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BLOG / 05.16.18 /

Tenant deemed successful party in landlord’s “action to recover possession” seeking to reform lease to exclude tenant’s use of backyard of demised premises

Standard lease agreements include a provision that the successful party is entitled to recover attorneys’ fees and costs incurred on any action or proceeding brought for non-payment of rent or recovery of possession of the subject premises. Where the contract limits the attorneys’ fees provision for the benefit of the landlord (e.g., that landlord is entitled to recover), the law gives the tenant a reciprocal right to recovery of attorneys’ fees and costs if the tenant is successful in the action.

In one recent case before the Appellate Division, Second Department, the Court held that a landlord’s action to reform the lease to change the area occupied by the tenant constituted an action for “recovery of possession”, thereby permitting the tenant to recover attorneys fees and costs. Mulholland v. Moret, 2015-11977 (May 9, 2018)

Specifically, under the controlling lease, the tenant’s demised premises included exclusive use and possession of backyard space. For various reasons, the landlord brought an action to reform the lease to specify that the tenant would no longer be permitted to utilize the backyard. When the lower Court dismissed the action, the tenant moved under Real Property Law (RPL) § 234 for attorneys’ fees and costs, which is permitted where the lease entitles the prevailing party on a breach of lease claim to recover fees and costs. Here, no “breach” of the lease was claimed. Therefore, the tenant was not entitled to RPL § 234 damages.

However, because the lease gave tenant exclusive use and possession of the backyard, the landlord’s action to reform the lease to the extent of the backyard constituted an action for “recovery of possession”, thereby allowing the tenant to recover fees and costs incurred when the landlord did not prevail on its claims. The fact that the landlord sought only partial possession through a reformation of the lease did not negate the tenant’s right, under the terms of the lease, to claim attorneys’ fees and costs.