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Hastings v. Chadwick-Greene Agency

A-3668-03T1 (N.J. Super. App. Div. 2005) (Unpublished)

LEASES; HOLDOVER—When a commercial tenant remains in possession of its premises after the expiration of the lease and the landlord elects to continue the tenancy on a month-to-month basis, the tenant is still required to abide by all of the terms of the lease.

A technology tenant entered into a lease agreement to rent office space in a commercial building. The lease provided that, in addition to rent, the tenant was to pay for real estate taxes, insurance premiums, and utilities. If the tenant failed to pay any of these charges, the landlord had the right to terminate the lease and take possession of the premises. The lease further provided that if the tenant remained in possession of the premises after the expiration of the term, the landlord had the option to deem the tenant’s actions a holdover or could continue the tenant’s tenancy on a month-to-month basis. The tenant paid rent on time during the initial term of the lease. At the expiration of the initial term, the tenant executed two lease renewal agreements. At the expiration of the last renewal term, the tenant remained in possession of the premises, and the landlord opted to continue the tenant’s tenancy on a month-to-month basis. The tenant paid rent and other charges for the next nineteen months during which it subleased a portion of the premises. The tenant then defaulted on its rent obligation and the landlord sent a letter to the tenant requesting the payment of all rental arrears. The tenant did not respond to the letter, and as a result the landlord filed a complaint against the tenant seeking possession of the premises and damages for unpaid rent and other charges. At the same time, the tenant filed a complaint against the property manager and a subtenant, asserting that the parties interfered with its peaceful possession of the premises. The lower court consolidated the two matters, and the property manager moved for summary judgment. The lower court ruled that the tenant had no defense against the landlord’s claim for possession and granted possession to the landlord. It then awarded damages to the landlord in the amount of unpaid rent and other outstanding charges. It further dismissed the tenant’s complaint for utility costs finding that it was without merit because pursuant to the lease, the tenant was responsible for the utilities. It held that at the time the complaint was filed, the tenant was leasing on a month-to-month basis, and therefore was still required to follow the terms of the lease, including the provision regarding utilities. For the above reasons, the lower court granted summary judgment in favor of the landlord. The tenant appealed the lower court’s determination, asserting that the lower court erred in awarding summary judgment because it had presented facts proving that it was denied peaceful possession of the premises. It further contended that the lower court erred in not ruling that arbitration was mandatory pursuant to the lease.

The Appellate Division affirmed the lower court’s determination. It found that the lease agreement did contain a mandatory arbitration clause, but that the clause was effectively waived as a defense when the parties filed their respective complaints. It further found that in light of the record, applicable law, and arguments presented by counsel, the lower court properly granted summary judgment for the landlord because the tenant had not presented any evidence which raised a genuine issue of material fact.


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