New York City Local Law 107 imposes fines on property owners who knowingly lease premises to unlicensed cannabis sellers. “Owners” include not only “the owner…of a premises,” but also any “mortgagee or vendee in possession, assignee of rents…or any other…entity directly or indirectly in control of a premises.” N.Y.C. Code §10-186

Commercial mortgages customarily include an assignment of rents, so the statute literally threatens virtually all mortgage lenders with liability. An identical definition appears in the Multiple Dwelling Law, but at least one court held that a collateral assignee of rents to secure a loan is not an “owner” under the MDL. Greenpoint Bank v. John, 256 A.D.2d 548 (2d Dept. 1998). The court should take the same position in interpreting Local Law 107 but, as I advise our bank clients, “Don’t be a test case.”

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