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Weichert Co. v. Nazmiyal & Sons, Inc.

A-2411-01T2 (N.J. Super. App. Div. 2002) (Unpublished)

LEASES; EVICTION; NOTICES— Even in a commercial lease, notices of default must be consistent and unequivocal, and in the case of habitual late payment of rent claims, a landlord’s right may become inoperative and unenforceable due to a continued course of dealing of acquiescence to late payments.

A commercial lease provided for the tenant to pay rent on the first day of the month. It also provided for a ten percent late charge on any installment of rent paid “more than ten (10) days after the due date.” The landlord also had the remedy of giving its tenant notice of default in the payment of rent and if the tenant did not cure such default within ten days or didn’t cure any other default within fifteen days, the landlord could terminate the lease on ten days’ notice. Even though the tenant had been late in paying rent, the lease term was extended for another five years. Prior to the execution of the lease amendment, the landlord had sent a letter indicating “that the tenant’s failure to pay rent when due constitute[d] a default ... of the lease” and gave the tenant ten days in which to cure the default. That letter concluded by stating, “[i]f you fail to cure within the period, [the landlord] reserves its right to pursue all available remedies including termination of the lease.” The tenant was frequently late in paying rent. Eventually, the landlord began to assess late fees. In fact, it sent a letter calling for late fees from the previous year in a significant amount. Earlier letters had been sent, but nothing in those letters explained the landlord’s remedies on default by the tenant. Eventually a letter was sent noting that if the tenant did not bring its account up to date the landlord would consider that to be a default in accordance with the lease agreement. There was testimony that the tenant and the landlord spoke, at which time the tenant agreed to make past-due payments to the landlord. This pattern continued and the landlord frequently sent letters demanding rent and reminding the tenant of its obligation to pay the rent on time, but not mentioning the default provision of the lease or threatening termination. Eventually, the landlord’s attorney sent the tenant a letter purporting to be a “notice to quit and demand for possession.” The tenant paid a substantial amount of rent, but not the entire amount claimed. The landlord’s attorney sent a second letter that was purported to be “another notice to quit.” This letter demanded that the tenant quit the premises “due to your habitual late payment of rent and refusal to pay late fees.” Three weeks later, another “notice to quit and demand for possession” was sent, again setting forth the habitual late payment of rent and refusal to pay late fees as the grounds. Eventually, the landlord, apparently still owed late fees, filed a summary action for possession of the leased premises. Considering all of the facts, the lower court granted the eviction. On appeal, the Appellate Division disagreed, stating that “[i]n the circumstances of this summary dispossess action, as reflected in the flow of letters sent to the tenant by the landlord, we conclude, ..., that the course of dealing between the parties was not sufficiently clear to justify a forfeiture of the leased premises. While the letters flowing from the landlord continuously indicated to the tenant that the rent was past due, these letters were inconsistent and did not affirmatively inform the tenant that if it failed to make timely rent payments, or failed to pay the late fees demanded, as required under the lease, the lease would be terminated.” Further, the Appellate Division extended a holding of the New Jersey Supreme Court in a residential tenancy case which set forth “the general precept that the terms of the contract that permit a party to terminate it by reason of late payment become inoperative and unenforceable due to the continued course of dealing of acquiescence to late payments.”

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