In our recent Law360 article, we discussed the potential liability that landlords may face under New York Real Property Law (“NYRPL”) Section 231 when a landlord has actual or constructive knowledge of their commercial tenants using the premises for the sale of unlicensed cannabis. This proved prescient, as the predicted crackdown began in earnest on February 7, 2023, with the Manhattan District Attorney’s Office mailing more than 400 letters to known gray-market smoke shops – e.g. sellers of unlicensed (and untaxed) cannabis – warning them that the city was prepared to use the Real Property Actions and Proceedings Law (“RPAPL”) to force their landlords to evict them, and that what they are doing is not in fact “gray” but is an illegal business.
Under RPAPL Section 711(5) a landlord has the authority to bring an eviction proceeding against a tenant for any illegal trade or manufacture, or other illegal business. The authority of the DA’s office to force a landlord to bring such a proceeding is hinged upon RPAPL Section 715(1) which allows any duly authorized enforcement agency of the state to begin eviction proceedings against illegal-use tenants if the landlord fails to do so. Together, RPAPL §§ 711(5) and 715 (1) have come to be known as New York’s “bawdy-house” laws which apply to hold a landlord liable when, despite being in control of the premises and aware of certain illegal activities occurring in said premises, the landlord fails to evict the tenant. These statutes combine with NYRPL § 231 (1), which does not create a separate right of action, but which renders a lease void if the lessee allows the property to be used for any illegal trade, manufacture, or business.
Over the coming weeks, the D.A.’s office will join efforts with the Mayor’s office to continue the crackdown on New York’s gray market smoke shops by identifying evidence of unlicensed cannabis sales and other illegal activity, and then notifying landlords of their requirement to begin eviction proceedings. Failure of the landlord to bring forth an application for eviction within five days of the written notice or if, after making the application, the landlord does not in good faith diligently prosecute it, then the D.A.’s office will have full authority to directly intervene and bring its own proceeding against the tenant.
The message from the city is clear: if a landlord is aware of illegal use, they should not wait until receiving notice for removal from the DA’s office. Instead, they should immediately use the means available to them to determine how to bring their tenants into compliance or (barring that) remove them from the premises.