842 N.Y.S.2d 341 (Co. Ct. 2007)
Robert and Barbara Lax, the landlords, had the tenants sign a six-page, thirty-three-paragraph lease on August 1, 2006 for a one-year term.1 The terms of the lease, which the landlords obtained from an Internet site, were not negotiated by the parties. The landlords had the tenants sign it without any input or comment from the tenants.2
The lease expressly provided a covenant of quiet enjoyment promising that the tenants shall peacefully and quietly enjoy the premises for the term.3 The lease also stated that, in the event the tenants abandoned the premises before the term ended, the landlord could hold the tenant liable for the rent that would have been payable during the balance of the unexpired term.4
In January 2007, a level three sex offender moved in with the tenants living next to the offender.5 On January 23, 2007 the tenants submitted a written request asking to be allowed to terminate the lease on January 31, 2007. They stated that it is our responsibility having three young girls that we feel are potentially endangered of any harm by said sex offender. We feel it warrants a release to be granted.
The tenants vacated the premises on January 31, 2007 without the landlords agreeing to terminate the lease on that date.6 When the tenants commenced this proceeding to recover the security deposit, the landlords counterclaimed for the balance of the rent due for the final six months of the contract which terminated on July 31, 2007.7
Whether a tenant can terminate a lease to protect his family when a level three sex offender moves into the adjacent apartment?8
Under New York law a tenant may terminate a lease early and avoid liability for future rent when an abandonment clause is unconscionable at formation. A landlord also violates the implied covenant of good faith and fair dealing by refusing to release the tenant from an unforeseen circumstance that destroys the covenant of quiet enjoyment.9
Yes. Robert and Barbara Lax obtained a pre-printed thirty-three-paragraph lease from an Internet site and presented it to the tenants without negotiation or input.10 The lease contained an abandonment clause allowing the landlords to hold the tenants liable for all remaining rent if they vacated early.11 In January 2007 a level three sex offender moved into the adjacent apartment.
The tenants, who had three young daughters, gave written notice on January 23 requesting termination effective January 31 because they felt the children were endangered.12 The tenants vacated on January 31. The landlords refused to agree and counterclaimed for six months of rent.13 The court found both the abandonment clause unconscionable and the refusal a breach of good faith, permitting early termination without further liability.14
A tenant may terminate the lease to protect the family under these facts.15
Whether the abandonment clause in the lease was unconscionable at the time it was made?16
Real Property Law § 235-c(1) permits a court to refuse enforcement of a lease clause that is unconscionable at formation. The test requires an absence of meaningful choice by one party together with contract terms unreasonably favorable to the other. Courts evaluate both procedural and substantive elements.17
Yes. The landlords presented the tenants with a six-page, thirty-three-paragraph pre-printed lease obtained from an Internet site and required signature without any opportunity for discussion or modification.18 This created an adhesion contract marked by gross inequality of bargaining power and absence of meaningful choice.19 The abandonment clause allowed the landlords to collect the full remaining rent regardless of the reason for early departure, even when the tenants had valid safety concerns.20
These procedural and substantive elements rendered the clause unconscionable at the time it was made.21
The abandonment clause was unconscionable at the time it was made.22
Whether the landlords violated the covenant of good faith and fair dealing by refusing to allow the tenants to terminate the lease early?23
Every contract contains an implied covenant of good faith and fair dealing. This covenant prohibits a party from taking opportunistic advantage of unforeseen circumstances that could not have been contemplated at formation. It also bars conduct that destroys the other party's right to receive the fruits of the contract.24
Yes. At the time the lease was signed the parties dealt with present realities that did not include a level three sex offender living next door.25 When that circumstance arose unforeseeably the tenants could no longer enjoy the express covenant of quiet enjoyment.26 The landlords refused to release the tenants from the remaining six months of the term and instead sought to enforce the abandonment clause for $2,700.27
This refusal took opportunistic advantage of the tenants' need to protect their children and violated the implied covenant of good faith and fair dealing.28
The landlords violated the covenant of good faith and fair dealing by refusing early termination.29