New York Forward Small Business Lease Assistance Partnership

Paperwork and pen for a lease agreement

Support services for small businesses to renegotiate their lease and avoid eviction

As a result of the economic impacts of COVID-19, many previously successful small businesses are struggling to pay their rent. At the same time, landlords are experiencing reduced rental income and increases in commercial vacancies, as their business tenants permanently close due to inability to pay. 

The New York Forward Small Business Lease Assistance Partnership (LAP) is a public-private partnership between Empire State Development, the nonprofit Start Small Think Big, and the New York Bar Association, to help avoid business evictions. The initiative provides commercial tenants and small business landlords with pro bono legal services, and the information needed to reach a mutually agreeable lease renegotiation.

Start Small Think Big

Start Small Think Big is partnering with New York State & the New York Bar Association to provide small businesses & small business landlords across the State with the help they need to renegotiate lease terms to keep the State’s small businesses running.

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Benefits of Lease Renegotiations

When successfully executed, lease renegotiations that avoid eviction can be beneficial to both landlords and tenants. 

    For Tenants: 

    • Receive rent relief to help your business through this unprecedented time 
    • Avoid the eviction of your business 
    • Improve continuity of business income
    • Reduce stress and uncertainty 

    For Landlords: 

    • Avoid costs of litigation 
    • Lower tenant vacancy rates 
    • Improve continuity of tenant rent payments 
    • Preserve neighborhood stability 
    • Avoid blight impact to area properties 
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    Lease Renegotiation Types

    Every landlord-tenant lease agreement is unique. These relationships differ in terms of how long-term the agreement has been ongoing, the type of business the tenant is operating, the business's cash position and COVID-19 related impacts.  

    In recognition of these differences, LAP provides a non-exhaustive list of potential lease terms that may be incorporated into a lease agreement. Some of the examples below can be pursued individually or combined together, to provide both parties with a temporary structure  superior to eviction. 

    To this end, none of the information provided by in the examples below constitute legal advice, and both landlords and tenants should consult the service of counsel in memorializing and effectuating any of these lease renegotiations, be it through a lease amendment or other legal means. 

    Lease Renegotiation Option Description Example
    Rent Forgiveness Tenant unpaid rents are forgiven. A landlord waives the tenant’s need to pay all or a portion of unpaid back rent. The tenant must still pay any rent not forgiven and must continue to pay rent moving forward, starting at an agreed upon date. 
    Rent Deferral Tenant obligations to pay rent are deferred until a later date. A landlord agrees to allow a tenant more time to pay their rent. When rent payments resume, tenants must repay any owed rent in installments—for example, repaying six months of unpaid rent over a 12 months, in addition to the baseline rent obligation.
    Rent Reduction Tenant’s rent is reduced. A landlord and tenant agree to reduced monthly obligation. Either for the remainder of the lease, a set term of months, or until an outside precondition is met (i.e. lifting of all limits on indoor gatherings in commercial establishments). 
    Lease Extension Tenant’s lease is extended. A landlord and tenant agree to extend the term of thelease, perhaps as a condition of other lease renegotiation options. 
    Profit Sharing Tenant pays rent based on sales.   A landlord and tenant change from a fixed monthly rent to a rent based on a percentage of the tenant’s sales.
    Profit Sharing with Reduced Base Rent  Tenant pays a lower fixed rent and a supplemental rent based on sales.   A landlord and tenant agree to lower the fixed monthly rent amount as a baseline, and layer on a profit sharing agreement, based on the tenant’s sales.
    Delinquency Fee Forgiveness Tenant’s late fees or interest charges are reduced or forgiven.    A landlord waives or reduces the interest or late fees due on late rent. 
    Security Deposit Utilization Tenant’s security deposit is reduced and/or applied as rent. A landlord and tenant agree to allow part or all of a security deposit to be utilized towards paying rent or other financial obligations. 
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    Lease Renegotiation Process

    Lease renegotiations are entirely voluntary, and landlords and tenants are not required to enter into such an agreement. However, given the aforementioned benefits and wide range of options, many landlords and tenants may find lease renegotiations mutually beneficial. 

    Lease renegotiations may be initiated either by the tenant or by the landlord. Depending on which party initiates the discussion, below are steps that may be taken. 

    Tenant-initiated lease renegotiations: 

    1. Review your finances and outlook to determine the rent you can afford and whether any one or combination of the different changes outlined above might make it possible for you to stay open. 
    2. Locate your lease, and have it available to share with Start Small Think Big and any attorney you use.
    3. Review the lease renegotiation options, to identify those that will best enable you to continue operating your business. 
    4. Contact Start Small to discuss the lease renegotiation options that will allow you to remain in business. 
    5. Reach an agreement with your landlord on mutually acceptable lease renegotiation options. 
    6. Memorialize the selected lease renegotiation options in a lease amendment or other legally binding document. 
    7. Repeat this process in the event that financial circumstances change. 

    Landlord-initiated lease renegotiations: 

    1. Review your finances to determine the level of renegotiation options you can offer. 
    2. Develop potential renegotiation options for different classes of tenants. 
    3. Contact counsel to discuss your preferred lease renegotiation options.
    4. Reach an agreement with your tenant(s) on mutually acceptable lease renegotiation options. 
    5. Memorialize the new lease terms in a lease amendment or other legally binding document. 
    6. Repeat this process in the event that financial circumstances change. 
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    Participating in a Lease Renegotiation

    To initiate a lease renegotiation, please go HERE. The New York Forward Small Business Lease Assistance Partnership provides pro bono legal services to small businesses, including landlords, to codify modified lease agreements. This Initiative is able to: 

    • Help you better understand the terms of your current lease  
    • Analyze the lease renegotiation options, to determine which structure best suits your circumstances 
    • Help to engage your landlord/tenant in a negotiation 

    Where possible volunteers may also:

    • Represent your interests in a negotiation 
    • Draft a legally binding contract amendment, to codify the agreed-upon terms 
    • Ensure that you fully understand your new contract terms from both a legal and financial perspective 
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    Disclaimer

    Empire State Development (“ESD”) provides the New York Forward Small Business Lease Assistance Partnership website for informational purposes only.  While ESD makes efforts to post accurate and reliable information, it does not guarantee or warrant that the information on this web site is complete, accurate or up-to-date. ESD assumes no responsibility for the use or application of any posted material by any person or business. The New York Forward Small Business Lease Assistance Partnership website is intended solely for the purpose of electronically providing the public with information on commercial lease renegotiation concepts, and articulation of the benefits to both landlord and tenant, the possible ways in which a lease renegotiation can be structured, the process for renegotiating lease terms, and access to ESD's pro bono legal services partner. ESD assumes no responsibility for any errors, omissions or other discrepancies between the information posted here and on any vendor’s website. 

    The New York Forward Small Business Lease Assistance Partnership website links to web sites maintained by other entities. Reasonable precautions are taken to link only to web sites which are appropriate and maintained by reputable organizations. However, those web pages are not under ESD’s control and ESD makes no warranties, guarantees, or representations as to the accuracy, value, quality, or fitness for a particular purpose of the products, services, or educational, training and/or informational content and materials that may be offered by such organizations or that are posted on their websites. Any use of a New York Forward Small Business Lease Assistance Partnership partner’s products, services, website or platform by any persons or businesses is a transaction, engagement or act occurring by and between such partner and such person or business. ESD is not a party to any such transaction, engagement or act and bears no obligation with respect to any such transaction, engagement or act. 

    ESD does not endorse products or services; no such endorsement should be implied by the identification of any organization on its website.  ESD does not and cannot guarantee the privacy or security of information shared by a business or person with any electronic platform, vendor or enabler.  

    ESD cannot provide individual advice or counseling, whether business, legal, or otherwise. If you are seeking specific advice or counseling, you should contact a lawyer or other professional. 

    Start Small Think Big, Inc. is an independent nonprofit entity, unaffiliated with the State of NY, working with volunteers to provide pro bono support to small businesses. No individual business is guaranteed any particular service. All Start Small Think Big’s services are provided as is, as available and at Start Small Think Big’s sole discretion.

    If you are a provider of pro bono legal services to both landlords and tenants, and are interested in participating in the New York Forward Small Business Lease Assistance Partnership, please contact us at [email protected].