Suppose that a tenant, T, has been renting the basement of a two unit home for several years in NJ. The initial term of the lease was for 1 year and then converted into a month to month tenancy after the first year.

The home was sold to a new owner, N (who plans on occupying the upstairs apartment) and N moved to terminate the downstairs tenancy immediately after purchasing the home by sending out a Notice to Quit that terminated the tenancy after 1 month.

Suppose that T wants to dispute both the underlying grounds for termination as well as the validity of the Notice to Quit.

T's original lease from the previous owner, O contains an arbitration agreement. Can T legally force N to arbitrate both the underlying grounds for termination and the validity of the Notice via arbitration, not in court.

Is the arbitration agreement binding on N?

Can the new owner argue that s/he isn't bound by the arbitration agreement since:

  1. s/he never signed the agreement

  2. T is in a month to month tenancy

  3. S/he moved to terminate the tenancy as soon as he purchased the home?

Will the court send the case to arbitration?

  • Did you read the terms of the lease? I would not be surprised if you agreed to have the terms be transferrable to any subsequent owner of the property. In other words, the change of ownership has no bearing on your lease terms.
    – jwh20
    Nov 21, 2022 at 3:09
  • @jwh20 Does the lease explicitly need to state that it transfers to the new owner or does it transfer by default? In this case, the lease does not discuss what happens when the property is sold. Where in case law is it explicitly stated that a buyer is bound by all terms of a lease by default?
    – S.O.S
    Nov 21, 2022 at 3:42
  • That's why I asked. We don't know the terms of the lease.
    – jwh20
    Nov 21, 2022 at 13:19

1 Answer 1


In general, and in particular in New Jersey, a new owner takes possession subject to existing rental agreements, and in particular subject to existing leases, unless there is a provision in the lease to the contrary. This happens automatically, by law. Thus any lease is as enforceable against the new owner as it would have been against the old.

But how enforceable is this arbitration agreement? How enforceable would it have been against the old owner O?

The basic fact about a month-to-month tenancy is that either party may end it on one month's notice, for any reason or none. Moreover, when a new owner intds to occupy the premises personally, or use them for his or her family, the requirement to honor a previous lease is, in general, not applicable.

T might be able to force N to go through arbitration, depending on the wording of the agreement, and on whether the written lease applies at all after the end of the first year (which it may well not). But on the facts as stated in the question, T would lose in arbitration as well as in court, and if there is any increased expense because of the arbitration, T would be obliged tom pay it.

Let us look at the actual NJ law

N.J.S.A. 2A:18-53 provides that:

any lessee or tenant at will or at sufferance, or for a part of a year, or for one or more years, of any houses, buildings, lands or tenements, ... may be removed from such premises by the Superior Court, Law Division, Special Civil Part in an action in the following cases:

a. Where such person holds over and continues in possession of all or any part of the demised premises after the expiration of his term, and after demand made and written notice given by the landlord or his agent, for delivery of possession thereof. The notice shall be served either personally upon the tenant or such person in possession by giving him a copy thereof or by leaving a copy of the same at his usual place of abode with a member of his family above the age of 14 years. [emphasis added]

Section 2A:18-56 provides that:

No judgment for possession in cases specified in paragraph "a." of section 2A:18-53 of this Title shall be ordered unless:
a. The tenancy, if a tenancy at will or from year to year, has been terminated by the giving of 3 months' notice to quit, which notice shall be deemed to be sufficient; or
? b. The tenancy, if a tenancy from month to month, has been terminated by the giving of 1 month's notice to quit, which notice shall be deemed to be sufficient; [emphasis added]

Section 2A:18-57 provides that:

If no sufficient cause is shown to the contrary when the action comes on for trial, the court shall issue its warrant to any officer of the court, commanding him to remove all persons from the premises, and to put the claimant into full possession thereof, and to levy and make the costs out of the goods and chattels of the person in possession.

No warrant of removal shall issue until the expiration of 3 days after entry of judgment for possession, except as provided for in chapter 42 of this Title.

Section 2A:18-61.1 provides that:

No lessee or tenant or the assigns, under-tenants or legal representatives of such lessee or tenant may be removed by the Superior Court from any house, building, mobile home or land in a mobile home park or tenement leased for residential purposes, other than (1) owner-occupied premises with not more than two rental units or a hotel, motel or other guesthouse or part thereof rented to a transient guest or seasonal tenant; ... except upon establishment of one of the following grounds as good cause ... [emphasis in original]
h. The owner seeks to retire permanently the residential building or the mobile home park from residential use or use as a mobile home park

But note that good cause is not required for an owner-occupied dwelling with no more than two rental units.

T would be wise to consult a lawyer knowledgeable about landlord/tenant law in NJ before attempting to contest the notice or eviction.

  • 1
    @S.O.S The general terms of the lease may well then apply to the continued tenancy. But the term "month to month tenancy" specifically indicates that either party may cancel (or raise rent) on a 1-month notice. If the house is in any part owner-occupied, the NJ statute requiring "good cause" for an eviction or non-renewal appears not to apply. For anything beyond that one should consult a lawyer. Nov 21, 2022 at 6:24
  • 1
    @S.O.S It would have been helpful to mention that in the initial question, or at least to edit it in now. Comments may always be deleted. That said, that provision might be found to conflict with the "month to month" language. Even if it does not, an owner is free to raise the rent on a month to month tenancy every month, if s/he so chooses, subject to any local rent-control laws. A lawyer will probably be needed in any such case. Nov 21, 2022 at 6:43
  • I would say that if there is a contract to terminate an employee only with good cause, that person is not an employee at will. I am not sure if a month-to-month rental is compatible with a "good cause" provision, it might be. If it is, the definition of "good cause" might not be the one from the statute. Nov 21, 2022 at 18:42
  • In the case of Woolley v. Hoffmann-La Roche, Inc the court held that Defendant's motion for summary judgment was granted by the trial court, which held that the employment manual was not contractually binding on defendant, thus allowing defendant to terminate plaintiff's employment at will. If the concept of an "at will" employee and "good cause" are inherently contradictory, the court should have dismissed the case based on these grounds alone - even if the employment manual was contractually binding. It sounds like the court held that the two concepts can coexist if manual was binding.
    – S.O.S
    Nov 21, 2022 at 19:12
  • I would say that if the court had held the manual binding, that would have meant that Woolley was not an employee at will. A change in terminology, not a change of legal rights. Anyway, the analogy may not work for the rental case, such analogies across areas of law often do not work. Nov 21, 2022 at 20:28

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