Hanlon Niemann Blog | A Freehold, New Jersey Law Firm

By Christopher J. Hanlon, Esq. an attorney protecting the rights of the landlord

Don’t assume knowledge of a violation of a lease provision will allow you to avoid eviction.  A recent NJ decision involving a commercial landlord and tenant is significant, in part, because it originates from the Appellate Division and therefore it is binding statewide.   The Court considered a judgment entered by the lower court for possession in favor of the landlord.   The lease specifically prohibited the tenant from assigning or subletting any portion of its space and the adjacent exterior parking space without the written consent of the landlord.   The landlord alleged that the tenant subleased part of its space to an unrelated third party business without its knowledge or consent.   The tenant alleged that the landlord knew that the third party was an unrelated business co-occupying the space since the beginning of the lease and therefore, was chargeable with knowledge of the lease and thereby waived the enforceability of the “no-subleasing or assignment” provision in the lease.  The Court ruled (based on the facts of the case), that the landlord was entitled to evict the tenant for a material breach of the lease by failing to get his permission to sublease or assign this space.  

This case stands for the proposition that if a lease requires that the tenant or landlord give notice or perform an affirmative obligation in writing, each side better be able to prove that written notice was given to other.

For more information on this decision, contact Christopher Hanlon toll free at (888) 800-7442 or e-mail him at chanlon@hnlawfirm.com.

New Jersey law is very biased against Landlords.  One unintended and innocent mistake can be devastating to you financially and result in a dismissal of your case.

1. When the Clerk or Judge calls the calendar of all matters scheduled, if the landlord is present in the courtroom and the tenant is not, the tenant will be “in default.” In that case, a judgment granting the landlord possession of the leased property may be entered against the tenant after the landlord has filed an affidavit proving a right to possession.  If the tenant is present in the courtroom and the landlord is not, the landlord’s complaint will be dismissed without prejudice, meaning it will have to be filed again without penalty.

2. In non-payment of rent cases, the tenant has the right to pay the full amount of rent into court (or with the clerk) by the close of the business day that the trial is set for. Then the case will be dismissed.

3. A landlord may not evict a tenant based upon failure to pay any attorneys’ fees, costs or late charges, unless there is a lease provision which states that such fees are collectible as rent. Even if the lease allows such charges to be collected, the amount due as rent may be limited by a rent control ordinance, or in the case of public or federally-assisted housing, by federal law.

4. A landlord may decide to settle a case before court, but the decision is entirely voluntary. Any settlement should be reduced to writing and filed with the court. This will protect both parties in the event of a breach by the other. Most Courts require that the terms of the agreement be “placed on the record,” in open court. This is for the protection of both parties as well. A settlement agreement should be placed “on the record” as a matter of course if there are complex terms, or if the tenant is agreeing to vacate. An experienced landlord attorney like Christopher J. Hanlon should be present to protect you during any settlement.

5. If the tenant wishes to challenge the allegations or accuracy of anything stated in the complaint, including the amount of rent due and owing, the tenant has a right to a trial before a judge.

6. The entry of a judgment for possession means that a landlord may request the court clerk issue a Warrant for Removal to a Court Constable and the tenant can be evicted.

7. If a judgment for possession is entered, a Warrant for Removal may not be issued until three days later. The Warrant for Removal authorizes a Special Civil Part Officer (Constable) to lock out the tenant three days after the Warrant has been served on the tenant. Service of the Warrant is generally accomplished by the Officer leaving a copy at the tenant’s apartment. The lock out may not occur on a weekend or on a judicial holiday. Also, weekends and holidays are not counted in calculating the number of days before the Warrant can be signed or issued. This means that the tenant will be locked out at a minimum of eight days from the day judgment of possession is entered.

8. If a judgment for possession is entered after a trial, or because a tenant did not appear in court, or because the tenant agreed with the landlord to the entry of a judgment, a tenant has the right to apply to the court for a hardship stay at any time up to ten (10) days after the Warrant for removal has been executed (door locked!) The court may grant or deny the stay and the landlord has a right to be heard at the hearing on the application. A stay of the judgment means that the tenant will not be removed for as long as the stay is in effect. The court may grant a stay for up to a maximum of 6 months. During the period of the stay, the tenant must pay all back rent, pay the future rent on time, not disturb the neighborhood, and not damage the property. After the stay is over, the tenant may be evicted by the landlord through the Constable without any further judicial action unless the Court grants an extension not to exceed 6 months from the date of judgment.

9. The Court provides a list of social service agencies that may be able to help tenants find other housing or provide grant monies.

10. If a landlord and tenant agree to an eviction, a consent judgment for possession must be prepared. When this happens, the landlord must also submit, in writing, a sworn statement that one of the causes for eviction authorized in the eviction statute has occurred. This sworn statement must be filed before the court will accept the consent judgment. The sworn statement must also state that all fees and charges sought by the landlord are allowed by federal, state and local law, as well as the lease.

Are you a New Jersey landlord?  Do you have an eviction that requires legal assistance?  Then contact Christopher J. Hanlon toll-free at (888) 800-7442 or e-mail him at chanlon@hnlawfirm.com today to protect your interests.

By Christopher J. Hanlon, a NJ Landlord/Tenant Attorney

When you sign a lease as a tenant in New Jersey, you become a party to a contract. As a party to a contract, you have certain rights that will be upheld by the Courts in New Jersey. Courts will generally uphold the lease that both parties agreed to when they signed it. However, disputes sometimes arise as to what exactly was agreed to in the lease. When these disputes occur, Courts will decipher the plain language of the agreement and the intentions of the parties the best they can, ruling in favor of whatever party they believe is correct in their interpretation of the agreement.

One of these disputes arose in a recent New Jersey Appellate Court case. The Landlord brought a claim against a tenant immediately after the lease expired, since the tenant failed to restore the 20-year old HVAC units at the end of the term. The landlord claimed this was agreed to in the lease and cited a provision in which the tenant agreed to restore the premises to its original condition. The tenant argued that the premises are subject to reasonable wear and tear and the tenant is not responsible for such, something which the landlord concedes. The tenant thus argues that the use of the HVAC units was part of this reasonable wear and tear and therefore they were not responsible.

The Court agreed with the tenant, stating that the most reasonable interpretation of the contract led them to conclude that the provision in which the tenant promised to restore the property to its original condition applied only to alterations the tenant made during the term of the lease. The Court found that use of the HVAC units was considered normal wear and tear, thus not included in the restoration provision of the lease. This meant the tenant was not responsible.

The New Jersey Courts provide a forum for upholding agreements between parties. When presented with a dispute as to the language of an agreement, they will look at the language of the contract and the intentions of the parties, often coming up with the most reasonable interpretation of the disputed language. If you have a question regarding a dispute with your landlord or tenant, please call Christopher J. Hanlon, Esq., an experienced Landlord/Tenant Attorney in New Jersey. He can be reached toll-free at 888-800-7442 or by email at chanlon@hnlawfirm.com.  He would be happy to assist you in your matter.  For further information, go to http://www.youtube.com/user/NJBusinessLaw#p/search/0/GGPeM8HxHHE to learn more.

Christopher J. Hanlon, Esq., a NJ Landlord Attorney

In what has been viewed by many observers as a landmark decision an Appellate Division panel in the Superior Court of the State of New Jersey ruled in favor of the convicted sex offenders on July 15, 2008 in two consolidated cases challenging municipal restrictions which ban the residency of convicted sex offenders within a designated distance of schools, parks, playgrounds and daycare centers.  G.H. v. Tp. of Galloway, 401 N.J. Super. 392 (App. Div. 2008).  The decision was based upon the doctrine of preemption which prohibits municipalities from exercising their legislative power over matters where the State has implemented comprehensive control.  In so ruling the Court relied upon a provision of the legislation known as Megan’s Law which prohibits   “. . .use of any information disclosed pursuant to this Act” to deny housing accommodations.  The Appellate Division struck down two municipal ordinances as being violative of this statutory scheme. 

The Court noted that one of the problems with these ordinances was their scope.  Using five hundred foot zones (or one thousand foot zones as many of these ordinances do) and applying them to most municipalities will render unavailable many, or in some cases, any practical housing opportunities for these sex offenders.  For example, in Cherry Hill (one of the defendant municipalities in that case) there were only two areas which were not within these school zones.  One was an undeveloped field, and the other was a very expensive residential subdivision (not a practical housing opportunity for parolees).

However, this decision did not decide the question of whether or not private housing providers are allowed to continue to perform criminal background checks (not limited in their scope to information received pursuant to sex offender disclosures under the Megan’s Law) from continuing to do so.  It expressly recognized that in a prior decision before the Appellate Division Mulligan v. Panther Valley Property Owners Association, 337 N.J. Super 293 (App. Div. 2001) involving a challenge to a prohibition of Tier 3 sex offenders (those most likely to violate the law again) in a common interest development, the matter was not decided because of an inadequate record.

Accordingly, this Galloway decision does not mean that housing providers cannot continue to perform criminal background checks on all applicants.  It would be the most prudent practice not to use a screening standard limited in its scope to information received by a landlord from a sex offender disclosure which would typically come from a County Prosecutor’s office pursuant to Megan’s Law, or made available through some other published source (such as the internet). A broader search of all criminal convictions would be the better practice.

In fact, there are numerous authorities which continue to endorse the practice of using a criminal background check as part of a uniformly applied screening criteria even when dealing with members of protected classes.  42 U.S.C.A. 3604 (F)(9)(Fair Housing Act); 24 C.F.R. 982.307(a)(3) (H.U.D.’s regulations enforcing the Fair Housing Act); DCA’s Landlord’s Guide to Section 8 Housing.  In Maglies v. Estate of Bertha Guy, 193 N.J. 108 (2007) the Supreme Court, in dicta, referenced the right of a landlord to refuse to allow the continued occupancy of a resident otherwise disqualified because of a “past conviction.”

Almost every legal authority dealing with private housing providers recognizes a landlord’s right to screen using criminal background checks.  It would be the height of absurdity to restrict the housing providers right to turn away those most likely to commit another sex crime while every other person with a criminal background could be the subject of an adverse discretionary determination at the time of application made to a private housing provider.  This author predicts that will not happen in New Jersey.  For now, there is no law that eliminates this discretion on the part of housing providers and therefore a uniformly applied written screening policy which contains specific reasonable criminal history disqualifying criteria is sustainable.

For further information and advice in any landlord matter, do not hesitate to contact me at 732-863-9900, or chanlon@hnlawfirm.com.

Effective August 18, 2008, N.J.A.C. 13:10-2.4 was amended to require all owners of multi-family dwellings to file the annual MDRR report online at the Division on Civil Rights’ Web site: www.NJCivilRights.org.  Previously, the regulation permitted filing either by mail or electronically.  Therefore, all property owners subject to the rule must now e-file on the DCR Web site no later than January 30, 2009.
 
Property owners who do not file their 2008 MDRR report online by February 14, 2009 will be subject to a $100.00 late filing fee.  The late filing fee increases to $250.00 for all property owners who file after March 1, 2009, and to $500.000 for all property owners who file after April 30, 2009 are subject to a penalty in an amount designated by the Director of the Division on Civil Rights.  See N.J.A.C. 13:10-2.7.
 
To file, visit the Division’s Web site, www.NJCivilRights.org, and follow the MDRR link. This year, in order to improve the accuracy of reports, your submission will be checked for missing information and mistakes in calculations.  To simplify the online filing process, a 2008 Multiple Dwelling Report Worksheet will be available for downloading.
 
This worksheet is designated to assist you in collecting the required information needed to properly complete the online form.  Submission of the worksheet by mail or fax does not satisfy regulatory requirements for online filing.  You can begin filing your online report commencing January 1, 2009. 

When the government takes aim at private property to be taken for some public purpose, more often than not any resulting litigation is a contest over how much the property owner should be paid, rather than whether the exercise of the power of eminent domain was appropriate in the first place.

From the landowner’s standpoint, it is important to realize that adequate compensation is not determined simply on the basis of the current use of the property. Instead, the landowner is entitled to the value of the property based on its “ highest and best” use (whether that use already exists or is only in the eye of a developer), so long as such a potential use is not too speculative or otherwise foreclosed by applicable laws and regulations. A landowner is entitled to the value of the property based on its “highest and best” use, whether that use already exists or is only in the eye of a developer.

The importance to a property owner of negotiating compensation on the basis of a best-case, but realistic, development scenario for the property is illustrated by a recent case in which the owner of a vacant, 22,000-square-foot lot settled with a town for compensation in an amount that was about 27 times higher than the amount initially offered by the town.

The lot was zoned for residential use, although at the time of the condemnation action the owner had no building or development plans. Appraisers hired by the town offered an opinion that the vacant lot’s best use was only as open space, or as a buffer for an abutting lot. They reasoned that compliance with the town’s lot area and frontage requirements, as well as with its road standards for improving the dirt road on which the lot was located, would be so burdensome as to make any development of the property prohibitively expensive. They also indicated that extensive development costs would preclude development even if the lot was considered to have grandfathered status that would protect it from certain town requirements.

For its part, the landowner retained experts who opined that the lot was, in fact, suitable for residential purposes and should be valued as such when arriving at a compensation figure for the taking. As the town’s experts had noted, there were various requirements on the books that, in theory, could be costly to comply with. However, an examination of past rulings by the town’s zoning and conservation officials showed that the lot was likely to be exempted from some of the requirements. Moreover, improvement of the dirt road, which would have been an especially big-ticket item, was not likely to be required.

Both sides were necessarily looking into the future to some extent, but the landowner was able to depict a scenario for the lot that was optimistic enough to bring about a favorable monetary settlement with the town.

By Christopher J. Hanlon, Esq.

The new Predatory Towing Act which became effective October 18, 2008 prohibits non-consensual towing, including towing of motor vehicles from private properties (your community) without the consent of the owner or operator of the vehicle, except in compliance with the Act.

 The Act requires either the consent of the vehicle owner (which consent might be secured in a lease or rules and regulations) or towing only after the posting of a sign “in a conspicuous place at all vehicular entrances to the property. . .no smaller than 36” high and 36” wide,” which lists all of the following:

1. The purpose for which parking is authorized;
2. That unauthorized parking is prohibited and no authorized vehicles will be towed at the owner’s expense;
3. The name, address and telephone number of the towing company;
4. The charge for towing which will not exceed the fee specified in the tariff which is on file with the Director (filed there by the towing contractor) for both the towing and storage of the towed motor vehicle; and
5. The street address of the storage facility where the towed vehicles can be redeemed by payment of the posted charges and times when redemption is possible.

In addition, no towing company may remove the motor vehicle without the written authorization of the property owner (or presumably an authorized representative) who must be present at the time of removal.

It is recommended that each lease now contain a generic authorization for towing of any car owned by any tenant who signs a lease.  Since the consent must be provided by the vehicle owner, it would also be advisable to have a consent signed by any authorized occupant.  However, lacking any such signed consent from any other person who might own a car parked on your property, considering the likelihood that such signatures might not be obtained from guests or other visitors, and the possible uncertainty concerning vehicle ownership under any circumstance, any property owner who wishes to maintain the option of towing unauthorized vehicles or vehicles parked in unauthorized areas from the premises (as opposed to enforcing parking regulations through eviction measures) should comply with the law by hanging appropriate the sign, which is in compliance with the guidelines set forth above where required by the law.

For more information about New Jersey’s Predatory Towing Act, please contact Christopher J. Hanlon at chanlon@hnlawfirm.com.

 Creating and Terminating Joint Tenancies in Real Estate

Several issues arise when a non-citizen spouse owns real estate jointly with a citizen spouse.  The rules governing the creation and termination of joint tenancies in real estate where one or both spouses are non-citizens are complex.  This section deals with tenancies established after July 13, 1988.  Different rules apply for different time periods before that date.
                                                                                               
(A)  The Portion of the Jointly-Owned Real Estate Is Includable in the Estate of the First Spouse to Die
 
Since 1988 the I.R.S. has followed a contribution rule.  Under the contribution rule, upon the death of joint property owner, his or her estate will include that portion of the property attributable to the portion of the original purchase price and cost of capital additions supplied by the decedent, over the total cost of acquisition and capital additions.[1] The burden of proof with respect to contribution is on the executor to show that the surviving joint tenant furnish some portion of the consideration or that the property was acquired by the decedent and the other joint owner by gift, bequest, devise or inheritance.[2] In community property states, each spouse is considered to have supplied half of the consideration.  The community property rules supersede the contribution rule.
 
(B)  Real Estate with a Situs Outside the United States
 
If the decedent is a non-U.S. domiciliary, his or her U.S. taxable estate does not include property with a situs outside the U.S.[3]  
 
If the decedent’s spouse is a U.S. citizen or domiciliary, his gross estate includes the value of all property owned at death regardless of situs.[4] The contribution rule would apply for all real estate, including that with a=2 0situs outside the U.S., if the surviving spouse of a U.S. domiciliary is a non-citizen.  However, if the surviving spouse is a U.S. citizen, the spousal joint tenancy rule would apply.[5]
 
(C)  Creation of Joint Tenancy or Tenancy by the Entirety
 
The creation of a joint tenancy or tenancy by the entirety in real estate, as well as any additions to the value of the tenancy in the form of improvements, reductions of indebtedness, or otherwise, is not deemed to be a transfer of property for gift tax purposes, regardless of the proportion of the consideration furnished by each spouse, provided the creation of the tenancy would otherwise be a gift to a non-citizen donee spouse.  If the donee spouse is a U.S. citizen, establishment of the joint tenancy is treated as a gift within the unlimited marital deduction. 
 
(D)  Termination of Joint Tenancy or Tenancy by the Entirety
 
If a joint tenancy or tenancy by the entirety is later terminated other than by the death of one spouse, the spouse is deemed to have made a gift to the extent that the proportion of the total consideration furnished by the spouse, multiplied by the proceeds of the termination, exceeds the value of the proceeds of termination received by the spouse.[6] In other words, there is a gift to the extent that one spouse receives less than his or her proportionate share of the proceeds based on the percentage of consideration each spouse contributed toward the original purchase price, plus improvements or reductions of indebtedness.  Therefore, to the extent that upon termination the donee spouse simply receives back his or her proportionate share, there is no gift.  If the non-citizen spouse receives more than his or her proportionate share, then there is a gift.
 
If the joint tenancy or tenancy by the entirety is terminated by death, the contribution rule will apply if the surviving spouse is a non-citizen.  The contribution rule does not apply if the surviving spouse is a citizen.

            [1]I.R.C. §§ 2040(a), 2040(b) and Treas. Reg. 20.2040-1(a)(2).
            [2]Treas. Reg. 20.2056A-8(a)(1) and 20.2040-1(a)(2).
            [3]I.R.C. § 2103.
            [4]I.R.C. § 2101.
            [5]Treas. Reg. 20.2056A-8(a)(1).
            [6]Treas. Reg. 25.2523(I).2(b)(2)(I).

Don’t assume knowledge of a violation of a lease provision will allow you to avoid eviction.  A recent NJ decision involving a commercial landlord and tenant is significant, in part, because it originates from the Appellate Division and therefore it is binding statewide.   The Court considered a judgment entered by the lower court for possession in favor of the landlord.   The lease specifically prohibited the tenant from assigning or subletting any portion of its space and the adjacent exterior parking space without the written consent of the landlord.   The landlord alleged that the tenant subleased part of its space to an unrelated third party business without its knowledge or consent.   The tenant alleged that the landlord knew that the third party was an unrelated business co-occupying the space since the beginning of the lease and therefore, was chargeable with knowledge of the lease and thereby waived the enforceability of the “no-subleasing or assignment” provision in the lease.  The Court ruled (based on the facts of the case), that the landlord was entitled to evict the tenant for a material breach of the lease by failing to get his permission to sublease or assign this space.  

This case stands for the proposition that if a lease requires that the tenant or landlord give notice or perform an affirmative obligation in writing, each side better be able to prove that written notice was given to other.

For more information on this decision, contact Christopher Hanlon at chanlon@hnlawfirm.com.

The New Jersey Appellate Division in an unpublished decision, Cesar S. Arredondo v. Nersy Pujols, Docket No. A-5459-05T25459-05T2, ruled that breaches of both of a lease provision and a New Jersey statute for failing to obtain municipal permits before commencing construction work were NOT grounds for evicting a commercial tenant.  Although very fact specific to a landlord with apparently “unclean hands”, this decision highlights pitfalls that can beset a landlord in the New Jersey eviction process.

Cannot Evict for “Minor” Breaches (No Permits, No Insurance, Sidewalk Sales, Etc.)

The Appellate Division agreed with the trial court on the insurance issue and the landlord’s inconsistent testimony.  However, the Appellate Division held that the breach was “not material” to warrant the tenant’s forfeiture of his leasehold interest. The Appellate Division noted that the New Jersey statute specifically provides grounds for an eviction where there is a “…violation of such covenants or agreements” of the lease. See N.J.S.A. 2A:18-53.  However, before a judgment may be entered, the landlord must establish the breach. 

Citing New Jersey case law, the Appellate Division held an eviction based on a “forfeiture” is deemed a penalty for failing to do a particular thing.  In New Jersey, the law does not favor forfeitures and requires a trial court to strictly review the provisions of the lease that a landlord seeks to forfeit the tenant’s interest, resolving any ambiguous language in favor of the tenant.

Based on the testimony and review of the lease, the Appellate Division held the breach was a minor deviation of the lease terms.  The court held that the work was undertaken under the direct order of the plaintiff and done by an independent contractor.  Further, all work was done in a workman-like fashion and that pursuant to the Jersey City inspector, the defendant could retroactively cure any of the code violations by obtaining a permit. 

Concerns for Landlords When Instituting Eviction Action Payment Defaults

This unpublished decision raises a number of pitfalls for commercial landlords. In this case, the landlord clearly failed to submit the proper proofs.  Before instituting an action to evict a tenant, landlords should consider a number is issues including:

1)     What proofs do I have?  In this case, the landlord had serious inconsistent statement, whereas the tenant’s testimony was not questioned.  Further, the tenant had two additional witnesses to prove his case, one being a city electrical inspector; and

2)     Is the Breach “Material”?  Here, failure to obtain permits was not “material”.  However, would that have changed if what the landlord was cited for resulted in a fine or penalty from the municipality?

3)     Can the Breach be Remedied before Trial?  Here, the alleged breach of the lease became a non-issue because it was remedied prior to trial. What other breaches can be remedied?

Strategic Use of Eviction Proceedings

This and other recent decisions by the Appellate Division raise pitfalls for commercial landlords in eviction proceedings. Landlords may think to strategically use the eviction process as a way in which to make the tenants become compliant with the lease.  To lessen the legal costs, landlords should take care to place in their lease that the tenant is required to pay the landlord’s attorney fees. 

In the case discussed, although an eviction did not occur, the act of taking the case to trial precipitated the tenant to obtain the proper permits and get insurance.  However, if a landlord wishes to actually evict the tenant, it is extremely important to sit down with your attorney ascertain “minor” or technical breaches.

For more information on evictions or other commercial lease issues, please feel free to contact Christopher J. Hanlon at chanlon@hnlawfirm.com, Phone (732) 863-9900 Ext. 109.