision imposes a duty on the landlord to mitigate damages against an evicted, defaulting tenant. It mandates that the evicting landlord relet the premises at fair market value or at the same rate, terminating the previous lease. Should the landlord succeed, the former tenant is not liable for lingering costs associated with the lease.

1. Casualty: The casualty clause clarifies, expands, or modifies the tenant’s right to forgo obligations of the lease when the premises become untenable, thereby cushioning tenants from duties inherently limited by uncontrollable events. The landlord and tenant may stipulate what constitutes a “casualty,” or untenable event, and the limitations to performance. The clause should expressly consider pandemics as a triggering event. COVID-19 may render a premise untenable; thus, the clause should relieve the tenant from obligation to pay rent for the untenable duration or allow the security deposit to cover missed rent.

1. Early Termination: Under this clause, parties may “terminate the lease either at will or on the happening of some contingency.” When based upon a contingency, “[t]he right reserved must be exercised in good faith and upon fair grounds.” When at-will, the clause may confer equal termination power to the parties without requiring good faith. Nevertheless, if unambiguous in the agreement, the right to terminate may denote whatever is mutually beneficial.

1. Force Majeure: The force majeure clause stipulates the events or occurrences that excuse the tenant’s or landlord’s performance under the lease. However, courts interpret the clause narrowly, limiting its applicability to the specific circumstances stipulated in the provision.  Leases that do not include terms like “pandemic” or “government closure of business due to an outbreak” within their force majeure clauses do not excuse obligations.

1. No Late Fees: This clause precludes a tenant from incurring late fees when rent is paid later than the date stipulated in the lease. Considering the longevity of the pandemic, and its continued restrictions, a tenant is likely to be late. Adding a “no late fees” provision eliminates the further burden of late fees for failure to make payments on time due to circumstances beyond the tenant’s control.

1. Mediation: A recovery lease should provide that disputes concerning non-payment may be resolved by mediation. This allows the mediator to work with the parties to form a mutually beneficial agreement, including lease reformation, given the realities of the pandemic.

1. Notice and Cure: This standard clause can be updated, considering the pandemic, to allow much longer periods for notice of defaults and the tenant’s opportunity to cure the default prior to the termination of the tenancy. Such a provision will give the tenant a reasonable time to assess options and to exercise the option, for example, of  choosing to pursue mediation to resolve the dispute.

1. Redemption: Applicable in some situations, a redemption clause can permit a tenant to recover economically and reclaim the premises within one year of being evicted. For example, under New York’s governing statute, the tenant must pay the landlord all rent in arrears incurred at default, and the lease must have expired with more than five years remaining in the term.

1. Rent Deferral: This provision allows a tenant to pay a reduced rent for a stipulated period, deferring the reduced rent for payment later. When “read fully and fairly,” this clause is viewed “as an expression of the parties’ mutual understanding that rent ‘shall be paid’ in the modified manner.” 

1. Rent Abatement: This provision reduces the rent to be paid during the period of exigency created by an unforeseen event. Common in casualty clauses, the clause should be extended to cover the COVID-19 pandemic; otherwise, a separate clause can abate rent for a period specific to the pandemic.

1. Renewal/Lease Extension: The parties can negotiate an extension of the lease term to provide a realistic opportunity for payment of deferred or abated rent. “[O]nce the option is exercised, the original lease is deemed a unitary one for the extended term and a new lease is not necessary.” Conversely, the clause can permit modifications to the original lease; these are subject to mortgagee approval.

1. Quiet Enjoyment: This covenant, often enumerated in leases, can prevent a landlord or its agent from interfering with a tenant’s lawful use of the leasehold through a constructive or unlawful eviction.  The lease may be structured to permit nonpayment evictions only through summary proceedings, after failing to reach an agreement via mediation.

CONCLUSION

To respond to the unanticipated economic impacts of the pandemic, municipalities and attorneys can use this period to rethink and reform lease provisions to prevent evictions and allow tenancies to continue under terms favorable to both landlords and tenants. In the case of small businesses and their landlords, this provides an opportunity to update the standard commercial lease to provide defenses and procedures that the common law and state legislation have not provided.  The pandemic is not over, there is no guarantee that we will reach herd immunity, climate change damage is ever more prevalent, and there is growing evidence of new variants. Reform of the standard small business lease is called for.

1. Reframing Sustainability: Introducing the Land Use, Human Health, and Equity Project
2. Planning for Public Health: A New Beginning for Land Use Law
3. The Role of Density in Combatting Climate Change and COVID-19
4. Novel Coronavirus Claims Implicate Age-Old Property Rights Questions
5. State & Local COVID-related Emergency Powers: Individual Rights
6. COVID-Related Land Use Regulations and Judicial Deference
7. Mediation of Eviction Disputes May Hold the Key to the Survival of Small Businesses
8. Using Zoning to Help Eliminate Food Deserts: A Few Steps Forward
9. Urban Heat Islands and Equity
10. Urban Heat Island and Equity: What Can Local Governments Do?

Land Use, Human Health, and Equity Project, Post 10: Urban Heat Island and Equity: What Can Local Governments Do?

 

Elisabeth Haub Law School of Law
Pace University
Land Use Law Center
Supervisor: John R. Nolon, Distinguished Professor
Blog No. 10 of the Land Use, Human Health, and Equity Project

Editors: Jessica Roberts, Jillian Aicher, Colt Watkiss
Contributing Researcher: Rhea Mallett[*]

 

Urban Heat Island and Equity: What Can Local Governments Do?

 

Extreme heat is a national public health emergency that kills more than any other weather-related event and will worsen as climate change increases global temperatures.   Extreme heat disproportionately impacts communities that are non-white, low income or have suffered historically racist disinvestment and urban planning practices.  Urban planning and zoning created UHIs, and land use regulations can provide solutions for mitigating their impacts.

UHIs experience higher air temperatures than surrounding areas. These ‘islands’ of higher temperatures all contain mostly man-made impervious surfaces that absorb and retain heat, such as buildings, rooftops, roads, sidewalks, parking lots, and courtyards. They lack vegetation such as trees, grass, and shrubs. The impervious surfaces (i.e., asphalt and concrete) capture and intensify heat during the day and slowly release the absorbed heat back into the air at night, resulting in higher nighttime temperatures that prevent residents from getting relief. The heat differential between a UHI and a more affluent neighborhood nearby can be as high as 27°F.

U.S. localities, large and small, are creating solutions through land-use regulations that control the causes and mitigate the impacts of UHIs. The focus of these strategies and links to examples follow:

Trees are “air conditioning for cities,” as air temperature under trees can be 20-45°F cooler than a nearby unshaded area. Trees block solar radiation, filter particulates, and absorb pollutant gases. Trees also provide critical “evapotranspiration” benefits, converting the sun’s energy into water vapor which cools the air and utilizes solar energy that would have otherwise created more heat.  Localities that prioritize increasing tree canopy have implemented laws that force developers to preserve trees, ensure tree density, plant minimum trees per lot, install trees shading sidewalks, protect tree roots during construction and have even created enforcement provisions that require fines, bonds, and five-year waiting periods to ensure the safety of trees.  Extending tree preservation to private property owners reinforces the philosophy that mitigation by one person helps everyone. Tree preservation funds for situations where compliance is difficult allow localities to redirect resources to areas where trees are most needed.

Green Roofs are 30° to 40°F cooler than conventional roofs. They also redirect solar energy through evapotranspiration and help with air pollution.  Green roofs also keep buildings cooler, reducing reliance on air conditioning which increases energy demand and pollution. Requiring green roofs on large developments has been so successful that at least one locality requires 100% green roof compliance.  Localities offer incentives for green roofs, such as zoning density bonuses, increased building height, and streamlined permitting.

Other cool roofing materials can be used alone or in conjunction with green roofs.  Cool roofing materials combine a higher reflectivity (albedo) as well as emissivity for heat. A Solar Reflectance Index (SRI) measures the surface’s ability to reflect heat, which can be used to set minimum standards.  Many localities will provide some flexibility, allowing for either 50% green roofs or 75% SRI,  a combination of both for 100% of roof covering, or a scoring system that allows developers to pick and choose different green infrastructure. 

Pervious or cooler materials are also mandated for non-roof hardscapes, such as paths, sidewalks, courtyards, and pedestrian right of ways.  A commonly seen ordinance requires developers to ensure that 50% of their ‘non-roof hardscape’ are either shaded or utilize cooler material, such as pavers, porous concrete, or other pervious surfaces. 

Parking lots and spaces are major sources of heat absorption.  Heat mitigation strategies include shading percentages, minimum tree amounts based on parking lot size, or the use of impervious materials.  Some localities reduce parking spaces required by allowing shared parking or reducing requirements to zero.  And at least one city upended the parking paradigm for developers by changing from parking allowance minimums to maximums.

Purposeful planning will also mandate open spaces, incentivize optimal landscaping, and provide shade to promote walkability. The effectiveness of each planning measure depends on climate, landforms, and building densities.  However, all planning must confront the role prior urban design has played in today’s inequities and prioritize the most heat vulnerable in its land-use solutions mitigating extreme heat.

[*] Rhea Mallett is an LLM candidate at the Elisabeth Haub School of Law and Land Use Law Center Volunteer.
Jessica Roberts is a second-year student at the Elisabeth Haub School of Law and Research Assistant to Professor Nolon.
Jillian Aicher is a second-year student at the Elisabeth Haub School of Law and Research Assistant to Professor Nolon.
Colt Watkiss is a first-year student at the Elisabeth Haub School of Law and Land Use Law Center Volunteer.

 

The previous blogs in the series are listed here:

1. Reframing Sustainability: Introducing the Land Use, Human Health, and Equity Project
2. Planning for Public Health: A New Beginning for Land Use Law
3. The Role of Density in Combatting Climate Change and COVID-19
4. Novel Coronavirus Claims Implicate Age-Old Property Rights Questions
5. State & Local COVID-related Emergency Powers: Individual Rights
6. COVID-Related Land Use Regulations and Judicial Deference
7. Mediation of Eviction Disputes May Hold the Key to the Survival of Small Businesses
8. Using Zoning to Help Eliminate Food Deserts: A Few Steps Forward
9. Urban Heat Islands and Equity

 

To subscribe to the GreenLaw Blog, please go to https://greenlaw.blogs.pace.edu/ and click on the “Subscribe” envelope.

Alterman & Pellach - Regulating Coastal Zones, International Perspectives on Land Management Instruments

Rachelle Alterman and Cygal Pellach are editors of a newly published collection entitled, "Regulating Coastal Zones:  International Perspectives on Land Management Instruments."  Sample chapters may be downloaded here.  An abstract is below (any typos are mine):

Regulating Coastal Zones is the first book to address the legal-regulatory aspects of coastal land management from a systematic cross-national comparative perspective.  The book encompasses fifteen advanced-economy countries, selected to represent three groups of legal contexts:  Eight are Mediterranean countries, most are signatories to the 2008 Mediterranean Protocol in Integrated Coastal Zone Management -- a treaty expected to be binding in international law.  Eleven countries are members of the EU (of which six are also included in the Mediterranean group).  They are parties to the EU Directive on Coastal Zone Management and its non-binding Recommendation on ICZM.  Additionally, two federal countries are included, located in different global zones.  The findings expose a surprisingly large variety of legal-regulatory instruments and practices, with highly differing degrees of effectiveness.  Although some countries have made significant progress towards implementing good ICZM principles, others fall far short.  The supra-national legislation and policies are shown to have had only limited influence.  Hopefully, the book's findings will encourage cross-national learning toward adoption of more effective legal-regulatory instruments, especially those necessary to reshape land policy and private real-property rights.  These are necessary to meet the challenges of coastal sustainability and resilience in the face of climate change.

 

Land Use, Human Health, and Equity Project, Post 9: Urban Heat Islands and Equity

Elisabeth Haub Law School of Law
Pace University
Land Use Law Center
Supervisor: John R. Nolon, Distinguished Professor
Blog No. 9 of the Land Use, Human Health, and Equity Project
Editors: Jessica Roberts, Jillian Aicher, Colt Watkiss
Contributing Researcher: Rhea Mallett[*]

Urban Heat Islands and Equity

Mass protests last summer demonstrated an increased awareness of the institutional racism pervading our criminal justice system. But what about the codified racism that is inherent in the building of America? It is no accident that the majority of people living in the most polluted neighborhoods of American cities and towns are predominantly low-income and non-white. Recent research demonstrates that our federal government’s ‘redlining’ of neighborhoods based on race is partially responsible for the great wealth disparity between the white and black population in the United States today. This data shows that redlining is also linked to greater vulnerability to the effects of climate change, including premature death and serious illness. While the more affluent live with more open space, trees, cleaner air, and security, those who have disproportionately shouldered the burden of development are now at greater risk from climate change and extreme weather events.

Neighborhoods that were redlined in the 1930s were identified as hazardous financial risks for mortgages and financial investment simply because black people lived in them. While redlining wasn’t the beginning of racial segregation, it is responsible for the systemic underinvestment in targeted neighborhoods by banks and mortgage lenders. The original Federal Housing Administration (“FHA”) redlined maps show that the neighborhoods deemed hazardous already had greater amounts of impervious surfaces (pavement, structures) and pollution (toxic air and noxious odors) than the white neighborhoods that were given the green light for financial investment. The underinvestment in redlined neighborhoods led to deteriorating conditions and low property values, which brought highways, manufacturing, and private industry to these areas. The neighborhoods that were originally redlined became overwhelmingly concrete and increasingly polluted.

While it was known that impoverished neighborhoods with mostly non-white populations were hotter than nearby wealthier neighborhoods, recent research has linked redlining to present-day unequal exposure to extreme heat. In a study of 108 formerly redlined neighborhoods, nearly all of them are now between 5 to 12 °F hotter than non-redlined neighborhoods nearby. People living in these urban heat islands—where impermeable surfaces and lack of vegetation cause the ambient air to be hotter than surrounding areas — are at increased risk during extreme heat events.

Heat is the nation’s deadliest weather disaster, causing as many as 12,000 deaths annually. Every 1°F temperature increase during a heatwave increases the mortality rate by 2.5% to 5%. Extreme heat causes and exacerbates many illnesses, including heatstroke, cardiovascular and kidney disease, and respiratory problems. People who are more vulnerable to heat-related illness and death include the elderly, children, the homeless, and those with underlying medical conditions. Air quality also suffers from heat-induced ozone; the increased reliance on air conditioning expands energy use, further exacerbating air pollution.

Rapid temperature increases from climate change have made the United States hotter overall and increased the number of extreme heat events. Without a significant curtailment of greenhouse gas emissions, temperatures could rise by 5°F by mid-century, with an anticipated 20 to 30 more days of extreme heat annually in some parts of the country.

Mitigating the impact of heat on formerly redlined neighborhoods is critical to the health of those living in low-income, socio-economically disadvantaged communities. An effective solution necessitates government resources, public/private partnerships, financial support, public education, and a commitment to remedy the situation from all levels of government.

At the Pace Law Land Use Center, we have identified how municipalities can reduce the harmful impacts of heat by using their delegated land use regulatory authority. By using these strategies, local governments can reduce the impact that extreme heat events will have on the population in lower income neighborhoods as earth’s temperatures increase.

This blog is accompanied by another titled: Urban Heat Island and Equity: What Can Local Governments Do? That blog will describe various measures localities can immediately implement to mitigate the impact of extreme heat events, which is fast becoming a national public health emergency targeting already marginalized communities.

[*] Rhea Mallett is an LLM candidate at the Elisabeth Haub School of Law and Land Use Law Center Volunteer.
Jessica Roberts is a second-year student at the Elisabeth Haub School of Law and Research Assistant to Professor Nolon.
Jillian Aicher is a second-year student at the Elisabeth Haub School of Law and Research Assistant to Professor Nolon.
Colt Watkiss is a first-year student at the Elisabeth Haub School of Law and Land Use Law Center Volunteer.

To subscribe to the GreenLaw Blog, please go to https://greenlaw.blogs.pace.edu/ and click on the “Subscribe” envelope.