What Happens If You Can’t Pay Your Commercial Lease in NYC Due to COVID-19

photo of new york city to represent commercial lease during COVID-19As the COVID-19 infection rate in New York decreases, the focus has turned to reopening the state and returning to work. The “New York State on PAUSE” executive order went into effect on March 22, 2020, closing all non-essential businesses statewide. While necessary from a public health perspective, the effect of the COVID-19 pandemic on many small businesses in New York City has been catastrophic, and affected their ability to pay their commercial lease.

Many New York City commercial tenants are now in a dire situation, having brought in no income since the executive order was implemented. A major concern is how commercial landlords will approach their tenants as monthly rent comes due. Another concern is the liability of personal guarantors of the commercial leases who assumedly are just as affected by the COVID-19 pandemic as the company they guaranteed.

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You’re in New York. Your debtor is in New Jersey. Can You Execute a Confession of Judgment?

We recently explained that New York state will no longer recognize a confession of judgment signed by an out-of-state resident — whether that’s a company or an individual. So what happens if your company is based in New York but your client lives in New Jersey? What will you do when they want to make a deal and reduce it to a writing, allowing you to enter judgment if their payment wasn’t made as promised?

Not to worry, a customer in New Jersey can sign a confession of judgment, too! If you work in New York, chances are you most likely work in New Jersey as well. After all, the two states are only a river apart.

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