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Waiver of Breaches of Lease Covenants
I previously wrote in this blog about how acceptance of rent by a landlord in a non-payment of rent case may constitute a waiver of all past breaches depending upon the facts in the case.
In breach of covenant cases, however, somewhat different rules apply. Lease covenants are simply the non-monetary promises the tenant makes in a lease. In this situation, there is no waiver by acceptance of rent for a period during which the tenant may occupy the premises. A waiver may become an issue, however, if rent is accepted by a landlord after the tenant's right to possession had terminated, (i.e. after the effective date of a Notice to Quit). For example, in the unpublished case of Han Yang Plaza LLC et als v. Optical Center et al (App.Div. 2006), the tenant argued that the use-limitation clause in the lease was ambiguous and that since the landlord had sent the tenant a notice to cease violating the use clause in 2002, but continued to collect rent for two years thereafter, the breach had been waived. The court disagreed, citing City of East Orange v. Bd. of Water Comm'rs, 41 N.J. 6, 17-18 (1963). The lease in each of these cases contained language that the waiver of any prior violation shall not be construed to be a waiver of a subsequent violation. The court in East Orange stated: “[a]ssuming, though solely for present purposes, that earlier breaches of the condition in a lease may be deemed to have been waived, there clearly was no waiver of the recent and current breaches by the [tenant]. The lease itself expressly provided that the waiver of a violation shall not be construed as a waiver of a subsequent violation. This would be true here, even apart from the provision, since the association's undertaking to maintain the golf course for the sole use of the residents of East Orange was continuing one." Our courts have noted that if a covenant represents a continuing obligation, conduct such as acceptance of rent with knowledge of that breach may legally effect the release of that breach, but not the release of a future breach. Plassmeyer v. Brenta, 24 N.J.Super. 322 (App.Div. 1953).
For example, the tenant’s obligation to provide the landlord with a valid certificate of insurance would be considered a continuing obligation on the part of the tenant.
Also, a waiver is an equitable doctrine, and courts will not apply it woodenly. It would be unfair to allow a tenant to continue to breach covenants in the lease simply because the landlord waived past breaches. Also, a landlord should not be punished simply for being tolerant and attempting to work things out with a tenant short of litigation. These equitable considerations can be developed and argued in a landlord’s favor when a tenant invokes waiver as a defense to an action filed by the landlord to enforce various lease covenants.