KMWB Secures Dismissal of Class Action Claim, Clarifying RPL §227-e

KMWB is pleased to share a significant legal victory for New York property owners and property managers regarding Real Property Law §227-e.

In a case of first impression, the plaintiff attempted to expand the application of RPL §227-e, alleging that our clients—a property owner and property management company—violated the RPL §227-e duty to mitigate damages by granting an early termination of the tenant’s residential lease in exchange for payment in the form of the relinquishment of the security deposit.

However, the Supreme Court ruled in favor of our clients, dismissing the Class Action Complaint and holding that:

  • RPL §227-e is triggered only when a tenant vacates in breach of the lease and the landlord seeks to recover damages as a result of that breach.
  • RPL §227-e is thus inapplicable while a tenant is in possession of the premises.
  • A tenant’s voluntary surrender of the security deposit in exchange for an early termination of the lease is not illegal or in violation of RPL §227-e.

This ruling reinforces that property owners may negotiate early lease terminations without automatically being subject to statutory mitigation requirements—an important precedent for real estate professionals managing tenant agreements.

Read the full decision here: ​https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=ZiQuAQKrrh9U3Nh5O0shyw==&system=prod​

Key Takeaways for NYC Property Owners & Managers:

  • Mitigation duties only apply when a tenant vacates in breach of the lease.
  • Property owners may negotiate early termination agreements, including security deposit arrangements.
  • Clear lease documentation remains critical in protecting against legal challenges.

This landmark ruling helps prevent the misapplication of RPL §227-e and ensures that property owners retain their ability to manage their properties effectively and fairly.

Next Steps & How KMWB Can Help

At KMWB, we remain committed to protecting the interests of property owners and managers and ensuring that New York real estate laws are applied correctly and fairly.

If you have any questions about this decision or need guidance on lease agreements, early terminations, or compliance with RPL §227-e, please feel free to contact:

Evelyn Flores, Senior Associate – ​[email protected]​ | 212-869-5030

Eric McAvey, Partner – ​[email protected]​ | 212-869-5030