New Jersey Landlord Tenant Update: When to Refuse Rents in a Notice Case

In a previous article, we discussed the premise that acceptance of rent, following the termination date set forth in a Notice to Quit, would constitute a “waiver” of that Notice, hence requiring the Court to disregard that Notice and dismiss any subsequent eviction action based upon that Notice. To support this theory, Courts often rely upon the famous case of Carteret Properties v. Variety Donuts, Inc.49 NJ 116 (1967)

By way of New Jersey statutory background, all evictions except those based upon non-payment of rent require the service of a Notice to Quit upon the tenant prior to the filing of an eviction action.  In the context of a residential rental, evictions based on lease violations also require the service of a Notice to Cease in advance of the Notice to Quit.  For residential evictions, it is the Anti-Eviction Act that determines which claims require a Notice to Cease, as well as determining the length of the Notice period for the Notice to Quit.  However, for commercial tenants, it is the lease that determines the nature and length of any notice of default that must be served upon the tenant in advance of the Notice to Quit.

Unlike residential tenants, who can only be evicted for good cause, as defined by the Anti-Eviction Act, a commercial tenant can be evicted upon the expiration of a lease, without the necessity of the landlord showing any good cause. However, in these cases, the Landlord must still serve the tenant with a Notice to Quit prior to the commencement of the eviction action.  The Carteret Properties matter involved a commercial tenant, who was alleged to have violated a lease covenant.   The landlord had served the tenant with a Notice of Default, and subsequently filed a Notice to Quit.  Much of the Court’s decision in Carteret Properties was based on the Court’s determination that the landlord’s Notice to Quit was defective.

The principles argued in the Carteret Properties matter date back to the matters of East Orange v. Bd. of Water Com’rs, etc., 41 N.J. 6, 18 (1963) and Plassmeyer v. Brenta, 24 N.J. Super. 322, 330-331 (App. Div. 1953).  In those matters, the Court determined that in cases in which the landlord accepts of rent with knowledge of the breach, the landlord waives the breach.  In Carteret Properties, while the notice to terminate the tenancy was served on November 6, 1965, the Plaintiff had received all of the rent that was due through the end of November 1965.  The Court concluded that acceptance of the November rent (which pre-dated the Notice to Quit) constituted a waiver of the Notice to Quit.  This conclusion was based on the Court’s determination that since the landlord was aware of the breach as of the date when rent was accepted, the landlord had effectively waived the breach by accepting the rent.

The Defendant in Carteret Properties argued that the “plaintiff waived any claimed breach of covenant by accepting monthly rent for so long a period.”  In response to this argument, the Plaintiff referred the Court to a lease clause, setting forth that “failure of the landlord to insist upon strict performance of lease covenants in one or more instances shall not be construed as a waiver.” The Court dismissed this argument, seemingly without any explanation as to its reasoning.   The Court did, however, leave the door open for possible curative action by the landlord to avoid waiver of the Notice, with the statement that “equity and good conscience would require reasonable notice from the landlord to the tenant to discontinue the [alleged misconduct] and from thenceforth to abide by the use limitation of the lease.  Unless such notice was served… equity should bar forfeiture of the lease.”

The Carteret Properties decision also included some discussion about the sufficiency of the Notice to Quit in terms of the lack of detail that was provided in the Notice.   Making sure that Notices to Quit contain the proper amount of details will be the subject of a future blog.  For questions about landlord tenant matters, please contact our office.