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316 49 St. Associates Limited Partnership v. Galvez

Decided: January 5, 1994.


On appeal from the Superior Court of New Jersey, Law Division, Hudson County.

Pressler, Dreier and Brochin, JJ. The opinion of the court was delivered by Dreier, J.A.D.


Defendant tenant appeals from a grant of summary judgment in favor of plaintiff landlord ejecting her from her apartment. Plaintiff cross-appeals from the trial court's refusal to include unpaid option charges and increased attorney's fees in the judgment.

Plaintiff, 316-49 St. Associates Limited Partnership, is the owner of an eleven-unit apartment building in Union City known as Thessalli Terrace. On June 28, 1988, plaintiff registered its conversion plan for the property with the Department of Community Affairs. Plaintiff has not yet however, established the condominium form of ownership for the property by recording the master deed. It is the recordation of the master deed that establishes the condominium form of ownership. N.J.S.A. 46:8B-8; Veltri v. Norwood, 195 N.J. Super. 406, 413, 479 A.2d 931 (App.Div.1984).

On September 1, 1990, defendant, Germania Galvez, signed an "Apartment Lease and Option to Purchase." The agreement provided that defendant would live in the apartment for a term of one year, and at the end of the term defendant would have the right to purchase the apartment for $110,000, receiving credit for her option payments. The agreement also provided that if defendant did not exercise the option at the end of the period, she would not be entitled to renew the agreement.

During the original term of the lease, defendant paid $387.85 per month in rent plus $229.17 a month for the purchase option, making her total monthly payment $617.02. The Rent Leveling Board of Union City has certified that the maximum allowable rent during this time was approximately $420. Defendant also paid a security deposit of $925.54, which represents approximately

one and one-half times her combined monthly rent and option payment.

On August 31, 1991, defendant was presented with a renewal agreement for the one-year period beginning September 1, 1991 and ending August 31, 1992. Defendant refused to sign the agreement, but continues to occupy the apartment with her three children. Defendant has certified that at the time she entered into the agreement she was employed as a factory worker, but soon thereafter she was laid off and has since lived on public assistance. When the agreement was signed, the mortgage contingency clause was not completed, and no inquiry was made into defendant's financial status. The most cursory inquiry would have revealed defendant's total inability to pay $110,000 at the time of the initial lease, the renewal, or in the foreseeable future, with or without a resort to available credit.

On or about November 20, 1991, plaintiff mailed to defendant a notice to quit and demand for possession, demanding that defendant vacate the apartment by November 30, 1991. Defendant did not comply, and on January 13, 1992, plaintiff filed a complaint for ejectment, damages, attorney's fees and costs. Defendant did not answer and judgment by default was entered in favor of plaintiff on March 9, 1992. A writ of possession was subsequently issued.

On or about February 24, 1992, defendant filed a late answer and counterclaim alleging that plaintiff had violated the Union City Rent Control Ordinance as well as the Consumer Fraud Act. On April 27, 1992, the Judge signed an order to show cause why the default judgment should not be vacated, and on June 24, 1992, the default judgment was vacated, conditioned on defendant's payment of all rent and option payments as well as attorney's fees.

Plaintiff then moved to vacate the June 24th order and defendant moved for reconsideration. Plaintiff's motion was denied; defendant's motion was granted, and the June 24, 1992 order was modified to relieve defendant of the obligation to make option payments during the pendency of the action.

After plaintiff filed an answer to defendant's counterclaim, the parties filed cross-motions for summary judgment which were heard on November 20, 1992. The trial court granted plaintiff's motion, finding that the parties entered into a binding lease and option agreement, that defendant breached that agreement by failing either to renew the agreement or vacate the apartment, and that no legal excuse existed for the breach. The Judge stayed the order pending appeal, conditioned upon defendant paying all outstanding option payments.

We stayed the order of the trial court on defendant's interlocutory motion. The stay was conditioned on defendant's compliance with the modified June 24, 1992 order requiring defendant to pay only the base rent. As final judgment had not yet been entered, we remanded for its entry. The final judgment provided that possession of the apartment be returned to plaintiff and that defendant pay $6,718.40 (representing double defendant's ...

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