Many commercial tenants are facing a severe downturn in revenue, which often equates to not paying their monthly rent. Sometimes, commercial landlords can work with a delinquent tenant by offering more favorable terms or concessions. Reduction in the cost per square foot or placing rental arrears on the backend of a lease can be solutions to keeping a store active by that tenant. However, sometimes legal action is required to protect a commercial landlord’s rights and value of the space.
Suing a tenant to retake possession of the premises is only half the battle. In New Jersey, commercial landlords can evict a tenant through a summary dispossess action (aka "eviction") for non-payment of rent or other covenant defaults. Once a judgment of possession is entered, the next step is to actually evict the tenant. If the tenant will not peaceable move after entry of the judgment of possession, then a landlord can request a warrant for removal be issued by the sheriff.
Once the warrant is issued, the commercial landlord needs to be prepared to fulfill the eviction process. Often this means figuring out what to do with "stuff" left behind at the store. Tenants sometimes leave everything from trash to copiers to inventory to personal items. But what exactly can the commercial landlord do with these items? Can you simply toss out this "stuff"? Can you sell these items? What if the tenant shows up and demands its items back a month or two after the tenant has been evicted?
The New Jersey Abandoned Tenant Property Act (N.J.S.A. 2A:18-74) is a commercial landlord’s solution for disposing, selling and/or returning items left by a tenant. Under the New Jersey Abandoned Tenant Property Act, a commercial landlord is required to give written notice before disposing or selling a tenant’s left over items.
Following is a quick list of questions to ask your attorney about adherence to the New Jersey Abandoned Tenant Property Act, as well as some other issues to address.
- What Type of Notice Needs to be Provided? The New Jersey Abandoned Tenant Property Act provides specific provisions for sending written notice to tenants before disposing or selling items. Failure to adhere to these strict guidelines could leave the commercial landlord with liability to not only the tenant, but also third parties who may possess liens or have an interest in the abandoned property (i.e. equipment leases). But, which address does notice need to be sent – the premises? the tenant’s prior address? Further, is the landlord required to conduct a search for other addresses?
- Does Notice Have to be Sent to Third Parties? Beside the tenant’s property left at the premises, there may be other entities with an interest in the property, including employees, creditors, financial institutions or leasing companies. Has your attorney conducted a UCC search to determine if there are liens on these items? If so, have you provided these entities appropriate notice? Further, has the notice directed the tenant to inform third parties of the abandonment?
- Can You Just Sell Valuable Abandoned Property? Although the New Jersey Abandoned Tenant Property Act provides for disposition of the tenant’s property after appropriate notice, can the landlord collect any removal, storage, attorney fees, and/or other costs associated with the items?
- What About Perishable Items or Trash? Often upon re-entry, commercial landlords find the premises with trash or perishable items. Can the landlord simply throw these items away or does notice need to be sent first?
- Do any Federal or State Statutes Preempt the Commercial Landlord’s Actions? Your attorney should be able to advise if any Federal or other State statutes effect your rights. For instance, are there any environmental issues that need to be addressed prior to disposal of the left over items?
- What if the Tenant Shows Up During the Notice Period? Often tenants will just leave the items left over for the commercial landlord to handle. But what if the tenant shows up? Can the commercial landlord charge them storage fees before the remove the items? What about collecting all rents due and owing, including attorneys fees?
Prior to disposing, selling or giving the left over items back to the tenant or third parties, it is advisable that a commercial landlord review these and many more questions with a licenced New Jersey attorney. Answering these questions beforehand can help you with the proper strategy to deal with troublesome tenants and keep your commercial property(s) profitable in these cautious economic times.