On December 20, 2019 the New York State Legislature enacted New York Real Property Law §235-h which:

The new law, in effect, restores the Yellowstone injunction as an available tenant remedy.

New York leases typically provide a tenant with an opportunity to cure when a landlord notifies a commercial tenant of an alleged default. The cure period can be anywhere from a few days to a month, based on the terms of the lease. In New York, if the default is not cured before expiration of the cure period, the lease and the tenant’s rights to the property may terminate and cannot be revived as a matter of law.

If the tenant disputes the basis for the default, there is usually insufficient time for a court to resolve the dispute before the cure period expires. The often tight timeframes to cure alleged defaults offer little flexibility for a tenant to investigate the facts and take appropriate corrective action. The Yellowstone injunction, so-named for the seminal case in which one was issued (First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 290 N.Y.S.2d 721 (1968)), was designed to protect tenants in these circumstances.

A Yellowstone injunction is a form of declaratory relief that enables a tenant to toll the expiration of a default notice until a determination is made whether both:

As with any contractual negotiation, the parties to a commercial lease can use their negotiating positions to preserve or waive certain legal rights. Commercial landlords and tenants are presumed to be sophisticated parties represented by experienced counsel and leases are typically enforced according to their terms. In many cases, statutory protections for tenants may be waived by an express provision in a commercial lease. However, New York courts sometimes recognize that a public policy such as the preservation of property rights by a Yellowstone injunction overrides freedom of contract.

In an unexpected turnabout, on May 20, 2019, the New York Court of Appeals in 159 MP Corp. v. Redbridge Bedford, LLC, 104 N.Y.S.3d 1 (N.Y. 2019) confirmed an appellate court decision and held that the tenant's waiver of declaratory relief was not against public policy and was enforceable. As a result, the tenant under a lease that waived the right to seek declaratory relief was unable to obtain a Yellowstone injunction. For more information on the Redbridge case, see Legal Update, New York Court of Appeals Ruling Impacts Availability of Yellowstone Injunctions for Commercial Tenants.

On December 20, 2019, the New York State Legislature enacted New York Real Property Law §235-h. The effect of this legislation is to restore the Yellowstone injunction as a tenant remedy.

The enactment of RPL §235-h restores a widely-used tenant remedy and eliminates a landlord's incentive to seek declaratory relief waivers. In so doing, the New York commercial leasing landscape has been restored to the status quo prior to the Redbridge decision. To maximize their chances of obtaining a Yellowstone injunction should the need arise, commercial tenants should continue to negotiate for the longest possible default notice and cure periods.

For more information on Yellowstone injunctions, see: