USA – NEW JERSEY Law and Practice Contributed by: David Freylikhman, Cory Mitchell Gray, David Jensen and Jody Saltzman, Greenberg Traurig LLP
include the landlord as an additional insured. Such insurance will usually include general com - mercial liability, property insurance for the ten - ant’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 landlord’s benefit. Often, landlords will maintain insurance to cover the common areas, structures and roof as well as general commer - cial liability and personal injury, with such costs to be included in the operating expenses pay - able 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 gener - ally require tenants to obtain any local approvals for a specified use (unless already covered by a certificate of occupancy). 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 prem - ises. This is especially important for a landlord in terms of any potential tenant alterations that could reach beyond the tenant’s own premises (ie, affect the structural portions of the build - ing, the building systems, or affect ingress and egress). Often, the lease will provide that a ten - ant may make alterations without the landlord’s consent, provided that such alterations: • are cosmetic in nature; • do not exceed a dollar threshold; • do not require a building permit; and/or
• do not affect the structure, the roof, the build - ing systems, or ingress to or egress from the building. 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 habitabil - ity. In addition, case law in New Jersey imposes an obligation on landlords to mitigate damages in the event of a tenant default. This applies in com - mercial and residential contexts. Accordingly, in the event of a tenant 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 gov - erned 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 remedies 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 meth - ods for calculation 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
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