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Lindeman v. Mulligan

A-4757-07T2 (N.J. Super. App. Div. 2009) (Unpublished)

LEASES; AMENDMENTS — Even though a lease states that it can only be changed by a writing signed by the parties, the parties may still amend the lease by a later agreement made orally or by conduct objectively manifesting a new understanding.

A one-year lease provided that the rent paid by the tenant would be credited to the purchase price in the event the tenants agreed to purchase the house. In addition, since the kitchen was in poor condition at the beginning of the tenancy, the tenants made improvements to the kitchen. The tenant claimed it had the owner’s consent to make such improvements, and believed that the improvements were going to either be offset against the sale price or reimbursed at the end of the lease term. Before the improvements were completed, the tenant decided not to purchase the premises, proposing instead that the landlord allow the tenant to stay another six months with a rent credit to defray the cost of the kitchen improvements. The landlord refused the request and denied having any discussions with the tenant with regard to the improvements. She did acknowledge that, after tenants decided not to purchase the premises, she prepared a website to advertise the house. The website advertised the new kitchen. When the landlord refused to pay for the kitchen, the tenant sued.

The lower court ruled in favor of the tenant, finding the landlord’s testimony to be not credible. It believed that she consented to the improvements with the understanding that some form of credit would be given tenant. The lower court held that the landlord had a “quasi-contractual” liability for the costs of the materials, but denied the tenant’s claim for compensation for his own labor in installing the improvements. The landlord appealed, claiming that the agreement regarding the installation was oral, and not written, and thus not enforceable.

The Appellate Division affirmed, rejecting the argument that the parol evidence rule barred the tenant from presenting evidence relating to his oral agreement with the landlord relating to the installation of the improvements. It noted that the parol evidence rule only bars evidence of prior or contemporaneous agreements to alter the term of an integrated written agreement, but does not apply to oral agreements made after the execution of an agreement. Since the discussions relating to the improvements occurred subsequent to the date the lease was executed, the parol evidence rule did not bar the consideration of such evidence. The Court also rejected the landlord’s argument that the Statute of Frauds barred the tenants from presenting evidence relating to the oral agreement because an agreement pertaining to the installation of improvements did not constitute an agreement to transfer an interest in real estate within the intent of the statute. The Court also rejected the landlord’s contention that the evidence was barred by a lease provision that stated that the lease could only be changed by a writing signed by the parties. It found that the provision did not disable the parties from amending the contract by a later agreement made orally or by conduct objectively manifesting a new understanding. Finally, the Court ruled that the evidence presented at trial was sufficient to warrant the imposition of quasi-contractual liability because the landlord would be unjustly enriched if it did not reimburse the tenant for the cost of the materials to construct the kitchen.


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