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NJ Commercial Tenancies: The Form Lease & Compliance with “All Laws”

Many form leases (from sites like LegalZoom or RocketLawyer) contain stock terms designed to apply to most landlord-tenant relationships. Unfortunately, New Jersey landlord-tenant law and the facts of a commercial landlord-tenant relationship rarely lend themselves to “canned” contract terms. One overly (and rarely correctly) used contract term requires the tenant to comply with “all laws.” The sentence: “The tenant shall comply with all laws” begs the question: When has the tenant failed to comply with all laws? In a recent case, the Firm successfully defended a commercial tenant from a landlord’s aggressive interpretation of the “comply with all laws” requirement.

The Commercial Tenant’s lease required that the Tenant “take good care of the premises,” not use the premises for any “purpose deemed unlawful, disreputable, or extra hazardous…” and “promptly comply with all laws.” Armed with these contract terms, the Commercial Landlord asked the City inspectors to cite the tenant based on the Landlord’s engineer’s opinion that the tenant’s dry cleaning equipment violated environmental standards. Once alerted to this opinion, the Tenant stopped using the dry cleaning equipment. Ultimately, the city cited the Tenant for certain fire code violations. After the tenant appealed the violations, the City dropped them. Undeterred, the Landlord continued to seek eviction.

The Landlord alleged that because the City cited the Tenant for fire code violations, the Tenant had failed to comply with “all laws.” According to the Landlord, even though the violations were ultimately dismissed, the Tenant had failed to comply the moment the notices of violation were issued. On appeal, the Firm defended the tenant and raised the argument the tenant had not violated any laws until the appeal was complete. The Appellate Division agreed.

Relying on State v. Kouvatas, 292 N.J. Super. 417, 423, (App. Div. 1996), the Firm argued that since the Tenant had a due process right to a “fair hearing as to whether [she] was in violation of the statute and regulations involved…” she could not be punished by the Landlord for unsettled allegations of violations. After all, the notice of violation is only the City’s opinion. It becomes final only if uncontested or upheld on appeal. To this end, the Appellate Division held: “the failure to satisfy the requirements imposed by the notice of violation…does not itself become a violation…” 845 Bergen Avenue Partnership v. Bu Weal Yang t/a Marcel Cleaners, A-1234-13T1.
In the end, the Landlord’s eviction case was dismissed. The commercial tenant continues to operate her business. This case is the sum of poor lease drafting and rigid reliance on bad terms. If the Landlord had a serious concern about safety and believed that a notice of violation was enough to prove wrongdoing, the lease could have been drafted to say just that. For example, the lease could have required the tenant take certain steps upon receiving a notice of violation or have allowed the landlord to do the same (regardless of the result of any appeal). Without such specificity, the Landlord could not succeed.

Offit Kurman LLC practices landlord tenant law throughout New Jersey assisting landlords and tenants in resolving disputes and 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.