The issue in this case is whether the relationship between the parties was that of landlord and tenant. It is an issue rarely found in cases reported in New Jersey, perhaps because it is so dependent on the facts and the fact "patterns" are often so different. However, because of the current economic recession, it is an issue that deserves reconsideration.
If the relationship of landlord-tenant was not the dominant relationship here, then jurisdiction did not exist for the entry of a judgment for possession in this summary dispossession action. I find that jurisdiction did not exist and hereby vacate the judgment for possession heretofore entered and recall the warrant for removal.
Plaintiff is essentially a solely-owned corporation and shall be referred to herein as though it were an individual.
Plaintiff, having been looking for properties advertised as in foreclosure and finding the subject property listed, approached defendants for the purpose of "saving the property from foreclosure." He explained to defendants that he would buy the property [a single-family residence in West Orange], lease it
back to defendants, and give defendants an option to buy it back within one year. Defendants agreed to plaintiff's overall proposal, and plaintiff had his attorney prepare a contract of sale (defendants to plaintiff); a lease back to defendants for one year; an option whereby defendants could repurchase the property; a memorandum of option in recordable form; a quitclaim deed (defendants to plaintiff); and a contract for the repurchase of the property by defendants. These documents were subsequently revised. All of the revisions are not necessary for this opinion, except to state that the lease gave defendants an option to renew it for one additional year at a cost of $10,000 with an increase in rent for the second year. The lease also provided for a cost for the option to repurchase. A formula was provided for the repurchase, and it appears to have included an excess (i.e., "profit" to plaintiff) of $30,000 if title was repurchased.
At the closing on August 4, 1987, all of these documents as finally drafted were signed, including a bargain and sale deed from defendants. Both parties were represented in the document negotiations and at the closing by attorneys of their own choice.
Defendants, not having exercised their option to purchase within the first year, exercised their option to renew the lease, and paid the $10,000 therefor. That renewal period expired on July 31, 1989 without the option to repurchase having been exercised.
Plaintiff recorded the quitclaim deed (from defendants to plaintiff) on October 16, 1989.
On June 20, 1990, plaintiff's attorney wrote to defendants, reciting that the lease had expired and that they were in possession as month-to-month holdover tenants. That letter included a notice to quit and demand for possession as of July 31, or in the alternative defendants were offered a new lease. The proposed lease, on a month-to-month term, called for an increased rent with defendants liable for the cost of utilities.
Plaintiff was responsible for property taxes and assessments, and of course the mortgage payments. This lease included no option to purchase. Defendants did not ...