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34 Label Street Associates v. R.C. Search Co., Inc.

A-4556-08T3 (N.J. Super. App. Div. 2010) (Unpublished)

LANDLORD-TENANT; EVICTION — If an eviction complaint is based on the tenant’s unlawfully holding over after the expiration of a lease, the issue as to the correct amount of rent to be paid under the lease is irrelevant.

A tenant rented commercial space under a written lease. After the lease term expired, the tenancy converted to a month-to-month lease in accordance with the lease’s terms. The landlord sent the tenant a thirty-day notice to quit and demanded possession of the leased premises. When the tenant failed to vacate the premises, the landlord filed an eviction complaint based on the tenant’s holding over after the lease’s termination.

The tenant moved to have the case transferred from the Landlord-Tenant Court to the Law Division. The tenant argued that it had been overcharged. The tenant had been the subtenant of the assignee of the original tenant. It entered into its own lease with the landlord on the same terms as those in the prime lease. It claimed that the rent payable under the original lease included the repayment of a loan from the landlord to the original tenant, which was fully paid off. Therefore, the tenant argued that the rent should have been adjusted downward once the loan was repaid, that it had therefore overpaid the rent, and that the parties had agreed to an oral extension of the lease until the credit was used up. The landlord however, disputed the tenant’s claim that the parties agreed to an extension. The landlord argued that once the prior tenant’s loan was paid off, the rent was renegotiated to market rent.

The lower court found in favor of the landlord, but stayed the eviction pending appeal. The Appellate Division affirmed, agreeing with the lower court’s finding that the case did not warrant removal to the Law Division and that eviction was warranted. The Court noted that even if there was a dispute about the rent owed, the landlord had not filed an eviction complaint for nonpayment of rent. It filed an eviction complaint based on the tenant’s unlawfully holding over after the expiration of the lease. In a commercial lease, once the lease term expires, the tenant becomes a month-to-month tenant. The lease may be terminated upon thirty days’ written notice to the tenant and afterwards the tenant may be evicted. In an eviction based on a holdover, a dispute over rent payment and credits is irrelevant. The collateral dispute over rent owed belonged in the Law Division, but it was not pertinent to the eviction of a holdover commercial tenant.

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