Our Client, a Fortune 500 company, net-leased or leased an entire building from their landlord. The tenant’s lease was expiring on April 30th. The tenant had leases with over two dozen sub-tenants and many of them, despite having leases end before April 30th, had no intention to move out when the lease ended. The tenant was in a quandary because if they did not evict all of the tenants by April 30th, they would have to pay heavy fines to the landlord for the breach. Second, none of the tenant’s subleases had any strong default provisions incentivizing the sub-tenants to vacate when the lease ended.
Against all odds, Adam Leitman Bailey, P.C. was hired to make sure that the building was not only complexly vacant by April 30th, but that the tenants spent the money to restore the premises to its original condition, which for a number of tenants would be a substantial burden.
The challenges were plentiful. Although we basically had little recourse against any tenant staying past its term, one tenant had diplomatic immunity which with the right tenant’s attorney could do serious damage to the tenant of record. At the same time, we did not want the tenants to know we were desperate for them to leave on time. We were friendly with the tenant who had immunity’s attorney and explained to him that we would have to run to court early because of lease defaults and we were worried about the tenant’s diplomatic immunity power. As a result, the sub-tenant agreed to give us a document that would allow a warrant to be served in early April and executed on April 30th. This chain of events was a result of having a good reputation in the industry, our straight forward and respectful relationship with the colleague attorney representing the tenants, and a lot of luck.
Some of the other tenants smelled money and a lot of it, and they wanted a payout. We let it be known that not one dollar would be paid. Our firm was known for using self-help in evicting tenants without going to court and we would not be afraid to use it here. We forwarded a number of decisions as well as articles and a chapter from a book on default clauses where we did the same using self-help, but we had no idea until the very end if we would be able to hand back the keys on time.
Getting the sub-tenants to put their spaces in their original condition provided the next challenge. Many alterations had been completed with agreements to restore them before the end of the lease. We counseled our client to start speaking with the tenants about the restoration to see if we had any problem tenants we needed to take action on now. Some of the tenants had not started alternations, others hired companies for amounts of money that would not do the job properly, and others hired companies that we had not worked with before so we investigated their abilities. For some of the tenants we decided to avoid the potential problem and had them pay us for our contractor to do the work.
In the end, all the alterations had been completed. We were now able to monitor the progress and had been in touch with the outside contractor doing work if that had been the tenant’s choice. This allowed us to make sure the project and restorations were on schedule and met a certain quality.
Next, we had contacted the remaining tenants to see if we could facilitate their moves in any way through elevator time, giving them additional workers to assist carrying items, or writing good tenant letters. This was a risky decision as it demonstrated our need to have the tenant’s out by a certain date. In past building tenant exodus, tenants, many times, would use this opportunity to threaten to stay unless payment of a large sum of money. However, by the time of this last contact, so close to the termination date, all the tenants gave their new addresses and expected vacate dates.
In the end, we handed in the keys with all tenants vacated and the building in clean condition in compliance with the lease.
Adam Leitman Bailey represented the master commercial tenant in strategy and negotiations. Dov Treiman drafted settlement agreements and notices of eviction.