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Newark Park Plaza Associates v. City of Newark

Decided: December 8, 1987.

NEWARK PARK PLAZA ASSOCIATES, LTD., PLAINTIFF,
v.
CITY OF NEWARK, KENNETH A. JOSEPH, TAX COLLECTOR OF THE CITY OF NEWARK AND THE BOARD OF EDUCATION OF THE CITY OF NEWARK, DEFENDANTS



Rosemary Higgins Cass, J.s.c.

Cass

[227 NJSuper Page 497] This case presents the court with a question not previously resolved in this State: whether public policy prevents enforcement of a tax provision, in a lease between a government entity and a private landlord, requiring the government entity to pay

any real estate taxes assessed against the property which is the subject of the lease.

Lacking sufficient government-owned property to conduct its administrative operations, defendant Board of Education of the City of Newark (hereinafter "board") entered into a one-year written lease with plaintiff Newark Park Plaza Associates, Ltd. (hereinafter "Park Plaza") for the period January 1, 1982 through December 31, 1982. The lease was not renewed at the end of this term, but to date the board continues to occupy premises owned by Park Plaza at 707-721 Broad Street, Newark, New Jersey.

Despite a clause in the lease requiring board to pay all real estate taxes levied on the property directly to the taxing authority, board never paid any of the assessed property taxes. By November 1986, unpaid taxes and interest attributable to the premises amounted to $1,281,703.41, and Kenneth Joseph, the City of Newark Tax Collector, included the premises in the city's tax sale scheduled for December 1986. Park Plaza demanded that board pay the subject taxes and interest as required by the lease, but board refused payment. Park Plaza then brought a summary dispossess action in special civil part.

Park Plaza also filed a complaint in the Chancery Division to enjoin the tax sale. The chancery judge entered an order restraining the city from including the premises in any tax sale pending resolution of this dispute and consolidated this case with the summary dispossess action. While the city has not yet moved to have either party pay the subject taxes plus interest, Park Plaza and the board have cross-moved for summary judgment. The single issue is whether the tax clause in the lease is enforceable. I find the clause valid and enforceable against the board.

Since the board of education continued to occupy Park Plaza's premises after expiration of its lease on December 31,

1982, the threshold question is to determine the nature of its tenancy. It is well-settled law in New Jersey that when a tenant continues to occupy a premises after the termination of a lease, his status becomes that of a month-to-month holdover tenant. N.J.S.A. 46:8-10; S.D.G. v. Inventory Control Co., 178 N.J. Super. 411, 414 (App.Div.1981). The rights and duties of such a holdover tenant are governed by the terms of the expired lease, absent a contrary agreement. Heyman v. Bishop, 15 N.J. Super. 266, 269 (App.Div.1951); cf. Trust Co. of New Jersey v. Doherty, 117 N.J.L. (32 Gummere) 433 (E. & A. 1937). This rule is consonant with the general rule established throughout the country. Heyman, supra.

Section 3.03 of the lease entered into between Park Plaza and the board reads in part as follows:

The above terms are unambiguous and a dispute over their meaning has not been raised.

Normally, "the function of a court is to enforce a lease as it is written, absent some superior contrary public policy." Fargo Realty v. Harris, 173 N.J. Super. 262, 265-266 (App.Div.1980) (citing Marini v. Ireland, 56 N.J. 130, 143 (1970); Mury v. Tublitz, 151 N.J. Super. 39, 44 (App.Div.1977). "In the absence of such a policy, the parties are free to define rent as they choose." Fargo, supra 173 N.J. Super. at 266. In the present case, the parties have chosen to include in their definition of rent the tenant's agreement to assume the ...


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