The opinion of the court was delivered by KEEFE, J.A.D.
Plaintiffs Vincent and Joan Surace appeal from a judgment dismissing their complaint for possession after the Law Division judge concluded that the subject building was governed by the "good cause" provisions of the Anti-Eviction Act (Act), N.J.S.A. 2A:18-61.1, and that the renovation of the premises subsequent to its purchase, reducing the number of rental units, did not remove the defendant tenant's preexisting protection under the Act. We affirm the judgment entered in favor of the defendant. However, for the reasons stated herein, we do not completely endorse the views expressed by the Law Division judge in his reported opinion at 236 N.J.Super. 81, 564 A.2d 134 (Law Div. 1989).
Plaintiffs purchased the property at 2191 McKay Avenue, Fort Lee, New Jersey in 1985. At that time the building
The prior owner did not occupy any of the five units. According to the testimony of plaintiff Vincent Surace, one of the basement units became vacant within three months of the purchase. Plaintiffs' family moved into that unit. Subsequently, the other basement tenant moved out after receiving a moving allowance or other payment from plaintiffs. Plaintiffs removed the partition separating the two basement units and utilized the entire space for their family. The same type of scenario occurred several months thereafter with respect to the first floor tenant who occupied the three room middle unit. Plaintiffs then opened up a stairway from the basement to that unit which was then utilized by plaintiffs' family as a living room, dining room and eat-in kitchen.
Plaintiffs then decided that they wanted defendant's unit for further expansion of their family quarters and served defendant with a notice to quit.
Plaintiffs contend that they have the right to proceed under N.J.S.A. 2A:18-53(a) on the grounds that defendant is simply a holdover tenant. Plaintiffs admit in their appellate brief that there is an absence of cause for evicting defendant under the Anti-Eviction Act but argue that they are exempt from its provisions because the Act excludes "owner-occupied premises
The trial judge essentially found that the statutory words, "owner-occupied premises with not more than two rental units," exempted only a two family house where the owner occupied one of the two units but did not exempt a three residential unit building such as plaintiffs'. 236 N.J. Super. at 87-88, 564 A.2d 134. That interpretation is contrary to the plain meaning of the statute. We endorse, instead, Judge Meehan's analysis of the subject phrase as explicated by him in Sheehan v. Rocco, 243 N.J.Super. 673, 581 A.2d 134 (Law Div. 1990). He concluded, as do we, that:
This interpretation is not only grammatically correct but also has the salutary effect of creating harmony of treatment between owner-occupied premises on the one hand and premises containing three residential units where the purchaser wishes to occupy one of them. (Compare the first paragraph of N.J.S.A. 2A:18-61.1 with N.J.S.A. 2A:18-61.1(l)(3)).
Thus, if the inquiry here was simply a grammatical one, we would conclude that plaintiffs' building was exempt from the Act because at the time the suit was filed plaintiffs occupied the premises and there were only two other rental units occupied by tenants. However, the Act must be interpreted with a view toward its legislative purpose — a recognition that
When defendant became a tenant in 1976 the premises contained five residential units. Because the Act was then in effect, she had the right to expect a continuing tenancy in those premises unless the building was completely removed from the rental market, N.J.S.A. 2A:18-61.1(h), or unless one of the other "good cause" grounds enumerated in the Act developed thereafter. Because the premises were not then owner-occupied and there were then five residential units, she did not have to concern herself with either the exemption from the Act's protection or paragraph (l)(3) of the Act which addresses the right of a non-occupying owner of a building with three residential units to occupy one of those units.
In this case, however, the landlords' family gained occupancy of one rental unit and subsequently two others. The question presented by these facts is whether the premises has lost its character as a five residential unit dwelling because of the plaintiff landlords' conduct or whether it retains those characteristics because of some vested right that defendant tenant has obtained under the Act. The answer is not readily apparent from the statutory provisions. It is doubtful that the Legislature could have foreseen this precise occurrence. Courts have, nonetheless, recognized that
Almost identical issues were presented in the cases of Manning v. Hancher, 217 N.J.Super. 199, 524 A.2d 1357 (Law Div. 1986) and Chambers v. Nunez, 217 N.J.Super. 202, 524 A.2d 1359 (Law Div. 1986). In Chambers, the building in question had three floors. Defendant had been a tenant on the third floor for 14 years. The plaintiff landlord occupied the first floor. There were two tenants occupying separate rental units on the second floor. One of the second floor tenants moved out and plaintiff converted the second floor to one rental unit by removing a partition that had separated the units. The plaintiff then served defendant with a notice to quit. When defendant did not surrender possession, a dispossess action was instituted in which plaintiff claimed exemption from the Anti-Eviction Act because, at the time the complaint was filed, the premises were owner-occupied and there were only two units rented to tenants. The defendant tenant argued that the conversion of the two units into one was a violation of the defendant's rights to live in a four unit building which receives the protection of the Anti-Eviction Act. Judge Fast wrote:
We endorse Judge Fast's analysis as expressed in Manning and Chambers, as did the Law Division judge in this case, because the result, in our view, achieves the legislative goal of maximizing tenant protection. Thus, we hold that the plaintiffs, having taken title to the property knowing that the tenants were protected by the Anti-Eviction Act, cannot now remove that protection by deleting just enough units from the rental market to render the premises exempt from the "good cause" provisions of the Act.