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Korman Suites at Willow Shores v. Kelsch Associates

372 N.J. Super. 161, 855 A.2d 642 (Law. Div. 2004)

LEASES—Absent an express provision to the contrary in its lease, an organization that leases residential property, as the tenant, for use by disabled adults cannot be evicted if, despite reasonable diligence by the organization, one of its clients damages the landlord’s property, but the organization, as tenant must pay for the damage.

A state-funded organization provided residential placement for developmentally disabled adults by entering into leases with landlords on behalf of the organization’s clients. It entered into such leases with a particular landlord for multiple units. One disabled client, without the knowledge of the assistance organization, allegedly started a fire causing damage to one of the rental units. After conducting its own investigation, the organization removed the individual from the apartment and paid the landlord for the damages. Regardless, the landlord sent a Notice of Termination, calling for the lease to be terminated at the end of the year. The notice said that the reason for the termination was because of the destruction of the landlord’s property.

During the eviction trial, the landlord abandoned its position that the lease had been violated, and argued solely that the organization, as tenant, willfully or by reason of gross negligence caused or allowed destruction to the premises. The Court noted that the disabled individual was his “own guardian,” and the organization was not. Under the arrangement between the organization and the landlord, the developmentally disabled persons were not parties to the residential lease, are not intended to be considered tenants for the purposes of removal actions in the context of state funded residential placement programs. The disabled individual did not sign the lease nor did he have any relationship with the landlord. The landlord’s only witness testified that she was the person who handled the lease transaction, and other than understanding that the tenant would be having various individuals living in the units, there was no discussion as to the character of the individual occupants. She asked no questions about the organization, and did not even ask the names of the residents who would occupy the units.

The Court held that the disabled individual who had caused the fire could best be described as a “permitted occupant” under the lease. Therefore, since a “permitted occupant” cannot be the subject of an action for possession, the landlord had the burden to demonstrate that the organization, as the actual tenant, willfully or by reason of gross negligence caused or allowed destruction to the premises. According to the Court, the landlord presented no evidence that the organization knew or could have known that its client was going to damage the premises. Even though the disabled individual admitted starting the fire, the landlord could not succeed without showing the tenant’s knowledge or gross negligence.

The landlord argued that it was the organization’s duty to make sure that the individuals placed in the unit would not endanger the health and welfare of other residents. In response, the organization provided evidence showing that the individual who had started the fire had been screened by a “team” and was determined to be able to reside alone without twenty-four hour supervision. The landlord offered no expert or other evidence of the nature and breach of a duty to the landlord. It failed to produce evidence as to what the duty was, or factually how that duty was breached. There was no evidence presented as to what the organization could have done to prevent the independent actions of the individual.

In addition, the Court found that it was the Legislature’s policy to provide for the protection of the developmentally disabled. If the Court had decided to terminate the lease, in effect, it would have prevented the organization from housing a different disabled person in the apartment. Evicting the organization because of the actions of a disabled individual who had subsequently been removed, absent a showing that the individual’s acts were preventable by the organization, would make it even more difficult to find adequate housing for developmentally disabled persons. In fact, such a decision would be inconsistent with the Anti-Eviction Act. For those reasons, the Court dismissed the landlord’s complaint.

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