On certification to the Superior Court, Appellate Division.
For reversal -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein join in this opinion. For affirmance -- none. The opinion of the Court was delivered by Garibaldi, J.
This appeal concerns a tenant's eviction for habitual late payments of rent under New Jersey's Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12 (the Act). We find that the course of dealings between the landlord and tenants after the landlord served the tenants with Notice to Cease was such that the landlord was required to afford them subsequent notice that the terms of the Notice to Cease would be strictly enforced. We hold that the landlord could not proceed in evicting the tenants since it failed to provide them with such notice.
The defendants, Thomas and Kathy Band, own a mobile home. Sometime in 1983 they leased mobile home Lot 1001, Stoney Fields Estates, from the plaintiff, A.P. Development Corp., t/a Stoney Fields Estates (the landlord).
On June 24, 1983, the Bands (the tenants) entered into a renewal of their month-to-month lease, whereby they agreed to pay their rent on the first day of the month. The Renewal Agreement was also subject to the terms and conditions of a Tenancy Agreement that Thomas Band signed on August 1, 1983.
Section 2 of the Tenancy Agreement provides as follows:
2. A late charge of the maximum amount permitted by law will be levied on residents paying after the 15th of the month. When the 15th is a Sunday or Legal Holiday the deadline will be the next Business Day. A service charge of $10.00 will be levied for any checks returned unpaid for any reason. These
additional sums shall be due and payable as additional rent with the regular rental payment. Tenant hereby agrees to pay rent on the first day of each and every month at the agreed upon rent. In the event that it becomes necessary for the landlord to seek legal services for the purposes of collection of the rent or for the purposes of eviction of a tenant for non-payment of rent, late payment of rent or other breach of the terms and conditions previously set forth, tenant agrees to pay to the landlord a sum equal to the amount expended by the landlord for enforcement of landlord's rights and that said sum shall be considered as additional rent payable on the first day of the following month. (emphasis added.)
The underlined portion of Section 2 was set forth as a specific term and condition in the Renewal Agreement dated June 24, 1983.
On December 14, 1984, the landlord sent the tenants, through certified mail, Notice to Cease Late Payments, which provided:
Your account has been turned over to me for the purpose of filing an eviction action for late payments of your rent. Late payment of rent is a violation of your Lease and demand is hereby made that you cease all further such late payments. I have been advised by your landlord to proceed with eviction action on the ground of habitual late payment of rent in the event that you continue said late payments beyond the date of this notice.
Your rent is due on the first day of each month and rent received after that time is deemed to be late.
This notice was received by Thomas Band on December 29, 1984.
During the sixteen months after the receipt of this Notice to Cease the tenants continued to make late rental payments each and every month, averaging between fifteen and twenty-eight days late. During this period they received monthly notices from the landlord reminding them that their rent was late. On April 21, 1986, sixteen months after receipt of the Notice to Cease, the landlord served the tenants by certified mail, with a Notice to Quit and Demand for Possession, that read as follows:
You have previously been sent demands to cease your late payments of rent, but have failed to comply with those demands. Demand is therefore made, now, that you vacate the premises no later than May 31, 1986, and return possession thereof to your landlord.
In the event that you do not vacate the premises by May 31, 1986, a Complaint will be filed in the Atlantic County District Court.
The Notice to Quit was received by Mrs. Band's son. After receiving the Notice to Quit, Mrs. Band paid the May rent in a
timely fashion. She then sent a check for June's rent to the landlord on May 31, 1986. The landlord refused to accept this check. The reason he proffered for doing so was that dispossession proceedings had already been instituted.
On June 18, 1986, the landlord, pursuant to N.J.S.A. 2A:18-61.1 j, filed a dispossess action alleging habitual late payment of rent. The trial court found that "the letter of the law has been met" with regard to the landlord's right to evict the tenant. Nevertheless, the trial court dismissed the complaint, concluding:
It seems to me that they've . . . that the landlord has lulled the tenant into a false sense of security at that point by * * * accepting the rent late, and not making an issue of it, and although I think the landlord may be technically correct here, it just . . . doesn't strike me as being right, and I think that there was a waiver of the notice, and I so hold. And I'm going to dismiss the plaintiff's complaint. And I don't know what the cutoff time is. I don't know whether a landlord has to . . . do something within two months or three months, or four months, five months, or twelve months * * *.
On the landlord's appeal, the Appellate Division reversed and remanded the case to the trial court. It held that there was "no basis, legally or factually for the court's finding that defendants were lulled 'into a false sense of security.'" It reasoned that:
There must be a balance struck between when it is reasonable to conclude that a pattern of habitual late payment has been established following written notice and the point where the tenant might reasonably come to conclude that the property owner has given up the right to receive rent in a timely fashion as demanded in the written notice.
On the record before us we find that neither the passage of time nor the landlord's inaction were [sic] sufficiently in derogation of the notice to cease as to render it ineffective. Indeed the landlord consistently attempted to enforce compliance with its right to timely payment of rent.
We granted certification. 109 N.J. 504 (1987).
The trial court and the Appellate Division considered only copies of the Renewal Agreement dated June 24, 1983, the Notice to Cease and the Notice to Quit. Although the parties agreed that the landlord sent monthly letters to the tenants concerning their late payments of rent, neither court received any of these letters. On request of this Court, both parties
submitted copies of several of the landlord's letters to the tenants notifying them of their late payment of rent.
A review of these monthly letters unveils the course of dealings between the parties. The first letter dated March 6, 1984, indicates that the February rent was not fully paid and that all the March rent was due. This is the only letter received by the tenants that actually threatened eviction. A $10.00 late charge was also requested in this letter. In May, July, September, and November of 1984 the tenants received letters indicating that the rents for those months were past due. None of these letters threatened eviction or requested a late charge. The July, September, and November letters, however, did threaten "further actions."
The Notice to Cease, dated December 14, 1984, seems to have had little impact on the course of dealings between the parties. In January, February, March, and April of 1985, the landlord sent letters identical to those sent prior to the Notice to Cease in July, September, and November of 1984. Typical of the form letter sent is the letter dated November 13, 1984, that reads:
Our records indicate you have not paid your lot rent for the month of November as of this date.
We would appreciate your remittance within five days of the date of this notice to avoid any further actions. We will be unable to accept any payments that are not for the full amount of the balance due.
If you have any questions concerning this matter, please feel free to contact our office.