My tenant moved out and left its junk behind. Now what?

     Imagine a situation where a burglar breaks into your home and “borrows” some of your possessions without paying for them. On the way out, the burglar drops its wallet on your kitchen floor. Instead of returning the wallet to the burglar, you immediately throw it in the trash. Do you think that you should have to compensate the burglar for failing to notify before throwing the wallet away? 

 

     Of course you shouldn’t. But, if you were a landlord and the burglar was your tenant, and you had a lease to allow the tenant to “borrow” your space in exchange for paying rent, the analogy might have a different conclusion.   That’s because New Jersey has a Tenant Abandoned Property Act (N.J.S.A 2A:18-72 et al.) (the “Act”), which permits a landlord of commercial or residential property to dispose of any tangible goods, chattels or other personal property left upon a premises by a tenant, but the landlord must reasonably believe under the circumstances that the tenant has left the property upon the premises with no intention of asserting any further claim to the premises or the property and the landlord must put the tenant on notice that the property will be disposed if not timely claimed.  An exception is made for perishable items, which the landlord may freely dispose in order to maintain the premises in a sanitary condition.  

 

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Free Rent Provision May Extend Term of Lease

Free rent is customarily given by a Landlord to a Tenant as an incentive to lease a particular space. Besides the obvious benefit to Tenant, Landlord also benefits by being able to list the lease on the rent roll starting on the day the lease begins, even if no rent is being collected. But does free rent extend the term of a lease? According to a recent New Jersey Appellate decision, it does.

In R.A.M. Holding Corp. v. Hoboken No. 1 Blimpie, Inc., No. L-1267-08 (N.J. Super. Ct. App. Div. July 24, 2009 ), Landlord and Tenant negotiated a 10 year lease commencing on September 1, 1997 and terminating on August 31, 2007. Because of necessary renovations, Landlord offered to abate rent for the first two months and the parties executed a rider to that effect. The rider also provided for an option to extend the term for an additional five years provided notice was given within 60 days of the date of termination. Tenant gave notice to Landlord that it intended to extend the lease on October 2, 2007, after the original lease term would have terminated. Landlord commenced dispossess proceedings, claiming that the lease had already terminated on August 31, prior to the notice of extension.

 

The court found in favor of Tenant, and held that the rider provision giving Tenant two months of free rent actually amended the term of the lease and extended the date of termination to November 31, 2007, which in turn granted Tenant an additional 60 days to give notice of Tenant’s decision to extend the lease.

 

While not all free rent provisions will extend the term of a lease, Landlords should ensure that the language of any lease or rider specifically states that any free rent incentive given is to be taken during the lease term and state the particular date on which the lease is to terminate.