The opinion of the court was delivered by: D'amico
On January 10, 1996, plaintiff Marie Campi appeared at the rental office of defendant Seven Haven Realty, seeking to rent an apartment commencing February 1, 1996. Plaintiff completed and signed an "Application for Lease" and other documents and paid the sum of $675, which defendant contends represented the first month's rent. Plaintiff also paid a nonrefundable application fee of $25. Philip Oliveri, the resident manager, showed plaintiff the apartment, which plaintiff said she would like to rent.
The Application for Lease included the following provision:
"NO RENTAL PAYMENT MADE BY APPLICANT(S) HEREUNDER SHALL BE REFUNDABLE AFTER THE DATE HEREOF IN THE EVENT THAT APPLICANT(S) DESIRE(S) TO CANCEL THIS APPLICATION AND APPLICANT SPECIFICALLY AGREES TO FORFEIT SAID RENTAL PAYMENT IN SUCH EVENT."
The Application for Lease further stated: "FIRST MONTH'S RENT REQUIRED WITH THIS APPLICATION . . . ONE MONTH'S SECURITY REQUIRED PRIOR TO OCCUPANCY." Defendant's rental agent told plaintiff that she would need someone to guarantee her lease obligations because she did not meet two requirements: length of employment and salary. Plaintiff responded that her mother, Sylvia Pacitti, would act as guarantor. Based upon this representation, defendant withdrew the apartment from the market.
On January 15, 1996, Sylvia Pacitti completed and signed an "Application for Guarantor of Lease" for the purpose of qualifying her as the guarantor of the lease on the apartment. Mrs. Pacitti disclosed her income, submitted her 1995 W-2 form, and executed a number of other documents. She also submitted a verification of employment. On January 18, 1996, defendant forwarded to Sylvia Pacitti's employer, Holy Trinity Church, a letter seeking verification that she was being paid a salary of $325. A prompt response was requested so that defendant might "process their application for an apartment as expeditiously as possible." There is no evidence that defendant ever received a verification from Holy Trinity Church.
Meanwhile, on the afternoon of January 19, 1996, defendant notified plaintiff by telephone of her acceptance as a tenant. Plaintiff testified that she told defendant on that date that she could not go forward with the rental. Defendant's rental agent testified that plaintiff accepted the approval and merely indicated during two telephone conversations her disagreement with defendant's requirement of a child care letter. Plaintiff provided such a letter on January 19, 1996.
Defendant sent a formal notification of approval by certified mail on January 20, 1996. This notification requested that plaintiff come to the rental office before taking occupancy on February 1, 1996, to sign the lease and pay one month's security deposit. A similar letter was sent to Sylvia Pacitti.
On January 22, 1996, Sylvia Pacitti left a message on the answering machine at defendant's rental office, indicating that she had received the certified approval letter. She advised, however, that she could not guarantee or co-sign plaintiff's lease because she was retiring and would no longer make enough money. Defendant's representative testified that after plaintiff canceled the Application for Lease, defendant attempted to rent the apartment for February, 1996, but was unable to do so.
The issue before the court is whether the provision in the Application for Lease requiring the prospective tenant to advance the "first month's rent" with the completed application form, and permitting the lessor to retain it if the prospective tenant cancels the application, is enforceable. Plaintiff contends that defendant has wrongfully withheld the $675 payment and seeks double recovery and attorney's fees pursuant to the Security Deposit Act, N.J.S.A. 46:8-21.1. Defendant argues that the money retained constituted the first month's rent, not a security deposit, and that it is, therefore, not required to return it.
There are significant differences between an "Application for Lease" and a lease. A "lease" is "any agreement which gives rise to [a] relationship of landlord and tenant." Delmat Corporation v. Kahn, 147 N.J. Super. 293, 297, 371 A.2d 296 (App. Div. 1977) (quoting Black's Law Dictionary 1035-36 (4th ed. 1968)). A residential lease consists of a "set of mutually dependent covenants". Westrich v. McBride, 204 N.J. Super. 550, 556, 499 A.2d 546 (Law Div. 1984). "The tenant's covenant to pay rent is dependent . . . upon the landlord's covenant permitting the tenant the quiet enjoyment of the leased premises." Ibid. The landlord must see to it that the tenant actually obtains full, complete, and exclusive possession. Adrian v. Rabinowitz, 116 N.J.L. 586, 186 A. 29 (Sup. Ct. 1936).
The Application for Lease and other documents prepared by defendant required plaintiff to come to the rental office, sign the lease, and tender a security deposit prior to taking occupancy. Plaintiff never signed the lease agreement, did not advance the security deposit, and did not take possession of the apartment. Plaintiff merely completed an application for a lease which she canceled before any landlord-tenant relationship was created. Consequently, the rule enunciated by the court in Cooper v. Aiello, 93 N.J.L. 336, 339, 107 A. 473 (Sup. Ct. 1919) applies:
'There is a marked distinction as regards both the rights and liabilities of the parties between a lease and a mere agreement for a lease. Thus, where the proposed lessee refuses to take a lease in pursuance of his agreement to do so, an action will not lie against him to recover the rent he was to pay. The reason for this rule is that an agreement for a lease vests no ...