Yes. Several judicial decisions uphold the lease rights of landlords to evict their commercial tenants for failing to obtain the required insurance coverage policies. Moreover, the lease provisions are closely read, and NYC commercial tenants are held to exact standards. In one example, the insurance obtained correctly listed the commercial landlord as a named insured but failed to include the individual company manager as a named insured. That was deemed a breach of the lease and triggered the landlord’s right to evict due to insurance coverage omissions.

In addition, the cases make clear that breaches of these types of insurance provisions are not minor breaches. They are, in all respects, material breaches. These breaches are, as such, solid justifications for commercial landlords to exercise their eviction rights.

Landlord CAN Evict due to Insurance Non-Compliance

On the landlords themselves are held to strict compliance with respect to various matters, notice and cure provisions. That is if the lease requires that the landlord demand compliance in a written letter, then the landlord will have to comply with that requirement.

In any event, insurance requirements are particularly important provisions in a NYC commercial lease, and it is best to strictly comply. More to the point, it is important to negotiate such provisions upfront so that it is possible for the tenant to comply and so that the tenant fully understands what is required. One option might be to have the landlord purchase the insurance and invoice the tenant. Another option might be that, in the event of a breach, instead of eviction, the landlord will be required to purchase the required insurance — including backdated insurance coverage — which, again, will be invoiced to the tenant.

Are There Legal Defenses to Eviction for Breach of the Insurance Requirement?

It depends. First, the commercial lease must be read carefully. Many leases will specifically bar many potential legal defenses, including an “offer of cure”.

That being said, there are some New York cases suggesting that offering to cure the breach can be a defense against the eviction. This is not easy, and many New York courts have rejected this as a defense to the eviction action. However, in one case, the court accepted the tenant’s efforts at a full cure. These efforts included:

• The tenant offered to fully indemnify the landlord and its employees for all pending claims.
• The tenant offered to be bonded for that indemnification.
• Offered to purchase back-dated insurance that would cover any event that may have happened but that had not yet been reported and
• Offered to buy insurance coverage for the reported event — in that case, a claimed personal injury event — such coverage is rare and expensive, but CAN be found and purchased.

In the end, the court concluded that this was a sufficient “cure” to the breach of the insurance requirement and based on that, the court denied the landlord’s right to evict due to insurance not meeting requirements.

Contact the NYC Commercial Lease Negotiators at Wright Law Firm NYC Today

For more information, call the experienced New York commercial lease and real estate attorneys at Wright Law Firm NYC. We provide top-tier commercial real estate legal services for the NYC business community. To schedule a consultation, contact our office by e-mail or call us at (212) 619-1500.