Commercial evictions in New Jersey are poised to increase under new orders issued by the New Jersey Supreme Court...
Commercial evictions in New Jersey are poised to increase under new orders issued by the New Jersey Supreme Court. While most eviction proceedings were placed on “pause” in light of COVID-19, commercial landlords and lenders may now proceed with certain landlord/tenant actions and post-judgment actions in commercial foreclosures.
Impact of COVID-19 on Commercial Real Estate Matters
In response to the ongoing COVID-19 public health emergency, the Supreme Court of New Jersey has authorized the temporary suspension of landlord/tenant trials, subject to a few narrow exceptions, since March 16, 2020. In July 2020, the New Jersey Supreme Court issued an order that allowed commercial or residential landlords to make an application for an eviction trial in certain emergency situations, including if a tenant was destroying the property or engaged in illegal activity. While commercial foreclosure trials have continued during the pandemic, the courts have withheld post-judgment action, including the issuance of writs of possession.
While these restrictions have provided welcome relief for commercial tenants, they have made it difficult for landlords to regain possession of commercial properties, even when tenant businesses are no longer operational. Lenders have also been left in limbo with regard to whether they may proceed with foreclosures.
Commercial Foreclosure Notice
In a Notice to the Bar, dated February 5, 2021, the New Jersey judiciary announced that, effective February 15, 2021, courts will resume post-trial activity, including issuance of writs of possession, for commercial foreclosure matters.
The announcement is likely unwelcome news for commercial property owners that are behind on mortgage payments. At the same time, it is a necessary step towards returning the legal system to its pre-pandemic operating status. By allowing actions to proceed through the legal process, it will also bring clarity for borrowers and lenders.
Commercial Landlord/Tenant Trials
In a second Notice to the Bar, dated February 5, 2021, the New Jersey Supreme Court clarified and expanded the circumstances in which a landlord may apply by Order to Show Cause for a trial in a commercial landlord/tenant matter.
Under the Order, a commercial landlord filing an Order to Show Cause must still allege emergent circumstances, and the basis of the landlord/tenant action generally can’t be nonpayment of rent. However, emergent circumstances can now exist where the tenant has vacated the property; the tenant’s business is not operating and will not resume operations; or the commercial landlord is facing foreclosure or a tax lien.
In such cases, the court will evaluate the application and determine whether emergent circumstances exist, and a hearing will be held. If the court finds that emergent circumstances exist, the commercial tenant will be notified, and a trial will be scheduled. After that trial, if the commercial landlord prevails, judgment will be entered, and a warrant of removal can be issued.
Key Takeaway
The Orders will not lead to a rash of commercial evictions overnight. However, the easing of restrictions does mean that parties to landlord/tenant and commercial foreclosure actions may need to shift their legal strategies.
As the COVID-19 pandemic continues to evolve and we slowly approach the “new normal,” additional orders are likely. We encourage lenders/borrowers and tenants/ landlords to stay up-to-date on legal developments at both the state and local level and contact experienced counsel to determine how you may be impacted.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Chris Dzwilewski, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Zoning Laws Explained: What You Need to Know Before Buying Property
Before buying property, it is critical to determine whether local zoning laws may affect your plans. If you plan to redevelop the property, you will want to confirm that local zoning regulations permit development as intended. If acquiring property that is already developed, you must verify that the use is permitted in the underlying zoning […]
Special Needs Trusts in New Jersey: Planning for Your Loved One’s Future
For parents of a child with a disability, estate planning raises concerns that go well beyond deciding who will inherit their assets. Parents may spend years making sure their child has the right care, services, and support. Eventually, they must also confront a difficult question: Who will take over when they can no longer do […]
What Every Real Estate Investor Should Know Before Buying a Rental Property
Before buying a New Jersey rental property, an investor should verify realistic operating numbers, the property’s legal and regulatory status, lead-based paint and flood compliance, the existing leases and tenant protections, and the right ownership structure. A rental property is more than a piece of real estate; it is an operating business subject to legal, […]
Can You Change an Irrevocable Trust in New Jersey?
In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
How Intellectual Property Valuation Will Impact Business Transactions
Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls
For New Jersey data center owners and operators, a service agreement may look routine when it is signed. The network is functioning, the vendor is meeting its installation schedule, and the parties have agreed on pricing and performance specifications. The provisions that seem most important at that stage are often the technical ones. That changes […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
