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Thomas D. Kearns


Be Careful What You Lease For

Lease Clause That Trade Fixtures Belong to Tenant Make Tenant Liable for UST . . .

Out of sight, but not out of mind, a former tenant was held liable for the removal of an underground storage tank (UST) he installed and subsequently left behind. New York’s Department of Environmental Conservation issued a $68,800 fine and order requiring the former tenant, not the landowner, to permanently close and remove the UST years after the tenant vacated the property. The Third Department, In re RGLL, Inc. v. Grannis, 935 N.Y.S.2d 345, agreed. The court was unmoved by petitioner’s argument that he abandoned the UST to the landlord and lacked responsibility. Although the court limited the order so that it would be applicable only to the petitioner and not to his officers, directors or employees, the court cited in part the lease clause which provided that trade fixtures do not become landlord’s property. Clearly, there are some trade fixtures landowners should avoid inheriting, particularly when environmental liability may follow suit. USTs may not be the first thing leasing lawyers think about when drafting trade fixture clauses but this clause may wind up helping the landlord escape liability.

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