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Raven Associates-Toms River v. Holualoa Toms River, LLC

A-0691-07T1 (N.J. Super. App. Div. 2010) (Unpublished)

LEASES — Where a property is commonly owned and tenants on two sides of the property are given rights to utilize a pylon sign on one side of the property, that right will continue even after the land is subdivided and then held by two separate owners.

Commercial tenants in two adjacent buildings, located on two contiguous lots, contested the use of a large pylon sign positioned at the entrance to a shopping center. The sign was on the particular lot that had one building entirely rented by a single tenant. The sign, however, was being used by several other tenants whose premises were in the building located on the other lot. The second building and lot contained many subtenants who subleased their respective spaces under an original lease executed by a supermarket. The sign, a free standing structure, displayed marquees for all these tenants and had separate electric service for each. The two contiguous lots had been jointly owned, and while under this joint ownership, each lot was subject to leases granting rights to the tenants of both lots to install, at their own cost and expense, their respective logos on the pylon sign. The several tenants asserted rights to the sign from the supermarket which provided that the supermarket could erect its logo on the sign as well as others at the location.

That supermarket lease was in effect at the time the sole tenant contested the use of the sign. The dispute arose out of sign maintenance issues between all tenants. By the time of suit, the two lots were separately owned. The tenant on its own lot asserted that it had the exclusive right to use the sign. The tenants on the other lot asserted that they held their interests under the supermarket’s lease.

The tenant on its own lot filed suit seeking sole possession of the sign as part of its leasehold. On summary judgment, the lower court concluded that the tenants in the second building also held a leasehold interest in the sign, even though it was physically located on the adjacent tract of land rented by that sole tenant. The court held that those tenants derived their rights from the existing overlease which permitted the supermarket to use the sign. The sole tenant appealed this determination.

The Appellate Division affirmed, finding that the tenant on its own lot did not submit evidence supporting its exclusivity claims over the sign and did not state why the original lease’s language did not define the other tenants’ rights to the sign. The Court found that the language of both relevant leases, taken together, contained clear and unambiguous language that granted rights to the several tenants to have their businesses included on the sign.

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