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Prospect Point Gardens Inc. v. Timoshenko

April 12, 1996


Hayser, J.t.c., temporarily assigned

The opinion of the court was delivered by: Hayser


HAYSER, J.T.C., temporarily assigned

The central issue presented in this case is whether a landlord loses his right to maintain an action under the notice requirements of N.J.S.A. 2A:18-61.1f when he integrates notice of a rental increase with other substantive changes in tenant's renewal lease. This issue has not been dealt with in any reported decisions.

The essential facts are not in dispute. On December 15, 1995, the defendants were served with a written notice terminating tenancy and demanding possession of their residential apartment on the last day of their lease term, February 1, 1996. The demand for possession was accompanied by a renewal rider offering a new lease term of February 1, 1996 through January 31, 1997. The proposed renewal rider included a rental increase of $30, increasing the current rent from $760 to $790.

In addition, the renewal rider proposed a number of lease modifications. The most significant modifications included: decreasing the 10 day grace period for delinquent rent to 5 days, increasing the late charge penalty from $25 to $30, increasing the 30 day notice to renew requirement to 45 days where the tenant is deemed to have renewed the lease if he does not notify landlord of an intention to leave within 45 days of the expiration of the lease, and permitting the landlord to retain the entire security deposit under certain circumstances. *fn1

The tenants did not sign and return the proposed renewal lease and the landlord commenced this summary action for possession.

The Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to 61.12, was designed to limit the eviction of tenants to "reasonable grounds" and to provide for "suitable notice" to tenants in the event of eviction proceedings. 447 Associates v. Miranda, 115 N.J. 522, 527, 559 A.2d 1362 (1989). The provisions of the Act express strong public policy to advance its beneficial ends of protecting residential tenancies so that no landlord may remove a tenant from premises leased for residential purposes without establishing good cause. Housing Authority of City of Wildwood v. Williams, 263 N.J. Super. 561, 623 A.2d 318 (Law Div. 1993). Specifically, N.J.S.A. 2A:18-61.1 requires a landlord to show good cause for the removal of a residential tenant and furnishes a lengthy list of what constitutes good cause. Two specific subsections are relevant to the resolution of the issue presented in this matter.

Subsection f provides that good cause for eviction exists when a tenant "has failed to pay rent after a valid notice to quit and notice of increase of said rent, provided the increase in rent is not unconscionable and complies with any and all other laws or municipal ordinances governing rental increases." N.J.S.A. 2A:18-61.1f.

Subsection i, in contrast, provides that good cause for eviction exists when a tenant refuses to accept, after written notice, "reasonable changes of substance in the terms and conditions of the lease, including specifically any changes in the term thereof ... [where] the landlord or owner shall have the burden of proving that any change in the terms and conditions of the lease, rental or regulations both is reasonable and does not substantially reduce the rights and privileges to which the tenant was entitled prior to the conversion." N.J.S.A. 2A:18-61.1i.

The notice requirements of these two subsections are substantially different. Under subsection f, to increase the rent a landlord must serve notice to quit terminating the old tenancy and simultaneously serve another notice offering a new tenancy at an increased rent. Harry's Village, Inc. v. Egg Harbor Tp., 89 N.J. 576, 583, 446 A.2d 862 (1982). If proper notice is given, a tenant, by holding over, creates a new tenancy at the increased rental. Stamboulos v. McKee, 134 N.J. Super. 567, 571, 342 A.2d 529 (App. Div. 1975). Thereafter, a landlord may institute an action for possession if the tenant does not pay the increase in rent, subject, of course, to the tenant's right to raise the defense of unconscionability of the proposed rental increase. Moreover, this places a potentially heavy burden on the tenant to prove that he is entitled to such a defense. Calhabeu v. Rivera, 217 N.J. Super. 552, 526 A.2d 295 (Law Div. 1987).

In contrast, under subsection i the landlord must first serve a one month notice to terminate the preexisting tenancy and give the tenant an opportunity to accept proposed changes, and then, if the tenant refused to accept the changes within that one month, the landlord must give another full month's notice to terminate pursuant to N.J.S.A. 2A:18-61.2e before instituting an action for possession. Lowenstein v. Murray, 229 N.J. Super. 616, 552 A.2d 245 (Law Div. 1988). *fn2 In effect, it takes a minimum of three months to evict a tenant entitled to the protection of N.J.S.A. 2A:18-61.1i in a summary dispossess proceeding. Lowenstein, supra, 229 N.J. Super. at 621.

The legislative scheme has been interpreted as providing for two separate categories of notices. Id. The first category provides grounds for eviction based on serving only one notice while the second gives the tenant a warning or an opportunity to "cure" some allegedly detrimental activity. Id.; RWB Newton Assoc. v. Gunn, 224 N.J. Super. 704, 709-710, 541 A.2d 280 (App. Div. 1988). Subsection f falls into the first category and does not require a warning, whereas subsection i falls into the second category and requires the landlord to give a "warning" and an opportunity for the tenant to cure the alleged violation of N.J.S.A. 2A:18-61.1. Lowenstein, supra, 229 N.J. Super. at 621-622.

This notice requirement distinction between subsections f and i is critical in the case at bar. Here, the landlord served a notice to quit and demand for possession of premises upon the tenants giving them one month notice. Therefore, under subsection (f) notice is proper. Under subsection ...

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