02/10/2021

Client Alert

Written by: Elizabeth K. Holdren, Esq.

Two Notices to the Bar were issued on February 5, 2021 by the New Jersey Courts – one of which assists landlords in proceeding with commercial landlord/tenant cases and the second which assists lenders in proceeding with commercial foreclosure actions.

Commercial Landlord/Tenant Actions - The first Notice concerns the Supreme Court Order issued on February 5, 2021 to clarify and expand the circumstances in which a landlord may file an Order to Show Cause requesting that a trial be held in a commercial landlord/tenant matter. Although only residential evictions were stayed by Executive Order 106 issued by New Jersey Governor Philip Murphy on March 19, 2020, commercial eviction proceedings have also been delayed by various matters concerning the court operations and legal practice in response to COVID-19. While the filing of landlord/tenant complaints has been permitted, trials have been suspended since March 16, 2020, subject to limited exceptions.

On July 14, 2020, the Supreme Court of New Jersey entered an Order authorizing several steps to support the resumption of landlord/tenant case processing during the ongoing COVID-19 public health emergency. That Order specifically permits landlords to apply for the issuance of an Order to Show Cause for eviction in emergent circumstances. However, the language of the Order appeared tailored toward residential tenancies, leaving some uncertainty as to whether it also applied to commercial properties and, if so, what situations would be deemed emergent in those cases. For example, it provides that the basis of that landlord/tenant action cannot be nonpayment of rent, except in the case of the death of the tenant. In determining whether to schedule a landlord/tenant trial upon the filing of an Order to Show Cause, the court will review the complaint to determine whether an emergency exists. Again, the examples of what the court would consider as an emergent matter appear focused on residential properties: i.e., violence against other tenants, extreme damage to residence, and death of tenant resulting in vacancy of the unit. 

The February 5, 2021 Supreme Court Order clarifies that the July 14, 2020 Order applies to both residential and commercial matters and therefore a commercial landlord can file an Order to Show Cause alleging emergent circumstances (e.g. violence against other tenants, criminal activity, or permanent closure of the business resulting in vacancy of the property). In commercial matters, the basis of the eviction action cannot be non-payment of rent, unless (i) the tenant has vacated the property, (ii) the tenant’s business is not operating and will not resume operations; or (iii) the commercial landlord is facing foreclosure or a tax lien. If the court determines that an emergency exists, a trial will be scheduled and heard. Following the trial, the Order states that an eviction may proceed in the “interest of justice.” The Notice to the Bar concerning the February 5, 2021 Order indicates that “if the commercial landlord prevails, judgment will be entered, and a warrant of removal can be issued.”

Commercial Foreclosure Actions - The second Notice to the Bar issued on February 5, 2021 provides that courts will resume the issuance of writs of possession in commercial foreclosure actions, effective February 15, 2021. Typically, this situation arises when the borrower continues to occupy the property at the time that a Sheriff’s sale occurs. Once the sale takes place, the foreclosure judgment which includes a judgment for possession, entitles the successful bidder at the sale to the issuance of a writ of possession, which is then delivered to the Sheriff to proceed with a lock-out. While the Notice to the Bar does not direct the Sheriff’s offices to conduct an ejectment when presented with the writ of possession, it appears that the court anticipates that the Sheriffs will schedule and conduct post-foreclosure commercial ejectments at this time.

Hill Wallack attorneys are tracking the changes to the court’s procedures as they occur and are also monitoring whether and to what extent the Sheriff’s offices in each county are proceeding with warrants of removal, writs of possession, and sales. To learn more and discuss your options, contact one of Hill Wallack’s experienced Creditors’ Rights attorneys, Michael Kahme, Esq. at 609-734-6383, Elizabeth Holdren, Esq. at 609-734-6345, or Sean Adams, Esq. at 609-734-4450.

©2021 Hill Wallack LLP. All rights reserved. Please contact Hill Wallack for permission to reprint. Notice: The purpose of this Client Alert is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, accuracy and completeness of which cannot be assured. This Client Alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.