Landlord Wins on Security Deposit, Loses Rent and Damages Claims in Appellate Division

October 10, 2014

A landlord avoided paying damages under a statute governing the return of security deposits but lost his other claims related to an unhappy parting with his commercial tenant. The landlord’s shortage of compelling evidence led the New Jersey Superior Court, Appellate Division to uphold the trial court’s rulings regarding the status of the tenant’s holdover, the tenant’s alleged nonpayment of rent, and damage to the property.

In 2008, Edward Lee, a plastic surgeon, signed a lease for a rental space in Bergen County, where he based his medical practice. In September 2010, Lee and his landlord, David Perlman, encountered a disagreement about a new lease term starting on October 1. The parties failed to agree on a new one-year lease. Lee continued to rent the space, however.

The following May, Lee notified the landlord that he was leaving the space and vacated the property at the end of August. The landlord sued the tenant for damage to the property and also tried to submit an amended filing to argue that the parties had a valid lease running through the end of September 2011. The landlord, however, decided not to hire an attorney and, since he did not file the amendment properly in accordance with court rules, the court threw out this argument about the lease extension.

The tenant, on the other hand, hired a local attorney who submitted a countersuit on the tenant’s behalf, arguing that the landlord illegally withheld the tenant’s security deposit. By the time the case reached trial, the landlord gave up his claims on many of the damages issues, but the court still had to hear the tenant’s countersuit regarding the security deposit. At trial, the landlord testified that he received the May letter regarding Lee’s intent to vacate and that, when the tenant did vacate, he did not return the deposit. The tenant testified that he paid his rent on time every month and that the property had incurred no unreasonable damage when he left in August. The trial court sided with the tenant and awarded the tenant double the amount of his deposit, in accordance with the Security Deposit Act.

The landlord appealed, arguing that the Security Deposit Act applied only in residential leases and that it was improper to award Lee double the amount of his deposit. The landlord also renewed his arguments that he and Lee had a valid lease running through September 30, 2011, that Lee never paid his rent for July and August, and that the tenant did unreasonable damage to the walls of the office.

Still proceeding without an attorney, the landlord succeeded only on the most obvious of his points. The Security Deposit Act is clear that it applies only “to all rental premises or units used for dwelling purposes,” and both sides agreed that theirs was a commercial lease. Since the lease was a commercial one and the statute applied only to residential leases, awarding the tenant double the amount of his deposit was erroneous.

The landlord failed on each of his other claims, however. The landlord failed to convince the court that he and Lee had the sort of business relationship that would allow him to assume that the tenant assented solely based upon the tenant’s payment of rent. Additionally, the records produced by Lee’s attorney regarding the July and August rent were clear, as compared to Perlman’s documents, which were incomplete and ambiguous. Lee’s attorney also persuaded the court that the holes in the office’s walls amounted to nothing more than the sort of “normal wear and tear” found in any long-term tenancy.

Although the landlord successfully erased the excess award of double the amount of the tenant’s security deposit, his case was often hampered in other areas by proof that was either inadequate or too vague to persuade the courts. Whether you are negotiating a commercial lease or battling over a commercial lease dispute, a capable real estate attorney can provide considerable value in terms of providing you with advice based upon in-depth knowledge of the law and skilled advocacy in court, should the need to go to trial arise. For your commercial lease dispute needs, talk to the real estate attorneys at Samuel C. Berger, P.C. Our New Jersey real estate attorneys can be there at every step to help your business protect its rights. Reach us online or call (201) 587-1500 or (212) 380-8117.

Contact us through our website or call to schedule your free, confidential initial consultation today.

More Articles:

Dealing With Your Tenant’s Property Abandoned Within Your Rental Space, New York & New Jersey Real Estate Lawyer Blog, July 15, 2014
Navigating the New Jersey Court System for Your Commercial Leasing Dispute, New York & New Jersey Real Estate Lawyer Blog, April 22, 2014