A common provision of a lease is an acceleration clause. An acceleration clause typically provides, in substance, that upon the tenant’s default, the landlord may terminate the lease, and recover, as liquidated damages, the balance of the unpaid rent for the remainder of the term of the lease (had the lease not been terminated).
In the December 2014 decision of the New York Court of Appeals in 172 Van Duzer Realty v. Globe Alumni,1 one of the issues before the court was whether a lease’s acceleration clause was per se invalid merely because the landlord terminated the lease and the tenant vacated possession of the leased premises. The Court of Appeals ruled that the acceleration clause was not rendered invalid simply because the tenant vacated possession of the property. The Court of Appeals, however, ruled that the defendants—the tenant and the guarantor—were entitled to a hearing on their contention that the undiscounted acceleration of all future rents constituted an unenforceable penalty.
‘Van Duzer’
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