To: New Jersey Law Revision Commission From: Staff Re: Redraft of grounds for eviction Landlord Tenant Revision Date: February 8, 2010 MEMORANDUM

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1 To: New Jersey Law Revision Commission From: Staff Re: Redraft of grounds for eviction Landlord Tenant Revision Date: February 8, 2010 MEMORANDUM Staff has revised the Grounds for Eviction, which are attached hereto for review. In accordance with the direction of the Commission at January s meeting, Staff changed the order of the provisions and restored the references to holdovers and holding over. Staff also discusses issues raised at that meeting, including whether the grounds set forth in the Anti-Eviction Act, which now apply to residential rental premises other than those exempted, should apply to the exempted residential premises and to commercial premises. An explanation of Staff s analysis is set forth below. I. Whether Anti-Eviction Act grounds for eviction should apply to residential premises currently exempted from the Anti-Eviction Act and nonresidential rental premises. At the January meeting, the Commission directed Staff to make a recommendation regarding whether the grounds for eviction set forth in the Anti-Eviction Act (now set forth in section LT: 5-1.2) should be made applicable to: A. one and two family owner-occupied rental premises; B. other residential premises not covered by the Anti-Eviction Act; as well as C. nonresidential (commercial) rental premises. As will be discussed below, Staff recommends that the grounds for eviction set forth in the Anti-Eviction Act, that now apply to residential rental premises other than those specifically excluded in current law, should not be carried over in their entirety to either A, B or C above. Some of the Anti-Eviction Act grounds, however, should apply to both categories A and B above, but not to C, and some of the current grounds should apply to C for the reasons discussed. A. Owner-occupied premises. The Anti-Eviction Act contains an express exception for owner-occupied premises with not more than two rental units. The definition of owner-occupied premises for purposes of this revision with the progression of the project and will be revisited when a Definitions Chapter is prepared 1. Generally, however, for purposes of 1 For purposes of the Security Deposits Chapter, owner-occupied premises have been defined as rental premises that may consist of one or more buildings containing more than one residential unit, at least one unit of which is legally occupied by a landlord as the landlord s place of residence. However, for purposes of the Landlord Registration Chapter, and based on source provisions specific to landlord registration, the Commission has defined owner-occupied premises as premises personally occupied as the primary residence of the owner or a member of the owner s household if the owner has temporarily taken lodging elsewhere. Primary residence means the residence where the owner resides a majority of the time. Temporarily means for a period lasting no more than 90 days when the owner either already 1

2 the Anti-Eviction Act, the owner-occupant must reside in one residential unit and there must be not more than two additional units that are rented for a total of no more than three units. The units may be in separate buildings upon the same parcel of land. See Sheehan v. Rocco, 243 N.J. Super. 673 (Law Div. 1990), cited with approval by the Appellate Division in Surace v. Pappachristou, 244 N.J.Super. 70, 73 (1990) 2 and in at least one case, a court held that one of the units may be used for commercial purposes. See Couey v. Sterling, 224 N.J. Super. 581 (Law Div. 1988). 3 Relying upon the Statements to the Assembly Bill and other indicia of the legislative intent of the Act, courts have concluded that although the Legislature intended, in a market critically short of rental housing, to limit the causes for which tenants may be evicted and forced to find new living quarters, there would be times when strict compliance would lead to injustices. Recognizing the unfairness of forcing resident landlords to live with tenants whom they found to be unfavorable, the legislators added the owner-occupied premises exception to the act. See Fresco v. Policastro, 186 N.J.Super. 204 (D. Ct. Essex Cty 1982), cited approvingly in Couey v. Sterling, 224 N.J.Super. 581 (Law Div. 1988) and Lewis v. Traynham, 234 N.J. Super. 121 (Law Div. 1989) (emphasis added.) The Anti-Eviction Act also provides as a good cause for eviction (see current 2A: (l)(3) and revised section LT:5-1.2i.(3)) the removal of the tenant when the owner of a building of three residential units or less seeks to personally occupy a unit or has contracted to sell a unit to a buyer who wishes to personally occupy the unit and the contract of sale requires the unit be vacant at time of closing of title. Courts have referred to the complementary purpose achieved by both 2A: (l)(3), which provides a ground for eviction in order to, in effect, create owner-occupied rental premises, and the language of 2A: that sets forth the very exemption from the Act of owner-occupied premises. In Durruthy v. Brunert, 228 N.J. Super. 199, 202 (App. Div. 1988), cert. denied, 114 N.J. 482 (1989), the Appellate Division illustrated this point, concluding that: In defining the rights of residential tenants, however, the Legislature also assured that owners would have certain rights to enjoy their properties. The Act provides not only that good cause can exist where an owner seeks to personally occupy a residential unit but also that good cause requirements are not applicable with respect to owner-occupied premises with more than two maintains a primary residence or intends to establish a primary residence and does so within 90 days after taking lodging elsewhere. 2 The Court in Surace, however, (endorsing the analysis of Judge Fast in two earlier Law Division cases) held that a landlord, having taken title to a five residential unit property, not previously occupied by the owner but fully occupied by tenants, and knowing that the tenants were at that time protected by the Anti- Eviction Act, could not remove the protection of the Act by eliminating just enough rental units from the market to render the premises exempt from the Act s good cause provisions. The landlord had moved into a basement unit that became vacant soon after the purchase and then removed the partition between the basement unit and a second basement unit that had become vacant after the landlord paid the tenant a moving allowance. 3 The Law Division held in Couey that the owner-occupied exception to the law may include an owneroccupant who resides in a mixed use building containing two other rental units, one of which is a commercial unit. 2

3 rental units. [citation omitted]. The purpose of those complementary provisions is evident: to assure that the owner of a building with a small number of residential units can reside in his own building and have some control over the persons with whom he lives. See also Lewis v. Traynham, 234 N.J. Super. 121 (Law Div. 1989), and Sabato v. Sabato, 135 N.J. Super. 158 (1975) (predates Durruthy and was the impetus for the amendment of the Anti-Eviction Act to include the ground discussed above.) In Sabato, the court called on the legislature to amend the Anti-Eviction Act to provide that a landlord of a building with a small number of units who seeks to occupy the building for personal use, is able to reside in the building and have the same control over it as the landlord who is exempt from the Act because the premises are already owner-occupied. See also Bradley v. Rapp, 132 N.J. Super. 429 (App. Div. 1975) (per curiam). It is also important to note that the Anti-Eviction Act is drafted so as to limit the grounds for eviction, not expand them. The current language is that no tenant may be removed except upon establishment of one of the following grounds as good cause... (emphasis added.) Thus, although, as Judge Fast argues, the grounds for eviction set forth in 2A: are greater in number than those set forth in 2A:18-53, the language of 2A: prohibits eviction except upon those enumerated grounds. The language of Section 2A:18-53 is actually broader, providing the following cases where eviction may occur, one of which, notably, is the breach or violation of a lease governing the tenancy. The import of 2A:18-53 is to permit the landlord more discretion to evict. For these reasons, Staff recommends the following, which is reflected in the current attached draft of the proposed grounds for eviction: 1. Because of the express intent of the legislature to preserve an owner-occupant s ability to have some control over the person with whom he lives, the owner-occupant should continue to be able to evict a holdover tenant, as current law now provides. Or, in other words, a tenancy in owner-occupied premises should continue not to be perpetual Because a tenant in owner-occupied rental premises cannot hold over, those grounds for eviction from residential rental premises under the Anti-Eviction Act that exist only because of a residential tenant s right to holdover indefinitely should not be made applicable to owner-occupied rental premises. These include the grounds pertaining to the landlord or owner s desire to use the property for some personal purpose, or change the lease terms, which in current law cannot be accomplished until after the lease has ended; specifically: a. the right to permanently retire the building from residential use (LT:5-1.2f. (5)); b. the right to alter the terms and conditions of the lease by proposing reasonable changes of substance (LT:5-1.2f.(6)); 4 As the court stated in J.M.J. New Jersey Properties, Inc. v. Khuzam, 365 N.J.Super. 325, 332 (App. Div. 2004), The [Anti-Eviction] Act provides substantial protections to a residential tenant. [citations omitted]. Indeed, the effect of the Act is to create a perpetual tenancy, virtually a life interest in favor of a tenant of residential premises covered by the Act as to whom there is no statutory cause for eviction under N.J.S. 2A: [citations omitted.] 3

4 c. the right to convert the unit from the rental market to a condominium or cooperative (LT:5-1.2h.); and d. the right to personally occupy the unit or sell it to someone who seeks to personally occupy it (LT:5-1.2i.). The remainder of the Anti-Eviction Act grounds for eviction, however, should also apply to evictions from owner-occupied rental premises. 3. Finally, again, to give owner-occupants the control the Legislature intended, owner-occupants should be able to evict tenants who breach or violate the lease governing the tenancy, as is the current law (under 2A:18-53c.(4).). B. Rental premises for seasonal tenants or transient guests. Although the term seasonal tenants is defined in the current statute at 2A: , pertaining to a warrant of eviction, no definition exists in current 2A: Nor does a definition of transient guests appear anywhere in the statute. With regard to the application of the Anti-Eviction Act, courts have defined these terms on a case-by-case basis. For example, in Poroznoff v. Albert, 168 N.J. Super. 140 (App. Div. 1979) (per curiam), the Appellate Division determined that the assertion of the plaintiff that the room which he occupied at the YMCA, on a week-to-week basis, was his only residence and thus he should be protected by the Anti-Eviction Act, was insufficient to establish that plaintiff was not a transient guest who could be locked out of his room for nonpayment of rent without consequence. The court concluded similarly in Syria v. Lichtenstein, 1991 WL (App. Div. 1991) where the plaintiff was a week-to-week resident of a furnished, rented room in a rooming or boarding house, despite the fact that he had lodged there for six months and had no other residence. The court determined that plaintiff, who had withheld rent payments claiming habitability defects in the premises, was not entitled to the protections of the Anti-Eviction Act as the occupancy was tantamount to renting an individual room at a hotel, motel or established guest house, as a limited tenure occupancy...and no legislative intent [was found] to expand the protections of the Act to transient tenants residing in a single room without cooking or kitchen facilities solely on a week-to-week basis. In McNeill v. Estate of Lachman, 285 N.J. Super. 212 (App. Div. 1995) and Williams v. Alexander Hamilton Hotel, 249 N.J. Super. 481 (App. Div. 1991), the courts held that the plaintiffs were tenants and not transient guests for purposes of the Anti- Eviction Act protections. 5 5 In McNeill plaintiff resided in the Alexander Hamilton Hotel for about two years until he had to leave because of hotel renovations, then resumed occupancy there with the stated intention to remain, without a specific time frame, until he had enough money to move elsewhere. The court relied upon the regulations governing hotels and multiple dwellings to define the term transient as an occupancy for not more than 90 days by a person having a principal residence elsewhere. The court also looked to the Anti-Eviction Act s definition of permanent occupancy and case law regarding the definition of domicile, concluding that the plaintiff s hotel room was a permanent home or domicile for which he had acquired tenancy status. In Williams, the occupant lived in the hotel room for two years with family members who attended school and registered to vote based on their residence there. Interestingly, the court held that it was for the 4

5 These cases do not discuss the legislative intent behind the transient guest or seasonal tenant exception to the Anti-Eviction Act other than to cite to the express intent of the Act to address the then rental housing shortage. However, because of the very nature of a transient guest s occupancy, a reasonable guest should not have the same expectations of legal protections as a tenant in a permanent residence. For no other reason, Staff recommends that the grounds it proposes should be applied to owneroccupant evictions also should be applied to transient guest/seasonal tenant evictions. C. Premises occupied by disabled family members of owner. The Senate County and Municipal Government Committee Statement appearing with the Anti-Eviction Act explains that the assembly bill expanded the definition of who may evict under the State s anti-eviction law to address a specific situation where developmentally disabled persons related to family members or provided for in trusts prepared by them reside in residential rental premises with co-tenants. To accommodate the concern that members of the landlord s family who do not actually own the rental premises but permanently reside there because of a disability, are not prevented from evicting a co-tenant, the Assembly crafted the exception appearing at the beginning of the Anti-Eviction Act at 2A: (and now appearing at LT:5-1.3a.(3).) The statement provides that: The committee amended the bill to provide that the exemption from the good cause provisions of the anti-eviction law applies only to situations in which the developmentally disabled member of the immediate family of the owner permanently occupies the dwelling unit which is the subject of the exemption or occupies the dwelling unit which is being held in a trust established by a member of their immediate family. It further states that [i]t is not the committee s intent, in protecting tenants, to increase the vulnerability of developmentally disabled persons in independent living situations by removing an important means of redress if those living arrangements are unsatisfactory. Staff recommends retaining this exception to the Anti-Eviction Act in the new Chapter and that the grounds Staff proposes should be applied to owner-occupant rental premises also should be applied to rental premises for seasonal tenants or transient guests. D. Nonresidential rental premises. Although the Anti-Eviction Act clearly applies to residential rental premises only, Judge Fast has suggested that the grounds for eviction set forth in the Act should also be applicable to commercial (or nonresidential) rental premises. He has cited to the Supreme Court s decision in Housing Authority of Wildwood v. Hayward, 81 N.J. 311 (1979) to support his position. Legislature to decide whether occupancy of a hotel for any fixed duration of time (e.g. 90 days, six months or one year) should give rise to tenancy status, and we do not hold that the mere fact that some person has the intention to remain an indefinite period when he arrives, or in fact stays there for a particular period, gives rise to that status. See p

6 In Wildwood, the court, upon vacating the judgment for possession and warrant of removal because the tenants had not been given the opportunity to be heard in the district court, noted that even if the district court at that time had entered a judgment for possession on a finding that the tenants were in default, the tenants would have had (citing to N.J.S. 2A:18-55) until the close of the court day to pay the rent arrearages into court and have the proceedings dismissed. In a footnote, the court then explained that: The contention that N.J.S. 2A:18-55 no longer applies to residential tenants by virtue of the 1974 amendment to the statute... is lacking in merit. This amendment was designed to give residential tenants greater protection in summary dispossess cases than had been afforded them under N.J.S. 2A:18-53 now made inapplicable to such tenants. Obviously, the Legislature in adopting [the Anti-Eviction Act] did not intend to take away from residential tenants the substantial right given under N.J.S. 2A:18-55, in a summary dispossess action for nonpayment of rent, to pay the rent in arrears into court and have the proceedings discontinued. Respectfully, Staff does not believe that the corollary to this case is that corporations and other legal entities should be subject to eviction based on the expanded grounds set forth in 2A: and recommends the following: 1. Grounds pertaining to tenant conduct. Although there are some differences in language, which Staff feels should remain in the revision, many of the current grounds for eviction that appear in 2A:18-53 pertaining to tenant conduct in nonresidential tenancies, already mirror the grounds involving tenant conduct that appear in 2A: pertaining to residential tenancies. The grounds that already mirror the grounds in 2A: should be retained and Staff has drafted accordingly. However, the criminal conviction provisions set forth in section LT:5-1.2 c., d. and e. (in current 2A: n. through q) cannot, and should not, serve as grounds for eviction from nonresidential rental premises. A residential tenant may be evicted under the Anti-Eviction Act if convicted for either drug law violations; assault or terroristic threats against a landlord or family member or employee of a landlord; theft of the landlord s property, the leased premises or other tenants; harboring someone who does any of these acts; or if found liable in a civil proceeding for eviction based on such conduct, with certain exceptions. To provide these same grounds for eviction in a commercial setting against legal entities would make little sense. Corporate tenants should not be evicted based on the personal conduct of one of their employees or shareholders that is unrelated to the rental premises. Instead, Staff recommends that a ground be created to evict a tenant from nonresidential premises based on the actual use of the premises by a commercial tenant for illegal activities. So, for example, if a professional corporation uses its offices as an illegal drug distribution center, that use may be a basis for eviction. Such a provision now appears at section LT:5-1.4 h. Staff does agree with Judge Fast s proposal that a notice to cease requirement be imposed upon a landlord with regard to the ground for eviction pertaining to disorderly commercial tenants. The current Anti-Eviction Act provides that a notice to cease must be provided to any tenant who continues to be so disorderly as to destroy the peace and quiet of the other tenants or occupants living in the rental premises or surrounding 6

7 neighborhood. The notice to cease, however, is not now required in the current law for evictions under 2A: Staff has incorporated the requirement in section LT:5-1.4g. 2. Grounds pertaining to landlord use of property. The current statute covers two broad types of landlord use of the residential rental premises for which eviction is permissible. The first involves a landlord s estimation of the economic feasibility of continuing to rent out the building or the rental premises and permits a landlord to board up, retire, convert or make other use of the property in certain cases. In a commercial context, these issues would be addressed in the lease itself or under contract law. Staff does not believe that a landlord should be authorized by statute to evict a tenant from nonresidential rental premises because the landlord does not find it economically feasible any longer to rent out the premises, or the building, or correct a violation that would otherwise prevent the landlord from renting the premises. This covers most of section LT:5-1.2 f. and entire section LT:5-1.2h. The second type of landlord use pertains to the landlord s personal occupancy of the property. Even if a landlord could presumably seek to occupy an office building for his own use as an office, a landlord s desire to personally occupy the premises or to sell the premises to someone seeking to personally occupy them is a ground to evict under the Anti-Eviction Act only because it provides a legitimate means to cut off the residential rental premises tenant s right to holdover. The current law provides that the landlord must wait until the end of the lease before exercising the right to evict on these grounds. If there is no right to holdover, which is the case with nonresidential rental premises, then the landlord can just not renew the lease and these grounds become superfluous. (see sections LT:5-1.2i. and LT:5-1.2f. (6)). The only remaining ground that has not been discussed and is currently applicable to eviction from residential rental premises but not to eviction from nonresidential rental premises is section LT:5-1.2g., pertaining to the termination of the employment by the landlord of the tenant that is conditioned on the tenancy. Staff is not certain if this condition actually occurs in a nonresidential rental premises context, but if it does, the termination of the employment and consequent right to evict probably would be (and should be) addressed in the lease itself. II. Additional grounds for eviction under section LT: At the January meeting, Staff proposed two additional grounds for eviction from residential rental premises, as suggested by commenters. The first, set forth at section LT:5-1.2j., provided for eviction from residential premises if a tenancy that is subsidized by the United States government in any manner violates or is contrary to a federal law or regulation. The Commission considered this ground to be unnecessary as it was a clear consequence of state law and federal regulation. 7

8 The Commission determined that the second suggested ground, formerly set forth at section LT:5-1.3b. should be retained but drafted in a very restrictive manner. Staff seeks comment on its proposed revision of this section, which now appears at LT:5-1.4c. 8