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2014, the Year that Was: NJ Commercial Tenant Finally “Gets with the Program”

A NJ commercial landlord-tenant relationship can be challenging to manage. A commercial landlord must balance the benefit of having a rent paying tenant in a space that can be difficult to rent with the realities of the tenant’s behavior. In 2014, the Firm confronted this scenario: Pursue an eviction matter far enough to convince a commercial tenant to change his behavior while preserving the landlord-tenant relationship and rent payments to the Landlord.

In this case, Commercial Landlord purchased a multi-family building with residential units above a ground-floor commercial retail space. Since he inherited the tenant, the Commercial Landlord was bound by the Tenant’s lease with the prior landlord. Being stuck with this lease opened the door for problems between Commercial Landlord and his tenant.

The Tenant ran a deli which operated mostly in cash. Given the unpredictable cash flow, the Tenant paid the rent late, failed to pay late fees, did not carry liability insurance and did not pay rent increases. Since replacing the Tenant could be difficult, the Commercial Landlord needed a way to convince the Tenant to follow the lease while preserving the income stream.

New Jersey commercial-landlord tenant relationships are controlled by N.J.S.A. 2A:18-53 not the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 which protects only residential tenants. In general, N.J.S.A. 2A:18-53 provides for eviction when (a) a tenant holds over after the expiration of the lease term; (b) nonpayment of rent; (c) disorderly conduct; (d) damage to the premises; (e) violation of the landlord’s rules and regulations and (f) breach of the lease.

On behalf of the Commercial Landlord, the Firm served Notices to Cease on the tenant for (1) late payments and (2) failure to maintain liability insurance. Simultaneously, the Firm filed a landlord-tenant complaint seeking the Tenant’s eviction for unpaid late fees (as rent) and unpaid rent increase (as rent). Although the Tenant could “cure” the unpaid fees and rent increases portion, the Tenant could not “cure” a terminated tenancy if the Commercial Landlord served a Notice to Quit.

On the trial date, the Firm negotiated with the Tenant and his lawyer. While preserving the right to permanently evict the Tenant, the Firm made is clear that there was ample opportunity to resolve the matter. Faced with the reality of his conduct and the strength of the Commercial Landlord’s legal position, the Tenant acquiesced. The Firm amended the existing lease by Consent Judgment and required (a) timely rent payments; (b) complete payment of all outstanding late fees; (c) payment of the rent increase and (d) required the tenant to secure liability insurance. Though unhappy with the consequences, the Tenant understood his obligation and signed the agreement.

Since that time, the Tenant has paid his rent in full and on-time and has the required insurance. In the end, the Firm preserved the Commercial Landlord’s income stream while conforming the Tenant’s behavior to the strict letter of the lease.

Offit Kurman practices landlord tenant law throughout New Jersey assisting landlords and tenants in avoiding unnecessary and costly delays. The firm’s geographic practice area includes: New Jersey (Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County, Paterson, Passaic County, Bergen County). The Firm invites you to visit the “Promises” page for our new way of doing business.