In response to the COVID-19 pandemic, in March 2020 the New Jersey Courts postponed all commercial landlord/tenant trials and barred the issuance of Writs of Possession arising out of Final Judgments in Foreclosure in commercial foreclosures. As a result, commercial landlords and lenders in New Jersey faced with tenant and borrower defaults have been left without a remedy for almost a year. Last week, the New Jersey Courts issued two Notices to the Bar that eased these restrictions. Copies of the Notices are posted here and here.
In the first Notice, the Courts expanded the circumstances in which a commercial landlord could seek a landlord/tenant trial—the first step in evicting a commercial tenant. The landlord must still show “emergent circumstances,” and the default in most cases must be for something other than non-payment of rent. In light of this high hurdle, many commercial landlords have delayed filing for possession and instead proceeded with lawsuits against tenants for money damages arising out of the failure to pay rent. However, for the first time, the Courts recognized that emergent circumstances can exist if the tenant’s non-payment of rent risks a foreclosure or tax lien.
The second Notice from the Courts was more straightforward. As of February 15, 2021, post-judgment actions, including writs of possession, in commercial foreclosures will be allowed to proceed. Therefore, unlike most commercial tenants, commercial property owners subject to a final judgment in foreclosure now risk eviction from their properties. We expect that the Courts will continue to issue Notices to the Bar over the next few months further loosening restrictions put in place in early 2020.