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J.M.J. New Jersey Properties, Inc. v. Khuzam

365 N.J. Super. 325, 839 A.2d 102 (App. Div. 2004)

LANDLORD-TENANT; EVICTION—Giving a rent increase notice to a residential tenant after the landlord has already given an eighteen month notice to vacate based on retiring the property from residential use does not mean that the eighteen month notice needs to be resent nor that the eighteen month period begins again.

A residential landlord gave an eighteen month notice to his tenants to vacate their month-to-month leased premises because he intended to cease using the property for residential use. Eight months after giving that notice, the landlord sent the tenants a rent increase notice. The tenants accepted the increase and continued in occupancy. Then, they claimed a new tenancy had been created, nullifying the landlord’s initial notice to quit. The lower court agreed, but the Appellate Division reversed, holding that the term of the holdover tenancies was limited by the earlier notice terminating the tenant’s right to possession after eighteen months.

The primary focus of the appeal was the lower court’s holding that before the landlord could retire the premises from residential use, it would need to serve the tenants with a new eighteen-month notice. The lower court reasoned that after the tenants paid the increased rent, new tenancies were created, rendering void the prior eighteen-month notice. The Appellate Division agreed that new tenancies were created, but pointed out that, at the time of the original notices, each tenant had a month-to-month tenancy. Such a tenancy is a continuing relationship that remains unabated on its original terms until terminated by one of the parties. To increase the rent of a month-to-month tenant, a landlord must serve a notice to quit terminating the old tenancy and another notice offering a new tenancy at an increased rent. After receiving such a proper notice, if a tenant holds over, a new tenancy is created.

The lower court, based on this new tenancy, determined that a new eighteen-month notice would be necessary before the landlord could retire the premises from residential use. The Appellate Division found this interpretation to be too broad and not within the meaning of the Anti-Eviction Act (Act). The Act limits evictions of tenants to reasonable grounds on suitable notice. It provides a tenant with the right to remain in possession of the rented property until there is good cause to be removed. The Appellate Division concluded that the lower court’s ruling did an injustice to the landlord without providing additional benefit to the interests of the tenants. In looking at the Legislative intent of the Act, the Court found that no new eighteen-month basis notice was needed. Although a new tenancy was created, certain covenants and obligations of both parties continued from the old tenancy to the new. Furthermore, the notice of the rent increase specifically informed each tenant that the new tenancy would continue to be on a month-to-month basis until the date specified for eviction.

Although the Act was silent on this issue, the Court could conceive of no reason why the Legislature would have intended to preclude a landlord from receiving a rent increase just because it had previously notified the tenants it would be removing the premises from the residential market. A purpose of a notice to quit is to give a tenant time to decide whether to accept changes in the rental terms or to seek alternate living arrangements. The Court felt that the notice of a rent increase did not undermine this purpose. It did not force the tenants to surrender possession of the property prematurely, nor did it reduce the time afforded to the tenants to seek different living arrangements. The Court also felt it was significant that, in bold print, the actual notice reminded the tenants of the eviction date.

Additionally, a landlord should not be required to secure a rent increase only in return for giving up the right to enforce a previously served notice to remove the property from the residential market. Such a policy would dissuade a landlord from giving a tenant more than the minimum eighteen months notice. Furthermore, the landlord, being denied its right to an otherwise permissible increase could argue that he was being required to subsidize the housing needs of his tenants, which could be constitutionally challenged as not providing the landlord the ability to obtain a “just and reasonable” return on his investment.

The tenants pointed out that the Legislature permits landlord to request rent increases during the three-year notice period when converting a rental unit to a condominium, and argues that if the Legislature had intended to allow a rent increase to be requested in cases like the one before the court, it could have done so. The Court stated that this principle, the expressio unius doctrine, is simply an aid in determining Legislative intent, and is not a rule of law. Further, the Court was not persuaded that simply because the Legislature expressly gave a landlord who chose to convert its property into a condominium the right to increase the rent, the landlord in the case at hand could not. The Act must be strictly construed, and its language does not preclude a landlord from seeking a rent increase during the statutory eighteen-month notice period.

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