BILL NUMBER: S1163

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the real property law, in relation to prohibiting rent
minimums in mortgages

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would prohibit mortgagees from penalizing or defaulting on
mortgagors for not charging a high enough rent. Eliminating the minimum
rent requirement for mortgagors will incentivize landlords to rent prop-
erties at a lower rate and not risk defaulting.

 
SUMMARY OF PROVISIONS:

Section 1 adds Section 284 to the real property law to prohibit rent
minimums in mortgages so that no mortgagee can charge a fee or force any
mortgagor to default or be otherwise penalized because they did not set
a high enough rent.

              

Section 2 sets the effective date and shall apply to all mortgages
regardless of when issued, renewed, modified, altered or amended.

 
JUSTIFICATION:

The economics for small businesses in New York were only made more
difficult by COVID-19 and vacant storefronts are widespread. For New
York's small businesses to recover, it is critical for commercial rents
to be cut. This bill would allow for landlords to rent space for less
than the minimum stipulated in their mortgage and would render any terms
in the mortgage which would cause a mortgagor to be penalized for not
setting a high enough rent to be void and unenforceable as against
public policy. This legislation, if enacted would incentive landlords to
fill storefronts without fear of default.

 
PRIOR LEGISLATIVE HISTORY:

2023-24: S.9234/A.974

2021-22: A.850

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

TBD

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all mortgages
regardless of when issued, renewed, modified; altered or amended.