On February 28, 2023, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Smg Auto. Holdings LLC v. AAF Real Estate, LLC, 2023 NY Slip Op. 30673(U), holding that a landlord’s acceptance of rent waived a breach of the lease, explaining:
It is well settled that a party may waive any contract provision that is to its benefit. Moreover, such waiver may even be implied. It is true that the acceptance of rent will not waive a lease provision prohibiting assignment without consent if the lease contains a provision providing that acceptance of rent with knowledge of a violation will not effect a waiver. However, absent such a provision the court in Jefpaul explained that “our decision applied the settled principle that acceptance of rent by a landlord from a tenant with knowledge of the tenant’s violation of the terms of the lease normally results in a waiver of the violation. The logic underlying this rule is plain enough: the option rests with the landlord to recognize the violation and terminate the tenancy if he chooses to ignore it and accepts rent with knowledge of the tenant’s violation then the acceptance evidences his waiver and
an election to continue the relationship. Although the intent to waive is usually a question of fact, knowing acceptance of rent without any effort to terminate justifies an inference that the landlord has elected to hold the tenant to the lease. The primary reason for the rule is the inconsistency of the landlord’s positions. As one old English case put it: the landlord should not be permitted to treat a man as a tenant, and then treat him as a trespasser.
In this case no such provision exists, thus the acceptance of rent acted as a total waiver of all the benefits of the lease notwithstanding written consent for any assignments. This waiver included the right to exercise the purchase option.(Internal quotations and citations omitted).