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Barrick v. State of New Jersey

A-1848-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

LEASES; GOVERNMENT—Under the Contractual Liability Act, a landlord cannot collect unbilled tax obligations from a state agency tenant if those charges are not billed within ninety days of the claim’s accrual.

A landlord leased office space to a state agency. The lease contained a tax escalation clause that required the state, as tenant, to pay, as additional rent, an amount equal to the difference between the taxes in the lease year and the tax base year. The landlord did not enforce the tax escalation clause for the first seven years of the lease. It finally sent a notice to the tenant demanding reimbursement. The state required the tenant to submit copies of the tax bills. The landlord submitted the required documentation. The state then denied the landlord’s request for reimbursement, citing the limitation provisions of the Contractual Liability Act. The landlord then notified the state of its intent to file suit for reimbursement for the tax escalation for the prior years and for the current year. Pursuant to the Contractual Liability Act, the landlord was required to notify the state of its claim for tax reimbursement within ninety days of the claim’s accrual. In determining the various accrual dates for the landlord’s claims, the Appellate Division used the “installment contract approach.” Under that approach, the statute of limitations for filing a claim starts to run each year on the date each tax reimbursement became due because the state was required, on a yearly basis, to pay the tax reimbursement as additional rent. The landlord had a claim against the state each year and was required to provide the state with ninety days notice from the date the reimbursement was due before suing. The landlord, by failing to pursue the tax reimbursement for seven years, waived its right to those payments.

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