This summary proceeding was commenced by the petitioner by duly serving a petition and notice of petition upon the respondent. Petitioner is the owner of the premises and can properly maintain this proceeding pursuant to RPAPL § 721. On the return date of the petition, December 2, 2009, respondent appeared and filed a written answer to the petition which included counterclaims. The matter was set down for trial to be heard on December 7, 2009.

A trial was held in a previous summary proceeding between the same parties (SP 08-2304) on February 25, 2009. The findings of fact and conclusions of law made by this Court in that decision dated March 31, 2009 are incorporated by reference into this decision.

The trial of this matter was held on December 7th and 15th, 2009. The Court makes the following findings of fact and conclusions of law:

Respondent entered into a written lease agreement with petitioner's predecessor in interest for respondent's use and occupancy of approximately 6,000 square feet of commercial space in a building known as and located at 142 State Street, Albany, New York. The initial lease was for a 61 month term, commencing on December 1, 2003 and ending on December 31, 2008, with a right [*2]to renew for two subsequent five year terms (paragraph 50th of the lease). Annual rent was $36,000.00 and was to be paid in equal monthly installments of $3,000.00 commencing on February 1, 2004.

The petition herein alleges that the within lease expired by its terms on December 31, 2008; that respondent owes petitioner $42,000.00 in back rent (for the months of November 2007 - December 2008); that respondent owes petitioner $88,000.00 use and occupancy (for the months of January 2009 - November 2009); and that respondent has failed to obtain and maintain the proper insurance as required by paragraph 29th of the lease. As a result of these allegations, petitioner seeks a judgment awarding possession of the property and the sum of $130,000.00 in damages. Respondent denies these allegations and brings counterclaims against petitioner for breach of the lease, diminution of rent and a judgment declaring the lease renewed.

Even though the petition seems to have been brought as a holdover petition, both parties proceeded during the conferences held on the trial dates, during the trial, and in their post-trial memoranda as if this were a non-payment proceeding (the petition was not designated either a non-payment or a holdover petition). While non-payment and holdover proceeding are considered mutually exclusive remedies [see Kern v. Guller, 40 AD3d 1231, 835 NYS2d 764 (3d Dept 2007); Kesten v. Ansell, NYLJ, 5/19/94, p. 32, col. 5 (App Term, 9th and 10th Jud. Dists.); Dean v. Korkidis, NYLJ, 12/5/91, p. 29, col. 3 (App Term, 9th and 10th Jud. Dists)], this Court will proceed to determine the issues attending both the non-payment and holdover causes of action.

A three day demand for rent is a prerequisite to the commencement of a summary proceeding based upon the non-payment of rent. RPAPL §711(2); See, e.g., Community Housing Innovations Inc. v. Franklin, 14 Misc 3d 131(A), 836 NYS2d 484 (App Term 2007). The demand must give the tenant three days to pay the amount demanded or give up possession. The purpose of the demand is to give the respondent an opportunity to avoid litigation and possible eviction by remedying the default. See e.g., Zenica Realty Corp. v. Masterandrea, 123 Misc 2d 1, 472 NYS2d 980 (NYC Civ Court 1984); Stiles v. Donovan, 100 Misc 2d 1048, 420 NYS2d 453 (NYC civ Court 1979).

Petitioner has submitted into evidence two exhibits representing three day demands for rent. The first is dated June 9, 2009 (plaintiff's exhibit 5). It demands payment of $42,000 in back rent for the months of November 2007 - December 2008. It does not mention the rent for the period of January 2009 - June 2009. It does not inform tenant that it must pay the rent by a certain day or give up possession of the premises. It's purpose is not to give tenant the opportunity to remedy its default in order to avoid litigation. It is, therefore, defective as a three day demand for rent.

The other letter petitioner's attorney proffers as a three day demand for rent is dated November 10, 2009 and was annexed to the petition (hereinafter designated as "petitioner's termination notice"). It demands the same $42,000.00 in back rent for the months of November 2007 - December 2008. It also includes "rent" of $88,000.00 for the months of January - November 2009 described as the "fair market value for use and occupancy" of the premises, inasmuch as the lease allegedly "expired by its terms on December 31, 2008." Rather than give tenant three days to pay the back rent so as to avoid litigation and remain in the premises, the demand gives tenant notice to "vacate the premises not later than November 20, 2009." This demand letter is similarly defective as a three day demand for rent. [*3]

Accordingly, since petitioner failed to provide respondent with a proper three day demand for rent, this summary proceeding, insofar as it is based upon the non-payment of rent, is dismissed pursuant to RPAPL §711(2).

Pursuant to RPAPL §711(1), a holdover proceeding may be instituted against a tenant whose occupancy entitlements have lapsed or were properly terminated by the landlord, and there has been a failure or refusal by tenant to vacate the premises. This provision thus provides the basis for the commencement of a holdover proceeding against a tenant whose tenancy has terminated because the lease has expired, because the lease has been terminated by operation of a conditional limitation in the lease, or because the tenancy has terminated by operation of law. Petitioner seeks possession of the premises herein based upon its allegation that the lease term ended on December 31, 2008, and based upon tenant's alleged breach of certain conditions in the lease.

Lease covenants are often written as conditions subsequent rather than as a conditional limitation. Where the landlord has the option of terminating the lease, or has an option to reenter based upon the breach of a lease covenant, that covenant in the lease is a "condition subsequent". In that situation, landlord serves a notice of termination to express its intention to exercise its option. If a lease allows a landlord to serve a notice to cure based on an alleged violation of the lease, the covenant created is a "conditional limitation". The key practical difference between a conditional limitation and a condition subsequent is that for a breach of a "conditional limitation" a landlord may bring a summary proceeding pursuant to RPAPL article 7 in this court. For a breach of the "condition subsequent", however, the landlord is relegated to bringing an action for common-law ejectment in Supreme Court. See VNO 100 West 33rd Street LLC v. Square One of Manhattan, Inc., 22 Misc 3d 560, 874 NYS2d 683 (NYC Civ Ct 2008); 451 Rescue LLC v. Rodriguez, 15 Misc 3d 1140(A), 841 NYS2d 819 (NYC Civ Ct 2007). Here, the lease does not provide for landlord's service of a notice to cure upon a breach by tenant (and, in fact, landlord served a notice to terminate rather than a notice to cure). As such, the lease provisions relating to respondent's alleged breach are considered conditions subsequent, and a summary proceeding based upon their alleged breach does not lie. Therefore, this summary proceeding, insofar as it is based upon "petitioner's termination notice", is dismissed pursuant to RPAPL §711(1).

The petition also alleges that the subject lease expired by its terms on December 31, 2008, as respondent failed to duly renew its lease. While petitioner does not contest the fact that respondent gave notice of its intention to renew pursuant to paragraph 50th of the lease, petitioner maintains that respondent did not fulfill its obligations under the lease by its failure to pay the rent due through December 31, 2008, and that respondent's right to renew is conditioned upon fulfillment of all of such obligations under the lease pursuant to paragraph 50th. This court, however, previously ruled that "there has been no default in respondent's payment of rent or other breach of the lease's terms and conditions" through December 31, 2008 (see this Court's prior decision dated March 31, 2009). Therefore, the Court finds that respondent has properly renewed its lease with petitioner for a new five year term commencing on January 1, 2009. Accordingly, the lease has not expired by its terms, and the petition is dismissed on this ground as well.

In its answer, respondent interposed three counterclaims against petitioner; for breach of the lease, for diminution of the rent; and for a judgment declaring the lease renewed. Paragraph 12th of the lease states as follows:

"That the landlord is exempt from any and all liability for any damage or injury to person or property caused by or resulting from steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or into any part of said building or from any damage or injury resulting or arising from any cause or happening whatsoever unless said damage or injury be caused by or due to the negligence of the landlord."

Respondent's second counterclaim is for diminution of the rent. Paragraph 26th of the lease states, in pertinent part as follows:

"In respect to the various "services", if any, herein expressly or impliedly agreed to be furnished by the landlord to the tenant, it is agreed that there shall be no diminution or abatement of the rent, or any other compensation, for interruption or curtailment of such "service" when such interruption or curtailment shall be due to accident, ... or some other cause, not gross negligence on the part of the landlord."

Respondent's third cause of action is for "a judgment declaring the lease to be renewed for an additional five (5) year period and further declaring that the lease is in good standing and further directing petitioner to accept rent from respondent ...". Respondent's third cause of action is beyond the jurisdiction of this Court as this Court does not possess the necessary equity jurisdiction to hear declaratory judgment actions. While this Court has determined hereinabove that the lease was renewed for an additional five year period, this finding is made only within the context of petitioner's summary proceeding for recovery of possession of the subject property. Therefore, respondent's third counterclaim is dismissed.

By reason of the foregoing and based upon the record before me, the petition and respondent's counterclaims are hereby DISMISSED.

So ordered.

Dated at Albany, New York

January 22, 2010

____________________________________

Gary F. Stiglmeier

Albany City Court Judge