Tenant Defaults and "Yellowstone Injunctions"

January 2, 2018 | By Charles Botensten

Q. I am a commercial real estate broker and I represent a commercial tenant whose landlord is threatening to prematurely terminate its lease (the tenant received notice from the landlord that its lease would be terminated unless the tenant completed certain repairs, which are required under the lease, within a specified cure period).  My tenant’s attorney said that he would respond by filing a “Yellowstone” injunction.  What is a Yellowstone injunction?

A. A Yellowstone injunction, named after the landmark decision in First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630 (1968), is a New York Supreme Court proceeding initiated by a tenant to temporarily suspend a cure period and prevent a landlord from prematurely terminating a lease while the tenant is remedying and/or challenging the alleged lease default.

The requirements for granting a Yellowstone injunction include the tenant establishing that: (1) there is a valid commercial lease; (2) the tenant received a notice of default, a notice to cure, or a threat of termination of the lease from the landlord; (3) the cure period has not expired; and (4) the tenant desires and has the ability to cure the alleged default, short of vacating the premises.

Because Yellowstone relief will not be available after the cure period has expired, it is important that a tenant seek legal guidance immediately after a notice of default or demand for a cure is received by the tenant.  Judges are prone to granting a temporary restraining order to maintain the status quo of the landlord-tenant relationship until the landlord and tenant have a chance to present their arguments and the judge can make a determination on the alleged default.  

Tip: Yellowstone relief will typically not be available where a default is based on non-payment of rent alone since a monetary breach can be cured without judicial intervention. 

The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel

Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP