Section One Condition to the Effectiveness of Rent Protection
Notwithstanding anything to the contrary elsewhere in these General Terms and Conditions, or in the Bond issued by the Surety, no lease or other agreement will be a bonded lease under the Bond, no losses or other damages will be Covered Losses and no Landlord shall be entitled to the payment of any payments or other compensation under the Bond unless and until the Agent has issued a surety bond for such Lease on behalf of the Surety, has obtained an executed General Agreement of Indemnity from the Tenant, and all applicable Bond premiums have been paid.
The term of the Bond shall be that stated on the first page of the Bond and shall not exceed the length of the lease (except as provided herein), and shall not be renewable. Upon conclusion of the initial lease, if required by the Landlord and paid for in full by Tenant, a new bond will be issued.
B. Holdover after Expiration or Termination of Bonded Lease
If a Tenant or Occupant “holds over” in the Apartment (remains in occupancy or otherwise fails to deliver vacant possession of the Apartment to the Landlord after the Expiration Date or earlier termination of the Bonded Lease), then an additional period of time will be added to the Bond Term, not to exceed the earlier to occur of (i) the date on which vacant possession of the Apartment is delivered to the Landlord and (ii) the date which is two (2) months after the Expiration Date or the date of the earlier termination of the Bonded Lease, as applicable.
Section Three Obligations of Landlord Upon Event of Default
A. Required Actions
If an Event of Default occurs under the Bonded Lease which gives rise to a Rent Protection Event, then no later than 45 days after the date on which such Event of Default occurred, the Landlord shall either
- commence an Eviction Proceeding or bring a Monetary Claim against the Tenant under such Bonded Lease,
- commence negotiations with the Tenant to enter into a Surrender Agreement, or
- provide evidence of Abandonment; and
- The Landlord will promptly furnish the Surety with copies of
- all notices, pleadings, and papers served, filed or otherwise required in connection with such Eviction Proceeding or Monetary Claim, and any other relevant documents that may be reasonably requested by or on behalf of the Surety,
- any judgment of possession or stipulation of settlement obtained, or the statement by the Landlord and associated evidence that the Apartment has been abandoned by the Tenant, in respect of such Event of Default,
- any money judgment obtained in respect of such Event of Default,
- documentation evidencing the basis for and the manner in which the Security Deposit was applied, and
- any other documentary evidence reasonably requested by the Surety with respect to such Event of Default, including evidence of Abandonment.
B. Failure To Comply With Requirements
Failure by the Landlord to comply with each of the foregoing requirements with respect of an Event of Default under a Bonded Lease will give the Surety the right, in its sole and absolute discretion, to deny some or all of the claim for payment of any losses arising out of such Event of Default.
Section Four Payment of Claim
A. Loss Reimbursement Payments
If an Event of Default which gives rise to a Rent Protection Event occurs with respect to the Bonded Lease during the Bond Term, then the Landlord must timely submit a complete and accurate Certificate of Loss in respect of such Loss. Provided that the Landlord has also otherwise performed all of its material obligations under this Bond, and materially satisfied all of the terms and conditions of the Bond, then the Surety will pay the Landlord a Loss Payment for such Covered Loss no later than three (3) Business Days after the Surety’s receipt of the Landlord’s Certificate of Loss.
B. Subsequent Loss Reimbursement Payments
After a Loss Payment has been made under Section 4A, the Landlord may submit supplemental Certificate(s) of Loss to the Surety for each subsequent Covered Loss. Each such supplemental Certificate of Loss must be submitted fifteen (15) days after such Covered Loss occurs. Provided that the Landlord has also otherwise performed all of its material obligations under this Bond, and materially satisfied all of the conditions in this Bond, then the Surety will pay the Landlord a Loss Payment for no later than three (3) Business Days after the Surety’s receipt of the Landlord’s supplemental Certificate of Loss requesting such Loss Payment.
Section Five Determination of Landlord Losses
A. Loss Reimbursement Payments
The amount of a Covered Loss will be determined by the Surety upon receipt of the Certificate of Loss detailing the applicable Event of Default, in an amount equal to
- the accrued amount of Fixed Rent due under such Bonded Lease as of such date (excluding any accelerated rent or penalties), minus
- the amount of Fixed Rent paid under such Bonded Lease, minus
- any Rent Credits received or provided by, or available to, the Landlord.
In the event that the tenant has not provided Security Deposit, then the Covered Loss may also include any amounts owed by the tenant that would be covered by a Security Deposit, up to the amount of the typical Security Deposit required by the Landlord or otherwise as set forth under the law (usually equal to one-month Fixed Rent).
In all cases, Covered Loss(es) shall not exceed the penal sum of the Bond.
B. Rent Credits: Security Deposit
Notwithstanding the Landlord’s actual application thereof, subject to Applicable Law, a Security Deposit shall be applied to Landlord Losses to determine the amount of Covered Loss(es) in the following order:
first, to the payment of the reasonable actual cost of the repair of any actual physical damage to the Apartment that occurred during the term of the Bonded Lease (excluding ordinary wear and tear),
second, to reasonable attorneys' fees and expenses suffered or incurred by the Landlord caused by, arising from, or in connection with, an Eviction Proceeding under such Bonded Lease (to the extent such amounts would be lawfully owed by Tenant).
third, to any unpaid and accrued Fixed Rent (excluding any accelerated rent or penalties), and
fourth, to any other reasonable costs and expenses suffered or incurred by the Landlord caused by, arising from or in connection with unpaid or unperformed obligations of the Tenant under the Bonded Lease.
Section Six Exclusions from Coverage under the Bond
The Surety will not be liable under any conditions for any and all losses, damages and expenses (including, but not limited to, attorneys' fees and expenses administrative fees, management fees, fines and penalties) suffered or incurred by the Landlord caused by, or arising from, or in connection directly or indirectly with any of the following:
- a constructive eviction of the Tenant from all or any portion of the Apartment (per the definition of the Bonded Lease or by Applicable Law),
- the Tenant’s inability to occupy the Apartment and/or termination of the Bonded Lease as the result of fire, flood or other casualty,
- the Landlord’s absence of compliance with Applicable Law or with any of its obligations under such Bonded Lease,
- the Landlord’s breach of any of its material obligations under this Bond,
- a claim made against the Landlord by a third-party,
- the amendment or modification of a Bonded Lease in any material respect,
- the assignment of a Bonded Lease or the subletting of all or any portion of the Apartment leased thereunder (in each case except to the extent that the Landlord is required by Applicable Law to permit or consent to the same),
- the Landlord has caused or colluded to cause a Tenant’s Event of Default or to create a Loss, and
- any Certificate of Loss or other request for a Rent Reimbursement Payment submitted by the Landlord is materially false or misleading, and/or fraudulent.
- Acts of terrorism or foreign enemies, and/or armed conflict.
Section Seven Mitigation of Damages
Promptly after an Event of Default on a Bonded Lease, the Landlord shall use commercially reasonable efforts to find a new qualified tenant for the Apartment and enter into a new lease thereto, as soon as practicable. If the apartment is rented for less than the full rental amount the Surety will pay the difference, excluding any free rent and/or other inducements. For the avoidance of doubt, such new lease shall not be a Bonded Lease or be entitled to coverage from the Surety unless the new tenant submits an application for a new bond to the Surety and otherwise satisfies all of the conditions of the Surety with respect to the underwriting of a new surety bond.
In the event an apartment has been vacant for more than 30 days, the Surety may present to the landlord a reasonably qualified tenant to take over the existing lease. Reasonable will be based upon the standard approval guidelines the building adheres to including using the lease rental guarantee service. If the landlord unreasonably refuses to enter a new lease with such tenant, the Surety shall have no obligation to pay for any losses that arise 30 days (or more) from the date the tenant was presented to the landlord.
Right of Inspection
Following an Event of Default on a Bonded Lease which gives rise to a Rent Protection Event, or at such other times as the Surety shall reasonably request, the Surety has the right to reasonably inspect the Apartment from time to time upon reasonable notice to the Landlord, and to the extent required by the Bonded Lease or Applicable Law, to the Tenant and any Occupant.
Rights of Surety Following Rent Reimbursement Payment
A. Rights and Remedies
Following any Loss Payment, and without the necessity of any action by the Landlord or otherwise, the Surety shall be subrogated to the Landlord's rights and remedies to collect and recover all Covered Losses to the extent such Loss Payment was made.
If a Certificate of Loss contains any representation or other statement that is fraudulent, materially inaccurate or materially misleading, then in addition to its rights and remedies hereunder or available under Applicable Law, the Surety will have the right to seek reimbursement from the Landlord for any and all amounts paid in respect of such Certificate of Loss.
B. Assignment of Rights to Payment and Collection
The Landlord hereby presently, absolutely and irrevocably assigns to the Surety all of the Landlord's rights and remedies to collect and recover all Covered Losses in respect of which such Loss Payment was made by the Surety to the Landlord.
Section Ten Defense of Claims
In the event of any claims brought or actions commenced against the Landlord, whether by a Tenant or other Occupant or a third-party, the Surety shall have no obligations or liabilities with respect thereto and shall not be required to defend, participate in or contribute to the cost of any such claims or actions (or any judgments or settlements with respect thereto).
Section Eleven Representations and Warranties by Landlord
The Landlord, by execution and acceptance of the Bond, represents and warrants to the Surety that:
- The Landlord (i) is a corporation, limited liability company, individual or partnership, as applicable, duly organized or formed and validly existing and in good standing under the laws of the State of its organization or formation; (ii) it has all requisite power and authority to enter into this Bond, and to perform its obligations hereunder; and (iii) its execution, delivery and performance of this Bond has been duly authorized; and
- This Bond, the Bonded Lease, and all agreements, instruments and documents herein provided to be executed or caused to be executed by it have been executed and delivered in accordance with such authorization, and are and will be binding and enforceable against it in accordance with their terms.
Section Twelve Covenant Against Discrimination
No person shall be precluded from applying for or obtaining a surety bond or denied the potential benefits of a surety bond or otherwise be subjected to discrimination by the Landlord or the Surety in connection herewith for any reason prohibited by Applicable Law.
Section Thirteen Suits, Actions and Proceedings
Any legal suit, action or proceeding arising out of or relating to the Bond shall be instituted in any Federal or State court sitting in the State of New York and the parties hereto waive any objections which they may now or hereafter have based on venue and/or forum non conveniens of any such suit, action or proceeding, and the parties hereby irrevocably submit to the jurisdiction of any such court in any suit, action or proceeding. No legal suit, action or proceeding arising out of or relating to the Bond may be brought after the first anniversary of the date on which the event giving rise thereto occurred.
Section Fourteen Miscellaneous
Descriptive headings are for convenience only and shall not control or affect the meaning or construction of the provisions of the Bond or these General Terms and Conditions.
The Landlord may not assign all or any portion of its rights under or with respect to the Bond without the prior written consent of the Surety.
Successors and Assigns; No Third-Party Beneficiaries.
All of the terms and provisions of the Bond shall be binding upon and inure to the benefit of the parties thereto and, their respective successors and assigns. The Bond is for the sole benefit of the parties thereto and not for the benefit of any third party.
It is the desire and intent of the parties hereto that the provisions of the Bond shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of the Bond shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made.
THE BOND, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES THERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
WAIVER OF JURY TRIAL
THE LANDLORD, THE TENANT AND THE SURETY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM INVOLVING ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE BOND.
Waivers; Rights and Remedies Cumulative.
The failure of any party to pursue any remedy for breach, or to insist upon the strict performance, of any covenant or condition contained in the Bond shall not constitute a waiver thereof or of any other right with respect to any subsequent breach. Except as otherwise expressly set forth herein, rights and remedies under the Bond are cumulative, and the pursuit of any one right or remedy by any party shall not preclude, or constitute a waiver of, the right to pursue any or all other remedies. All rights and remedies provided under the Bond are in addition to any other rights the parties may have by law, in equity or otherwise.
The Bond cannot be amended without written consent of the Surety.
Execution and Delivery by electronic signature or Email.
The execution and delivery of the Bond or any amendment hereto by electronic mail or electronic signature shall be deemed a valid and effective execution and delivery of such instrument and shall have the same effectiveness as the execution and delivery of an original instrument.
Section Fifteen Definitions
As used in these Terms and Conditions, the terms below have the following meanings:
Abandoned means that
- The Tenant and each other Occupant has not lived in the Apartment for 30 consecutive calendar days, unless the Tenant gives the Landlord written notice that such vacancy is temporary and the Tenant (or subtenant or permitted roommate) intends to return to the Apartment and resume occupancy thereof within a reasonable period of time,
- All or substantially all of the property and possessions of the Tenant and each other Occupant have been removed from the Apartment,
- The Tenant expressed to the Landlord or the Landlord's agent Tenant’s intent to cease its occupancy of and residency in the Apartment, whether orally or in writing, including by returning the keys to the Apartment to the Landlord or the Landlord's agent,
- Any other action by the Tenant which, in the Surety's sole judgment, indicates that the Tenant no longer claims or retains any interest in the Apartment, or
- Any other condition that constitutes an “abandonment” as defined in or otherwise under the terms of the Bonded Lease.
Applicable Law means any applicable law, statute, code, regulation, ordinance, or rule of any governmental authority.
Business Day shall mean any other day than a Saturday, Sunday, or a day which is a New York State, United States Federal or statutory holiday for which financial institutions shall be closed.
Certificate of Loss means the Landlord’s certification in writing to the Surety in the form provided by the Surety from time to time that an Event of Default and a Rent Protection Event giving rise to a Covered Loss has occurred under the Bonded Lease.
Claim means a written request by the Landlord for a Loss Payment from the Surety under the Bond.
Event of Default means a “default” or “event of default” by the Tenant under the Bonded Lease (as defined in such Bonded Lease).
For the purposes of this Bond, the date of an Event of Default is the earlier of
- if the act or failure to act giving rise to such Event of Default occurs on a specific identifiable date, then such date, or
- if the act or failure to act giving rise to such Event of Default does not occur on a specific identifiable date, then the later to occur of (i) the effective date of any notice of termination of the Bonded Lease or notice to quit or vacate the Apartment, and (ii) the last day of any cure period to which the Tenant is entitled under the Bonded Lease.
For the avoidance of doubt, the date of an Event of Default due to the non-payment of rent shall be the first day after the expiration of any cure period for unpaid rent, whether or not the tenant was notified of the missed payment.
Eviction Proceeding means a process under law commenced following an Event of Default under a Bonded Lease in exercise of the Landlord’s rights thereunder to terminate such Bonded Lease as well as the Tenant’s occupancy of the Apartment thereunder that seeks the removal of the Tenant from the Apartment.
Fixed Rent means the fixed or base rent due each month under the Bonded Lease. Fixed Rent shall not mean any amount defined as “additional rent” or that is not otherwise required to be paid in equal monthly installments during the term of the Bonded Lease. Examples of amounts that are not Fixed Rent include, but are not limited to, legal fees and expenses, security deposits or other deposits, pass-through items, penalties, and service charges.
Landlord means the landlord or lessor under a Bonded Lease, and any successor or assignee of the landlord or lessor.
Bonded Lease means that lease or other agreement in writing between the Landlord and the Tenant for the use and occupancy of the Apartment indicated in the Bond with respect to such lease or other agreement that
- outlines equal monthly payments of Fixed Rent, and
(b) has a term of twenty-four (24) months (or less), plus (as applicable),
- any partial calendar month in which the commencement date and/or the stated Expiration Date of such lease or other agreement occurs if such commencement date and/or stated Expiration Date does not occur on the first day or the last day of a calendar month, respectively, and/or
- not more than two months for which no Fixed Rent will be charged; even if such “period of free rent” occurs at the beginning of the term of such lease or other agreement.
Notwithstanding anything to the contrary in this Bond, no lease or other agreement shall be a Bonded Lease unless:
- the Landlord has conducted its customary due diligence with respect to the prospective tenant under its application submitted for a lease and has reasonably concluded that but for issuance of a surety bond for such lease, such prospective tenant’s application would be rejected, and
- Except for the addition of a rider requiring the tenant to carry rent insurance coverage, the form of lease for the Apartment to be rented by the prospective tenant is on the same form of lease that the Landlord uses for tenants for whom the Landlord does not require a surety bond.
Covered Loss means a loss entitled to reimbursement under this Bond arising from a Rent Protection Event with respect to the Bonded Lease.
Surety shall mean The Hanover Insurance Company, United Casualty and Surety Insurance Company, or Arch Insurance Group Inc, and their respective successors and assigns.
Lease Break means
- illegal activity in or about an Apartment,
- the use of the Apartment for a purpose that is not a permitted use under the Bonded Lease (such as using the Apartment under Airbnb or other “apartment sharing” program),
- an assignment or sublease of the Apartment without the consent of the Landlord for profit or for an amount in excess of the amount permitted by Applicable Law,
- any representation or other statement by the Tenant to the Landlord or the Landlord in a Renter Agreement, rental application for the Apartment or otherwise that is fraudulent, materially inaccurate or materially misleading.
Maximum Amount means the maximum aggregate amount of the monthly Fixed Rent due under a Bonded Lease for each full and partial calendar month during the initial stated term of such Bonded Lease.
Monetary Claim means a legal proceeding that is limited solely to the recovery of money damages.
Occupant means a subtenant who has been approved by the Landlord in writing or a “roommate” permitted by Applicable Law without the Landlord’s consent.
Premium means the sum remitted by a Tenant to the Surety in exchange for the issuance of the Bond for such Tenant’s Bonded Lease per the terms of the General Agreement of Indemnity and the Bond with respect to such Bonded Lease.
Rent Credit means each of the following:
- a remittance for occupancy and use of an Apartment during an Eviction Proceeding
- a payment for use and occupancy of an Apartment following a re-letting of such Apartment during or after delivery of vacant possession of the Apartment to the Landlord, including the amount of any “free rent” or rent credit provided to the new tenant,
- an abatement of, credit against, or other deduction in the amount of the Fixed Rent due under a Bonded Lease, including “free rent” or other promotions or allowances, for any reason (including, but not limited to, an administrative or judicial order or an agreement in writing executed and delivered by the Landlord), and
- any other amount set forth in Section 5 hereof.
Rent Protection Event means any of the following events:
- the recovery by the Landlord of physical possession of the Apartment under a Bonded Lease after an Event of Default by the Tenant thereunder (including for a Lease Break), provided that possession of such Apartment is the result of
- the issuance and entry by a court of competent jurisdiction of a final and unappealable judgment in an Eviction Proceeding awarding vacant possession of the Apartment to the Landlord,
- the entry with and approval of a court of competent jurisdiction of an unconditional stipulation of settlement under which the Tenant delivers vacant possession of the Apartment to the Landlord, executed and delivered by the Tenant and the Landlord in connection with an Eviction Proceeding,
- the execution and delivery of a Surrender Agreement prior to the commencement of an Eviction Proceeding; provided that the Surety has consented to such agreement in writing, or
- Abandonment by the Tenants of the Apartment, or
(b) the issuance and entry by a court of competent jurisdiction of a final and unappealable judgment for money damages against the Tenant within twelve (12) months after the Expiration Date of the Bonded Lease arising from an Event of Default by the Tenant thereunder.
Loss Payment means a payment made by the Surety to the Landlord for Covered Losses.
Renter Agreement means a “General Agreement of Indemnity” between Tenant and Surety purchased from the Surety (through the Agent) by a Tenant for the benefit of a Landlord with respect to a Bonded Lease, executed and delivered by the Tenant setting forth the terms and conditions of the relationship between the Tenant and the Surety with respect to such Bond.
Surrender Agreement means an agreement to terminate a Bonded Lease (if such Bonded Lease has not previously been terminated), deliver vacant possession of the Apartment to the Surety and/or liquidate any damages suffered by the Landlord arising from an Event of Default under such Bonded Lease.
Security Deposit means collateral provided by (or on behalf of) the Tenant to secure its obligations under the Bonded Lease, including cash Security Deposit, promissory note, insurance or bond (other than the subject Bond).
Tenant means the tenant(s) or lessee(s) of an Apartment under a Bonded Lease.