Landlord Tenants: Landlord's Options When the Deal Goes Bad


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Jason R. Rittie, Esq. of Denville, NJ law firm Einhorn Harris Ascher Barbarito & Frost, P.C. presented a seminar on Landlord/Tenant Law for CLE credits. Part two discusses options that Landlords may have when the deal goes bad

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Landlord Tenants: Landlord's Options When the Deal Goes Bad

  1. 1. Jason R. Rittie, Esq.Einhorn, Harris, Ascher, Barbarito & Frost PC 165 East Main Street Denville, New Jersey 07834 (973) 627-7300
  2. 2.  Breach of Contract and Causes For Eviction ◦ Non-Payment of Rent ◦ Conviction or Guilty Plea of Drug Offenses, Assault, or Terrorist Threats, or Theft ◦ Disorderly Conduct ◦ Destruction, Damage, or Injury to Premises ◦ Habitual Late Payment ◦ Continuous Substantial Breach of Covenants or Agreements
  3. 3.  Written Lease Terms Control ◦ Notice and Cure Periods ◦ Grace Periods ◦ Non-Payment of Rent requires no notice under Anti-Eviction Act ◦ Late Charges ◦ In-sufficient Funds/Returned Check Fees ◦ Collection Costs (filing fees and attorneys’ fees)
  4. 4.  Eviction from Premises – Special Civil Part – Landlord/Tenant Court ◦ Judgment for Possession ◦ Warrant for Removal Breach of Contract Suit – Law Division or Special Civil Part depending on size of claim Duty to Mitigate Damages
  5. 5.  A "ground lease" is a long-term lease of land on which the Tenant plans to construct substantial income-producing improvements. Ground leases are of extremely long duration. A disadvantage of a ground lease for the Tenant is that the Tenant’s default or breach of the terms, covenants, and conditions of the lease may subject the Tenant to eviction and the complete forfeiture of the leasehold estate. Although this possibility is common to all leases, the consequences under a ground lease are likely to be more acute because of the Tenant’s large investment in the improvements constructed on the land.
  6. 6.  “Abandonment” occurs when the tenant leaves the premises vacant with the avowed intention not to be bound by the lease. “Surrender” is to relinquish the relationship of landlord and tenant; to end all rights, duties, and obligations under the lease; and to terminate the lease prior to the end of the lease term. Surrender must be mutual. In New Jersey, surrender of a lease may be express or implied by law.
  7. 7.  To constitute surrender by operation of law, there must be both an abandonment by the tenant and an acceptance of the abandonment by the landlord. Mere receipt of keys by the landlord and an attempt to re-rent the premises may not alone, constitute acceptance of the surrender. Abandonment absent surrender and acceptance constitutes a breach of the lease.
  8. 8.  Abandoned Property Law, N.J.S.A. 2A:18-72 through 2A:18-84. ◦ Applicable to both residential and commercial tenancies. ◦ However, a written non-residential lease may provide that the provisions of the Statute do not apply. ◦ Requires written notice to tenant concerning content, delivery and storage.
  9. 9.  A warrant for removal must have been executed and possession of the premises returned to landlord; or the tenant has given written notice that he/she is relinquishing possession of the premises. Compliance in good faith with the requirements of the law is a complete defense in any action for loss or damage of property. If landlord does not comply with the law, tenant is relieved of any liability for reimbursement of landlord’s costs and is entitled to recover up to twice the actual damages sustained by tenant.
  10. 10.  All leases, whether written or oral, give the tenant “exclusive possession” of the premises. In a written lease, landlord’s duty not to enter the premises is called the Covenant of Quiet Enjoyment. The Right to Inspect/Enter Premises must be in the written Lease. Otherwise, a landlord may not lawfully enter the premises.
  11. 11.  Lease should also provide landlord with a copy of all keys and a prohibition on tenant changing the locks. New Jersey does allow a landlord to enter into the premises only in a few special circumstances. Without right in written lease or by permission, entry by landlord is a “trespass” and if continuous, can constitute “harassment.”
  12. 12.  Even if given legal authority to enter the premises, a landlord may only enter in a peaceable manner. Actions for Unlawful Entry or Detainer N.J.S.A. 2A:39-1 through 2A:39-8. Unlawful Entry and Detainer occurs when a landlord enters the premises peaceably or forcibly and then detains the tenant’s property by force or the threat of force, without consent or judgment from the Court.
  13. 13.  Forcible Detainer: occurs if the landlord enters the premises forcibly or legally, with tenant’s permission or a court order, and then uses force to detain the property. Unlawful Detainer: occurs if a tenant willfully and without force, holds over at the premises after written notice demanding delivery of possession has been given to tenant. ◦ If tenant is found guilty, landlord can recover double rent for as long as tenant holds over. ◦ Also applies, if tenant gives notice that it will be quitting the premises, and then holds over. (N.J.S.A. 2A:42-5 and 2A:42-6)
  14. 14.  An eviction is an actual expulsion of a tenant out of the premises. For most residential tenancies, a landlord must have good cause to evict a tenant. The Anti-Eviction Act , N.J.S.A. 2A: 18-61.1 was created to protect blameless tenants from eviction and was adopted in recognition of the housing shortage in NJ.
  15. 15.  A summary dispossession action against a tenant is governed by one of the following Statutes: ◦ The Summary Dispossess Act (N.J.S.A. 2A:18-53); or ◦ The Anti-Eviction Act (N.J.S.A. 2A:18-61.1). ◦ The Summary Dispossess Act applies to all other rental or residential properties (not otherwise covered by the Anti-Eviction Act), and including commercial tenancies. ◦ Under both Acts, notice requirements are of utmost importance, because a Court can dismiss the action.
  16. 16.  The law applies to most residential properties including: ◦ Single-family homes ◦ Mobile homes and land in a mobile home park ◦ Apartment buildings and complexes ◦ Rooming and boarding homes  Does not apply to owner-occupied (landlord/owner lives there) two- or three-family dwellings  May not apply to hotel guests, motel guests  Does not apply to guest houses rented to transients or seasonal tenants
  17. 17.  There are a number of causes for eviction. Each cause, except for nonpayment of rent, must be described in detail by the landlord in a written notice to the tenant. Depending on the cause, a certain amount of time must pass after delivery of written notice before a landlord may begin eviction action. Landlord-Tenant Section, Special Civil Part
  18. 18.  The Summary Dispossess Act contemplates two different notice provisions: ◦ Notice to Quit  3 Months, 1 month or same as term (N.J.S.A. 2A:18-53a.)  3 days (N.J.S.A. 2A:18-53c.) ◦ Demand for Possession  May be served at any time prior to filing the Complaint; and  Almost always combined with Notice to Quit. (No notice is required for non-payment of rent, and in commercial tenancies, there is no Notice to Cease.)
  19. 19.  A landlord may only legally recover possession of premises by consent of the tenants, or through the legal process of eviction. Judge enters a Judgment for Possession by default or after hearing case. A warrant for removal must be issued and executed by an officer of the Court to legally effectuate the eviction.
  20. 20.  The law does not allow the warrant for removal to be issued by the Court Clerk until at least 3 days after the Judge enters a judgment for possession. Once the court officer serves tenant with the warrant for removal, tenant has 3 days to move out. If tenant does not move out or tenant does not contest the warrant and get a stay, the court officer may evict tenant, remove belongings and/or lock out tenant.
  21. 21.  Don’t do it – only an officer of the court can legally physically evict a tenant after issuance of warrant for removal. “Self-help” evictions are not permitted in NJ under any circumstances (applies to both residential and commercial tenancies). A landlord may not padlock, disconnect utilities or otherwise block entry to a rental premises.
  22. 22.  Judgment for Possession Warrant for Removal Separate Breach of Contract suit resulting in award of damages ◦ Lease provisions typically provide landlord with options, for example:  Landlord can terminate lease and sue tenant for back rent due and owing  Landlord can re-take possession of premises, and seek to re-let the premises to a replacement tenant, suing for any costs and expenses incurred in connection with re-letting and for any difference in rental amounts
  23. 23.  Collecting A Money Judgment ◦ Execution on Goods and Chattels (Personal Property) ◦ Bank Levy ◦ Execution against Wages ◦ Docketed Judgment ◦ Use of Information Subpoena ◦ Court Order for Discovery
  24. 24.  Protect privacy If a credit report or another type of consumer report is used to deny a rental application, Tenant must be advised, and given the name, address, and phone number of the agency that provided the information.
  25. 25.  Under NJ law, a foreclosing mortgagee may not evict tenants, unless there are grounds under Anti-Eviction Act. Federal Foreclosure Law: 12 USC § 5220 the Helping Families Save Their Homes Act of 2009, before a tenant can be evicted due to foreclosure, the landlord must provide the tenant with a 90 day notice to quit when the foreclosed property has been purchased by a buyer who wants to personally occupy it as his primary residence. Federal Law does not preempt any State or local law that provides longer time periods or other additional protections for tenants.
  26. 26.  N.J.S.A. 2A:50-69 et seq. ◦ Property acquired in Foreclosure containing one or more residential units requires written notice, in English and Spanish, within 10 business days after the sale. ◦ Must tell tenants that property ownership has changed, and that they are not required to move. ◦ Notice requirements to tenants PRIOR to the transfer of title due to a Foreclosure Action. ◦ Notice requirements to tenants AFTER the transfer of title due to a Foreclosure Action.
  27. 27.  Alternative Dispute Resolution: Arbitration and Mediation May be provided in written Lease (typically seen in determining fair market rent on renewal, or as a condition to commencing a lawsuit) Mediation is strongly encouraged at Landlord/Tenant Court (non-binding)