On appeal from the Superior Court, Appellate Division, whose opinion is reported at 201 N.J. Super. 267 (1985).
The opinion of the Court was delivered by Stein, J. Chief Justice Wilentz and Justices Clifford, Handler, Pollock, and Garibaldi, join in this opinion. Justice O'Hern, did not participate.
This case concerns the constitutionality of the Senior Citizens and Disabled Protected Tenancy Act. N.J.S.A. 2A:18-61.22 to -61.39 (Act). In a well-reasoned opinion, the Appellate Division upheld the statutory scheme in the face of plaintiff's assertion that the Act violated the "takings" and "contract" clauses of the United States and New Jersey Constitutions. 201 N.J. Super. 267 (1985).
We affirm the judgment below for substantially the reasons expressed in the opinion of Judge Baime. We write only to address three narrow issues not fully treated by the opinion below.
The facts and legislative background of this controversy are thoroughly set forth in Judge Baime's opinion. Id. at 272-77. A brief review will suffice for our purposes.
Hudson Harbour Condominium is a garden apartment complex purchased by Hudson Harbour Associates in October, 1980. Hudson Harbour sold the units at issue in this case to appellant Edgewater Investment Associates (Edgewater) on January 19, 1982.*fn1 By May, 1981, Hudson Harbour had completed the process of converting the apartment complex from rental housing to the condominium form of ownership. In the conversion process, Hudson Harbour had complied with the
then-applicable provisions of the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12, 2A:18-61.15 to -61.21. The Anti-Eviction Act protected tenants faced with eviction due to condominium conversion for a period of not less than three and not more than eight years.*fn2
On July 27, 1981, the Senior Citizens and Disabled Protected Tenancy Act, L. 1981, c. 226, became effective. The Act significantly increased the duration of the statutory tenancy afforded to qualifying elderly or disabled tenants. To qualify, a tenant must establish that he or she is at least 62 years old or disabled, or is the surviving spouse of an eligible tenant and was at least 50 years old at the conversion date, that the dwelling has been his or her principal residence for the two years prior to conversion, and that the total household income does not exceed three times the county per capita income. N.J.S.A. 2A:18-61.24, -61.28. Qualified tenants are entitled to a "protected tenancy period" of 40 years from the date of conversion. N.J.S.A. 2A:18-61.24(h). During this period the tenant is protected from eviction by virtue of an amendment to the Anti-Eviction Act:
No action for possession shall be brought pursuant to this subsection against a senior citizen tenant or disabled tenant with protected tenancy status pursuant to the "Senior Citizens and Disabled Protected Tenancy Act," P.L. 1981, c. 226 * * *, as long as the agency has not terminated the protected tenancy status or the protected tenancy period has not expired. [ N.J.S.A. 2A:18-61.1(k).]
Section 14 of the Act permits its retroactive application under certain circumstances. This section was interpreted by the trial court to allow the grant of protected tenancy status to a number of the tenants in Hudson Harbour, even though Hudson Harbour's conversion was perfected approximately two months before the effective date of the Act. 201 N.J. Super. 286, 291 (1984). N.J.S.A. 2A:18-61.11(d) states as follows:
On or after the effective date of the "Senior Citizens and Disabled Protected Tenancy Act," * * * whether by virtue of the authorization by the court of a
stay of eviction or by virtue of any other proceedings required or instituted pursuant to P.L. 1974, c. 49 (C. 2A:18-61.1 et seq.) or P.L. 1975, c. 311 (C. 2A:18-61.6 et seq.), or in any action for declaratory judgment, the court may invoke some or all of the provisions of the "Senior Citizens and Disabled Protected Tenancy Act" and grant to a tenant, pursuant to that amendatory and supplementary act, a protected tenancy period upon the court's determination that:
(1) The tenant would otherwise qualify as a senior citizen tenant or disabled tenant pursuant to that amendatory and supplementary act, except that the building or structure in which the dwelling unit is located was converted prior to the effective date of that amendatory and supplementary act; and
(2) The granting of the protected tenancy period as applied to the tenant, giving particular consideration to whether a unit was sold on or before the date that the amendatory and supplementary act takes effect to a bona fide individual purchaser who intended personally to occupy the unit, would not be violative of concepts of fundamental fairness or due process. Where a court declines to grant a protected tenancy status, it shall nevertheless order such hardships [ sic ] stays as authorized by subsections a. and b. of this section until comparable relocation housing is provided. The hardship relocation compensation alternative of subsection c. of this section shall not be applicable in this situation.
Judge Baime summarized this provision in affirming the judgment of the trial court:
The effect of that statute is to confer upon the judiciary the discretionary authority to recognize protected tenancy status for senior citizens even where the conversion occurred prior to the effective date of the Act. If the court declines to grant protected tenancy status, it may nonetheless issue up to five one-year stays unless comparable rental housing is provided. However, the owner does not have the option to provide hardship relocation compensation. [201 N.J. Super. at 276-77.]
The Appellate Division upheld the Act in the face of two constitutional challenges. First, Edgewater asserted that retroactive application of the Act to grant a 40-year protected tenancy to tenants in Hudson Harbour violated the constitutional proscription against impairment of contracts. U.S. Const. art. I, § 10, cl. 1; N.J. Const. art. IV, § VII, para. 3. Second, appellant contended that the Act imposed so unreasonably upon its property interests as to constitute a governmental taking ...