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PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT).

The First Department determined that a provision in a lease which required the petitioner tenant to pay the respondent landlord’s attorney’s fees even where the landlord was in default was unenforceable as unconscionable. Petitioner tenant had sued the landlord for failure to transfer shares in an apartment in accordance with petitioner’s husband’s wishes:

In 2012, petitioner’s husband, who owned the shares to another apartment in the building, agreed to transfer his shares to petitioner. Petitioner paid a transfer fee to respondent so that it would transfer the shares to her. She later sued respondent for default of the lease agreement and for statutory violations because respondent had not transferred the shares to her husband’s apartment to her. Respondent answered petitioner’s complaint and asserted a counterclaim for attorneys’ fees under paragraph 6(7)(c). * * *

… [W]we find that an attorneys’ fees provision which provides that the tenant must pay attorneys’ fees if it commences an action against the landlord based upon the default of the landlord is unconscionable and unenforceable as a penalty. Paragraph 6(7)(c) of the proprietary lease permits the landlord to recover attorneys’ fees when the tenant brings an action against the landlord even when the landlord is in default. To enforce such a provision would produce an unjust result because it would dissuade aggrieved parties from pursuing litigation and preclude tenant-shareholders from making meaningful decisions about how to vindicate their rights in legitimate instances of landlord default. Matter of Krodel v Amalgamated Dwellings Inc., 2018 NY Slip Op 07531, First Dept 11-8-18

LANDLORD-TENANT (CONTRACT LAW, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/CONTRACT LAW (LANDLORD-TENANT, LEASE, CONTRACT LAW, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/LEASE (CONTRACT LAW, UNCONSIONABILITY, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))/UNCONSIONABILITY (LANDLORD-TENANT, CONTRACT LAW, LEASE, PROPRIETARY LEASE PROVISION ALLOWING THE LANDLORD TO RECOVER ATTORNEY’S FEES EVEN WHEN THE LANDLORD IS IN DEFAULT IS UNCONSCIONABLE AND UNENFORCEABLE (FIRST DEPT))

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