All too often, tenants move out of their leased offices, warehouses or other place of business and leave behind valuable equipment, inventory or other property.  Operating under the mistaken belief this property is legally abandoned, landlords often promise this property to future tenants or, in some instances, may retain the property for their own use.  Landlords should be aware this practice may result in severe economic consequences.

New Jersey has adopted a comprehensive statutory procedure to govern the disposition of personal property left at premises by a tenant whose lease has expired.  This statutory scheme, commonly known as the Abandoned Tenant Property Act (the “Act”), defines the manner in which landlords may dispose of “any tangible goods, chattels, manufactured or mobile homes or other personal property left upon premises by a tenant.”  The Act does not apply to abandoned motor vehicles or intangible property, such as bank accounts or insurance policies.  Furthermore, any statutory liens a landlord may have acquired on a tenant’s property are not affected by the Act. 

Before a tenant’s property may be considered abandoned under the Act, two general conditions must be satisfied: (1) legal possession of the rental premises must be restored to the landlord; and (2) the tenant must be provided an opportunity to retrieve the property.  Possession of the rental premises can be restored to the landlord through a summary eviction proceeding in the Superior Court.  This is necessary even though the tenant is no longer in physical possession of the leased premises.  Once the Court enters judgment restoring legal possession to the landlord, the landlord must then apply for a warrant of removal, which constitutes the final step in the eviction proceeding.

The obligations imposed upon landlords under the Act extend well beyond the eviction process.  Once the landlord obtains legal possession of the leased premises, the landlord must notify the former tenant, in writing, that its personal property must be removed within thirty days, absent which the landlord may dispose of the property.  This notice must be forwarded to the tenant, by certified mail, return receipt requested addressed to the tenant, at the tenant’s last known address (which may be the address of the renal premises).

Pending expiration of thirty days, the landlord must store the tenant’s property in a reasonably safe place.  If the tenant fails to respond within the applicable time, the property is conclusively presumed to be abandoned.  Only then may the landlord sell or dispose of the property without consequence or further obligation to the tenant.  In the event the tenant responds to the notice the landlord is required to provide the tenant reasonable access to the property for purposes of removal.  At that time, the tenant must reimburse the landlord for all costs incidental to storage.

Absent a landlord’s strict compliance with the statutory requirements, a tenant may sue its former landlord and recover damages equal to twice the value of its property together with legal fees and costs.  Partial compliance is insufficient to guard against potential liability.  Navigating through the Act’s statutory requirements can be an onerous task.  Fortunately for landlords, if a written lease is in place that specifically addresses the landlord’s responsibilities regarding abandoned tenant property, the landlord is shielded from the mandates of the Act, not to mention a potential claim for enhanced damages.  To avoid the pitfalls of non-compliance, landlords are encouraged to have counsel negotiate written leases containing specific provisions governing the disposal of abandoned tenant property.  By doing so, landlords may eliminate the risk of litigation and exposure to substantial damage claims.