On many occasions, a commercial landlord and a tenant who find themselves in court together will enter into a consent judgment as a means to resolve their dispute in order to avoid the time and expense of a trial. The courts provide basic consent judgment forms that the parties may revise to fit their specific situation. A consent judgment will usually contain payment terms with which the tenant must either comply or risk eviction. It may also include other terms covering the tenant’s non-monetary obligations. If the tenant defaults, it usually means the tenant will be evicted. I say “usually” because consent judgments are viewed by many courts as being a hybrid between a traditional judgment and a settlement agreement. Settlement agreements are strongly favored in New Jersey as a means of resolving disputes. Many of our courts are overburdened and understaffed, making settlement of lawsuits highly desirable as a means to preserve judicial resources.
What happens if you have a consent judgment and the tenant fails to make a payment? Most times, the landlord will simply submit a certification to the court detailing the tenant’s default and requesting the issuance of a warrant of removal. The warrant is issued and, ultimately, the tenant is evicted. That’s a clear case. There are situations that arise, however, where the tenant defaults, but then quickly moves to cure the default by making the necessary payment. Nevertheless, the landlord has a vested interest in enforcing its rights under the consent judgment. In New Jersey, if you sleep on your rights there is a good chance you will lose them.
How do courts deal with these situations? The court will look not only at “excusable neglect” (the standard that will be applied in determining whether to vacate a warrant of removal), but also at whether the tenant has cured its default and, in essence, substantially complied with the terms of the consent judgment. Unlike a situation involving enforcement of a traditional judgment, if the tenant has substantially complied with the terms of the consent judgment and cured the default, the court may be less likely to evict the tenant. In making its determination, a court will 1) consider any prejudice accruing to the landlord as a result of the default; 2) apply concepts of equity to its analysis; and 3) ultimately exercise its legal discretion in determining whether to enforce the consent judgment against the defaulting tenant. Because “equity” is involved in the analysis, a court may be less eager to strictly enforce a consent judgment where the tenant has cured its default, and prejudice to the landlord is minimal.
For more information on this topic or any other New Jersey real estate issues, please contact Tim McKeown at email@example.com