USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
the landlord. The tenant will pay 100% of taxes on their personal property, and may pay any increases directly attributable to any improvements that the ten -
• do not require a building permit; and/or • do not affect the structure, the roof, the building systems, or ingress to or egress from the building. In addition, landlords may subject consent to an improvement with a requirement that the tenant remove the improvement at the end of the term. 6.15 Specific Regulations All tenants in New Jersey are entitled to the right of quiet enjoyment. Residential tenants are given greater rights relating to a warranty of habitability, including the right to withhold rent under certain circumstances. Commercial tenants are not entitled as a matter of law to withhold rent owing to a landlord’s failure to fulfil its obligations under a lease, but a tenant may reserve such rights in a lease. In addition, case law in New Jersey imposes an obli - gation on landlords to mitigate damages in the event of a tenant default. This applies in commercial and residential contexts. Accordingly, in the event of a ten - ant default where the lease is terminated, the landlord must use commercially reasonable efforts to relet the premises. 6.16 Effect of the Tenant’s Insolvency The tenant’s insolvency in a lease context is governed by applicable bankruptcy, insolvency and creditor’s rights statutes. When the tenant files for bankruptcy under federal bankruptcy law, an “automatic stay” is imposed that initially restricts the enforcement of rem - edies or the termination of the lease by the landlord, in the absence of relief from the bankruptcy courts. Thereafter, there are specific requirements under bankruptcy law with respect to whether a lease – which is a contractual agreement – is to be assumed or rejected, and which establish methods for calcula - tion and recovery of rents unpaid as of the date of the bankruptcy filing. The lease is an executory contract, and bankruptcy law may impose rules and obligations on how this must be treated. 6.17 Right to Occupy After Termination or Expiry of a Lease Typically, landlords require a security deposit at the outset of the lease in the form of either cash security
ant makes to real property. 6.12 Insurance Issues
In New Jersey, the landlord and tenant each main - tain their own insurance. Typically, the landlord will impose an obligation on tenants to maintain specific forms of coverage and to include the landlord as an additional insured (and loss payee with respect to tenant improvements that remain on the premises after the expiry of the lease term). Such insurance will usually include general commercial liability, property insurance for the tenant’s improvements and personal property, and business interruption insurance, all in certain amounts and limits that will vary depending on the premises and the use. Landlords generally require that a waiver of subrogation be provided for the land - lord’s benefit. Often, landlords will maintain insur - ance to cover the common areas, structures and roof as well as general commercial liability and personal injury, with such costs to be included in the operating expenses payable by tenants. 6.13 Restrictions on the Use of Real Estate Restrictions on use are governed by local law as well as historic encumbrances. Landlords generally require tenants to obtain any local approvals for a specified use (unless already covered by a certificate of occu - pancy). In addition, tenants are required to comply with existing and future land encumbrances. 6.14 Tenant’s Ability to Alter and Improve Real Estate Tenants must typically request the landlord’s prior written consent as to any alterations or changes to be made within its leased premises. This is especially important for a landlord in terms of any potential ten - ant alterations that could reach beyond the tenant’s own premises (ie, affect the structural portions of the building, the building systems, or ingress and egress). Often, the lease will provide that a tenant may make alterations without the landlord’s consent, provided that such alterations: • are cosmetic in nature; • do not exceed a dollar threshold;
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