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BLOG / 06.16.17 /Jack Malley

Second Department Rejects Yellowstone Application where Tenant’s Default was not Curable

Real estate veterans are well familiar with the court order known as a Yellowstone injunction, which is sought by a commercial tenant to stop a landlord’s termination of its lease. In order to obtain the injunction, a tenant must demonstrate that: (1) it holds a lease, (2) its landlord served a notice to cure, (3) the tenant sought the Yellowstone injunction prior to the expiration of the cure period, and (4) the tenant has the ability and desire to cure the alleged default.

In Prince Fashions, Inc. v. 60G 542 Broadway Owner, LLC, 149 A.D.2d 529 (2d Dep’t April 18, 2017), the landlord alleged the tenant was in default because it failed to maintain an insurance policy naming the landlord as an additional insured as required by the lease. The Second Department held the tenant could not cure the default because the pertinent policy periods had passed, and it rejected the tenant’s Yellowstone application for that reason, among others.

In contrast to the situation in Prince Fashions, willing tenants are likely to prevail where the alleged default is current. For example, where a tenant is in default because it failed to meet its nonstructural repair obligations, its submission to the court of a feasible repair plan would practically guarantee the granting of a Yellowstone injunction.