Court Opinion

ID: 9700330
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:21:20.102761+00
Date Added: 2024-06-11T13:08:36.171770
License: Public Domain

GARIBALDI, J.,
dissenting.
Today, the majority holds that the Anti-Eviction Act, as amended by L.1986, c. 38, applies to all foreclosing mortgagees holding a lien that was established prior to the leasehold of the tenant in possession. In so doing, the majority does precisely what this Court declined to do in Guttenberg Savings & Loan Ass’n v. *?Rivera, 85 N.J. 617, 428 A.2d 1289 (1981)—namely, extend the Anti-Eviction Act to foreclosing mortgagees without a clear legislative indication that such a construction reflects the Legislature’s intent. Relying primarily on the ambiguous words, “the owner’s or landlord’s successor in ownership or possession,” the Court sweeps away the well-settled property rights of foreclosing mortgagees as well as the priorities set forth in the New Jersey Recording Act, N.J.S.A. 46:21-1 to -4.
The Court achieves that surprising result by ignoring the legislative history of the 1986 amendments, by abandoning the relevant principles underlying Guttenberg, and, ultimately, by erroneously consigning to the Legislature an intent to overrule our unmistakably clear holding in Guttenberg. I believe that we should not accomplish by judicial fiat such sweeping changes of that well-established principle. Indeed, we should achieve such changes only in the face of a clear manifestation of the Legislature’s intent. Because little evidence supports the majority’s conclusion that the Legislature intended the amended Anti-Eviction Act to apply to foreclosing mortgagees, I respectfully dissent from the Court’s holding.
I
To understand the wide-sweeping ramifications of the Court’s ruling, I look no further than Maryland National Mortgage Corp. v. Littlejohn, 261 N.J.Super. 428, 619 A.2d 241 (App.Div.1993), a case argued before this Court with this case.
The facts in Littlejohn are simple. On January 28, 1988, George and Gwendolyn Clapps purchased a single-family house in Irvington, and executed a purchase money mortgage for $58,200 on the same day. The mortgage was recorded on February 5, 1988. On February 1, 1991, the Clappses defaulted, and on November 12, 1991, the mortgagee, Maryland National Mortgage Corporation, filed a complaint seeking foreclosure and possession of the property. A lis pendens was filed on December 9, 1991. After Maryland National had filed both the complaint and the lis *237pendens, Littlejohn entered into a lease with the Clappses to become a tenant on January 3, 1992.
Under the majority’s holding today, Littlejohn, who entered into a lease with a defaulting mortgagor not only subsequent to the recording of the mortgage but also subsequent to the filing of the foreclosure complaint and the lis pendens, is entitled to priority over the foreclosing mortgagee. As a result, the property could be sold at the Sheriffs sale only subject to Littlejohn’s leasehold.
Littlejohn illustrates the unfairness of including every mortgagee within the scope of the Anti-Eviction Act. The Clappses, like most purchasers of single-family dwellings, purchased the single-family dwelling as their residence. They resided in the home until they defaulted. Only after they defaulted did they lease the house. Single-family dwellings, unlike multiple-dwelling apartments, are not typically purchased for investment income but rather are purchased as primary residences. Likewise, a mortgagee lending money to the purchaser of a single-family dwelling does not consider the income from the house as additional security for the mortgage. I doubt that Maryland National or any other mortgagee would have lent the Clappses $58,000 for their home had they realized that at foreclosure the property could be sold only subject to a lease. Who. is going to buy a single-family dwelling with a perpetual tenant? I suggest no one.
Littlejohn presents the exact situation we cautioned against in Guttenberg, supra, 85 N.J. at 632-33, 428 A.2d at 1298, that to burden mortgagees with disadvantageous leases entered into by defaulting mortgagors would be unfair and inequitable. The majority argues that the 1986 amendments solve that problem by permitting successors in ownership or possession to renegotiate unfavorable leases with tenants in possession. To say that that provision alleviates the burdens placed on foreclosing mortgagees by the majority’s holding today is disingenuous, to say the least. Granting foreclosing mortgagees permission to negotiate with tenants in possession is a meaningless concession to a mortgagee *238who cannot sell the single-family dwelling subject to a lease and who never intended to be a landlord. Moreover, although the majority would have us believe that the ability to renegotiate the lease of a tenant in possession is some cure-all or panacea, experience suggests otherwise.
Take the case of the Josephsons. They were month-to-month tenants with no lease to renegotiate. Nevertheless, when faced with an Appellate Division order to pay “market rent,” they moved for a stay of that order. I believe that those forced “renegotiation” situations will seldom lend themselves to amicable negotiations but instead will cause foreclosing mortgagees unending headaches. For example, in the Josephsons’ case, we have a tenant without a lease holding the mortgagee (who has no desire to be a landlord at all) over a proverbial barrel, making the mortgagee fight tooth and nail for market rent. If mortgagees do not take solace in the majority’s assertion that they have no problems because they “may offer a different lease to the former tenant” pursuant to N.J.S.A. 2A:18-61.3b(3), I, for one, would not blame them.
II
Before addressing the specifics of the 1986 amendments, I note at the outset my disagreement with the majority’s conclusion that the Josephsons could not be evicted even under our pre-amendment interpretation of the Anti-Eviction Act in Guttenberg. The Josephsons argue that Chase’s mortgage lien on the property must be subject to their tenancy, which they entered into prior to the mortgage. Although a valid leasehold entered into prior to the recordation of a mortgage takes priority over the mortgage, the Josephsons unmistakably were not leaseholders at the time Chase recorded its mortgage. The majority admits that the Josephsons were merely month-to-month tenants. See ante at 223, 638 A.2d at 1308. Even if the mortgage were subject to the month-to-month tenancy, our interpretation of the Anti-Eviction Act in Guttenberg would permit a foreclosing mortgagee to termi*239nate the monthly tenancy on proper notice. See Harry’s Village, Inc. v. Egg Harbor Township, 89 N.J. 576, 583, 446 A.2d 862, 865 (1982) (stating, “Either party may terminate a monthly tenancy by serving upon the other a month’s notice to quit.”).
The majority erroneously accepts the Josephsons’ contention that our holding in Guttenberg implied that tenants in possession pursuant to a tenancy that antedated the mortgage were protected from eviction by a foreclosing mortgagee. Guttenberg implied no such thing. Guttenberg was concerned with “tenants under leases subordinate to the mortgage,” and we held that the Anti-Eviction Act did not apply to a “mortgagee holding a lien prior to the leasehold of a tenant in possession.” 85 N.J. at 623, 428 A.2d at 1292 (emphasis added).
Aside from the fact that Guttenberg was concerned with tenants under a lease (which all parties admit the Josephsons did not have at the time of the mortgage), the majority’s view that even under Guttenberg the Josephsons would have been protected from eviction rests on a misunderstanding of month-to-month tenancies. Although a month-to-month tenancy is a continuing relationship, see ante at 223, 638 A.2d at 1308, absent application of the Anti-Eviction Act, either party may terminate the tenancy by proper notice. Harry’s Village, Inc., supra, 89 N.J. at 583, 446 A.2d at 865. The majority’s interpretation of the Josephsons’ month-to-month tenancy would effectively transform it into a thirteen-year lease. That it was not a thirteen-year lease counsels against our treating it as such.
Ill
Turning to the 1986 amendments to the Anti-Eviction Act, the ambiguous language relied on by the majority to abrogate a foreclosing mortgagee’s rights is hardly sufficient evidence of the Legislature’s intent to support overruling our clear holding in Guttenberg. The Legislature is presumed to be “‘thoroughly conversant with its own legislation and the judicial construction placed thereon.’ ” Quaremba v. Allan, 67 N.J. 1, 14, 334 A.2d 321, *240328 (1975) (quoting In re Keogh-Dwyer, 45 N.J. 117, 120, 211 A.2d 778, 779 (1965)).
Neither the word “mortgagee” nor our decision in Guttenberg is mentioned in the 1986 amendments to the Anti-Eviction Act. I cannot conceive that a Legislature conversant with the Anti-Eviction Act and with Guttenberg would overturn this Court’s decision and so drastically alter the fundamental property rights of foreclosing mortgagees without at least mentioning either the Guttenberg decision or the word “mortgagee” in the amendments or in the legislative history. Plaintiff is forced to rely on ambiguous language in N.J.S.A 2A:18-61.3b referring to an “owner’s or landlord’s successor in ownership or possession.” That language is no more explicit than the language contained in the preamendment version of the Anti-Eviction Act and it certainly does not mirror our admonition in Guttenberg that the Legislature must take a “straight[-]forward” approach should it desire “to modify established fundamental property rights of mortgagees.” 85 N.J. at 627, 428 A.2d at 1295. Our statement in Guttenberg that “[i]t is not realistic to believe that the Legislature intended to modify the relationship [between mortgagees and tenants] by the Anti-Eviction Act without some reference to mortgagees,” id at 626, 428 A.2d at 1294, applies a fortiori to this case because of our explicit holding in Guttenberg.
As the Appellate Division aptly pointed out, a court shall not impute to the Legislature an intention to change established law in the absence of a clear manifestation of legislative intent. 261 N.J.Super. at 439, 619 A.2d at 247; accord Elberon Bathing Co. v. Ambassador Ins. Co., 77 N.J. 1, 18, 389 A.2d 439, 447 (1978).
The majority, nevertheless, contends that the “plain language” of subsection b of N.J.S.A 2A: 18-61.3 encompasses foreclosing mortgagees because foreclosing mortgagees must obtain an order of possession to gain possession of property after default. “Thus, the prohibition in N.J.S.A 2A:18-61.3 of the removal of a tenant from the premises ‘by any order or judgment for possession * * * by the owner’s or landlord’s successor in * * * possession’ would *241appear to include foreclosing mortgagees seeking possession from tenants residing in the mortgaged premises.” Ante at 225-26, 638 A.2d at 1309.
Although one can make an argument that this subsection was intended to refer to foreclosing mortgagees, to suggest that “plain language” dictates that result is disingenuous. To me, “plain language” would dictate that result if subsection b read: “A person who was a tenant of a landlord in premises covered by the Act may not be removed by any order or judgment for possession from the premises by a foreclosing mortgagee.”
An equally plausible reading of subsection b is that the phrase “owner’s or landlord’s successor in ownership or possession” cannot refer to foreclosing mortgagees because foreclosing mortgagees do not become successors in possession until an order of possession has been rendered and they do not become successors in ownership unless they elect to purchase the foreclosed property. Subsection b prohibits those who are already the “owner’s or landlord’s successor in ownership or possession” from obtaining an order to remove a tenant. Because a foreclosing mortgagee is not a successor in possession, at least until a judicial order grants that mortgagee possession, subsection b cannot apply to him or her.
The meaning of “owner’s or landlord’s successor in possession or ownership” is far from “plain.” One may become a successor in ownership or possession in a myriad of ways. The language may merely evidence the Legislature’s attempt to prevent clever pretexts and stratagems devised by creative landlords and owners seeking to avoid the coverage of the Anti-Eviction Act. The inclusion of the “successor” language may apply to instances in which the parties circumvented the Act through fraudulent or illusory conveyances, such as those between affiliated entities or entities undergoing reorganization. Those possibilities are equally as plausible as, if not more plausible than, the majority’s conclusion that the Legislature intended the 1986 amendments to overturn Guttenberg and to subvert the well-defined property rights of mortgagees.
*242In any event, plainly the majority’s “plain language” is not so plain. Moreover, the majority’s attempt to buttress its “plain meaning” construction is similarly unconvincing. The majority alleges that because N.J.S.A 2A:18-61.6e exempts purchasers at a foreclosure sale from the pretextual-eviction treble-damage provision (N.J.S.A 2A:18-61.6c), foreclosing mortgagees are not exempt from the anti-eviction section of the Act (N.J.S.A 2A:18-61.3b). The majority states that purchasers at foreclosure sales are typically foreclosing mortgagees. Ante at 230, 638 A.2d at 1311. Thus, N.J.SA 2A:18-61.6e’s exemption from treble damages for “owners” obtaining title at a foreclosure sale is really a statutory exemption for foreclosing mortgagees. Exempting owners who gain title at foreclosure sales from the treble-damages provision is seen by the majority as a one-time exclusion of foreclosing mortgagees from the term “owners.” Because foreclosing mortgagees are not similarly excluded from the term “owners” in the anti-eviction section, the Legislature must have intended that section to apply to them. So goes the argument.
That argument begs the very question before us. Rather innocuously, the majority states that because purchasers at foreclosure sales are typically foreclosing mortgagees, the exemption from treble damages for an owner obtaining title by means of a foreclosure sale is really an exclusion for foreclosing mortgagees from the term “owners.” But the statute does not say that. It says merely that if you become an owner by means of a foreclosure sale, you cannot be subject to pretextual-eviction treble-damage liability. The statute does not read as an exemption for foreclosing mortgagees because they are not within the scope of the term “owners” for this section. We settled in Guttenberg that foreclosing mortgagees were not within the scope of the term “owners.” 85 N.J. at 629-30, 428 A.2d at 1296. The question before the Court today is whether a foreclosing mortgagee is an “owner’s or landlord’s successor in ownership or possession” for the purposes of N.J.S.A 2A:18-61.3b. The majority’s discussion of the treble-damage provision and who may or may not be liable under it sheds no light on that question.
*?Moreover, a plain reading of the 1986 amendments reveals that “owners” would be subject to treble-damage liability unless they obtained title to the premises at a foreclosure sale and the former owner had previously evicted the tenants on the premises by permanently retiring the premises from residential use or by permanently boarding up the premises. See N.J.S.A 2A:18-61.1 e. The implication of this provision is similarly plain: the amendments were designed to apply when an owner has sought to retire property from residential use or to board it up permanently. That exemption for those obtaining title at a foreclosure sale is statutorily linked to such situations. The amendment does not imply that. foreclosing mortgagees are generally subject to the Act. It is merely a legislative recognition that those obtaining title to realty at foreclosure sales should be held blameless to tenants who have already been evicted by the former owner under certain provisions of the Act. Contrary to the majority’s opinion, the 1986 amendments were not focused in the least on foreclosing mortgagees.
Indeed, the omission of any reference to “mortgagees” indicates that the Legislature did not design the amendments to overturn Guttenberg and to subject mortgagees to the Anti-Eviction Act. Where statutory language is not plain on its face, the statute must be interpreted to effectuate legislative intent. See, e.g., Cedar Grove, Inc. v. Stanzione, 122 N.J. 202, 213, 584 A.2d 784, 789 (1991); State v. Maguire, 84 N.J. 508, 514, 423 A.2d 294, 297 (1980). I therefore now turn to the traditional sources of legislative intent to demonstrate that the Legislature never intended the 1986 amendments to include foreclosing mortgagees.
The legislative findings describe the problem before the Legislature as the owners’ “removal of blameless tenants in order to directly or indirectly profit from conversion to higher income rental or ownership interest residential use.” N.J.S.A. 2A:18-61.1a.a. The Legislature’s concern was the use of “pretexts [and] strategems” to circumvent state eviction laws, N.J.SA 2A:18-61.1a.b, resulting in a plethora of hardships to displaced tenants, *244N.J.S.A 2A:18-61.1a.d to -61.1a.e. Consequently, the Legislature found, without any mention whatsoever of problems caused by foreclosing mortgagees, that citizens should receive “the broadest protections available under State eviction laws____” N.J.S.A 2A:18-61.1a.d. Those findings, like the statutory language, suggest that the Legislature was not thinking of mortgagees.
When we probe beyond the Legislature’s words and findings, the legislative intent becomes even clearer. The 1986 amendment resulted from two separate bills, S-1912 and A-1840, which were consolidated before enactment. Nowhere in the legislative history does the word “mortgagees” appear. Nothing even hints that the Legislature was contemplating that the amendments would apply to foreclosing mortgagees.
The statement to A-1840 asserts that the “bill would prevent apartment house owners from using certain legal pretexts to eject tenants in order to make the building available for conversion to condominiums or cooperatives, or for subsequent rental at more lucrative rates.” Statement Accompanying Assembly No. 1840 (Introduced by Assemblyman Catrillo, et al.), at 3 (1986). It explains that “[ejxisting law” permitted “landlords” to terminate tenancies either on the pretext of retiring the premises from residential use or by simply boarding up a building. Ibid. The bill would now prevent removal of the tenants by such means. Ibid. The statement makes clear that the Act is aimed at landlords, not foreclosing mortgagees.
The phrase at issue here, “successor in ownership or possession,” first appeared in S-1912. Like the statement accompanying A-1840, the statement to S-1912 asserts that it would prevent “landlords” from using legal pretexts to eject tenants to convert property to higher-rental units. Statement Accompanying Senate No. 1912 (Introduced by Sen. Jackman), at 5 (1986). The statement repeatedly refers to the current rights of “landlords” and “tenants” when discussing how the bill would change their relationship. See id. at 5-6. Moreover, it states that a landlord must *245inform a “prospective purchaser or lessor” in writing of any existence of any restrictions that apply to the property. Id. at 5.
The statement of the Senate Labor, Industry and Professions Committee regarding the combined bill of the Senate and the Assembly confirms that the phrase “prospective purchaser” does not include a foreclosing mortgagee. The first paragraph of the statement recites: “This bill addresses abuses that tenants suffer when a landlord evicts them because he seeks to permanently board up or demolish his building or seeks to retire permanently the building from residential use and then subsequently allows residential occupancy of the building.” Senate Labor, Industry and Professions Committee, Statement to Senate Committee Substitute for Senate No. 1912, and Assembly No. 1840, at 1 (1986). Notably absent is any reference to mortgagees.
One piece of legislative history mentions foreclosures. An amendment proposed by Senator Lesniak, part of which affected N.J.S.A 2A:18-61.6e, provided an exemption from the Act for a “purchaser (or his successor) of premises at a foreclosure sale, execution sale or bankruptcy sale ... when the former owner of the premises sought to retire permanently the premises from residential use or to permanently board up or demolish the premises and evict[ ] the tenants____” Statement Accompanying Proposed Amendments to Senate Committee Substitute for Senate Bill No. 1912, and Assembly Bill No. 1840, at 2 (1986). As the statement reflects, the amendment affects owners or their successors in interest who permanently board up property or retire it from residential use. In that limited context, the Lesniak amendment exempts purchasers at foreclosure sales, including foreclosing mortgagees. The 1986 amendment did not exempt foreclosing mortgagees from any other section of the Act because the Act did not apply to them.
Consistent with the legislative statements, Governor Kean, when signing the bill, proclaimed that the 1986 amendment would protect “tenants from the threat of eviction in real estate conversion projects.” Governor’s News Release for S-1912/A-1840, Oct. *24629, 1986, at 1. The Governor’s message emphasized that the changes would “provid[e] more protection for tenants against inequitable displacement by landlords.” Ibid. Like the Legislature, the Governor perceived that the statute was aimed only at landlords who attempted to evict tenants through pretextual means.
Contrary to the majority’s view, ante at 231, 638 A.2d at 1312, recent legislative history reconfirms that the Legislature did not believe that it was including foreclosing mortgagees within the prohibition against evicting tenants without “good cause” by enacting the 1986 amendments. Last year, in the recently completed second session of the 205th Legislature, A-2402 was introduced into the Assembly. Assembly No. 2402 (1993). The sole purpose of the bill was to require a foreclosing mortgagee or other lienholder to comply with the Act. In relevant part, the committee statement recites:
The purpose of this bill is to reaffirm the intent of the Legislature in enacting the 1986 amendments to the Anti-Eviction law by including foreclosing mortgagees and other lienholders, along with landlords and owners, as parties who must comply with the procedures set forth in the anti-eviction act, P.L.1974, c. 49, when evicting tenants from certain rental property. The New Jersey Supreme Court held in Guttenberg S. & L. Ass’n v. Rivera, 85 N.J. 617 [428 A.2d 1289] (1981), that a mortgagee that foreclosed on property was not covered by that act, and did not have to comply with the statutory procedures when evicting tenants whose leaseholds were subsequent to the mortgage. It is the Legislature’s intent that mortgagees that foreclose on rental property covered by the act must comply with the provisions of the act, and may evict tenants only on the basis of “good cause” as provided by the act.
[Assembly Housing Committee, Statement to Assembly No. 2102, at 1 (1993).]
The Assembly passed the bill, but the Senate never posted it for a vote. Consequently, it died at the end of the session. A similar bill, A-178, has been introduced in the current legislative session. Assembly No. 178, 206th Leg. (1994). The Legislature’s refusal to adopt A-2402 echoes the Legislature’s consistent message that the 1986 amendments to the Anti-Eviction Act were not intended to overrule our clear holding in Guttenberg.
The majority erroneously finds support for its interpretation of the 1986 amendments in recent additions to the Anti-Eviction Act. *247See ante at 281, 638 A.2d at 1312. As the majority explains, on December 27, 1993, the Legislature once again amended the Anti-Eviction Act by adding N.J.SA 2A:18-61.1g and -61.1h. Ibid. The former empowers municipalities to enact ordinances that would provide relocation assistance to tenants who are evicted because of an owner’s failure to abide by zoning regulations. The latter requires owners to provide the same relocation assistance directly to evicted tenants in municipalities that have not passed an ordinance pursuant to N.J.SA 2A:18-61.1g. Mortgagees in possession through foreclosure are not subject to relocation liability under the amendment. N.J.S.A 2A:18-61.1g.d and -61.1h.e.
The majority concludes, as it did with reference to the treble-damage-liability provision, that the Legislature’s exclusion of mortgagees who gain possession through foreclosure from the potential liability authorized by this section implies that the Legislature intended to cover foreclosing mortgagees in the anti-eviction section of the Act. Just as was the case with the treble-damage provision, those recent additions merely reflect a legislative recognition that mortgagees obtaining possession or title at a foreclosure sale should be held blameless to tenants who have already been served with a notice of eviction by a former owner pursuant to N.J.SA 2A:18-61.2g.
Had the Legislature intended that foreclosing mortgagees be covered under the anti-eviction section of the Act, it would have passed A-2402 last year or it will pass A-178 this year. Until the Legislature provides the Court with a clear indication that it has overruled Guttenberg, we should not infer its intent to do so from the recent amendments providing relocation assistance to evicted tenants. That mortgagees who obtain possession through foreclosure are not liable for such relocation assistance in no way suggests that they are subject to the “good cause” requirements of the Act.
IV
Furthermore, I disagree with the majority that the public-policy reasons for excluding foreclosing mortgagees from the Act no *248longer exist. Ante at 227, 638 A.2d at 1310. Significant reasons still exist for excluding foreclosing mortgagees from the Act.
First, the majority’s decision today conflicts with the underlying policy of N.J.S.A. 46:21-1, a section of the New Jersey Recording Act, which provides:
Except as otherwise provided herein or in chapter 9 of Title 12A of the New Jersey Statutes, whenever any deed or instrument of the nature or description set forth in section 46:16-1 of this Title, which shall have been or shall be duly acknowledged or proved and certified, shall have been or shall be duly recorded or lodged for record with the county recording officer of the county in which the real estate or other property affected thereby is situated or located such record shall, from that time, be notice to all subsequent judgment creditors, purchasers and mortgagees of the execution of the deed or instrument so recorded and of the contents thereof.
The Recording Act unmistakably provides that a duly-recorded interest in real property serves as notice to and takes priority over the interests of all persons obtaining subsequent interests in the property. The majority’s interpretation of the Anti-Eviction Act gives tenants a superior right to possess the leasehold despite the recordation and priority of the mortgagee’s security interest.
Thus, the Court has elevated tenancies subsequent to a mortgage above the priorities scheme of the Recording Act. “This construction is in complete derogation of the recording act policy that a first-in-time interest in realty has priority.” Harold N. Hensel, Note, New Jersey’s Anti-Eviction Act Prohibits Removal of Residential Tenants by Foreclosing Mortgagees Upon Default of Landlord Mortgagor Absent Good Cause, 11 Seton Hall L.Rev. 311, 324 (1980). “The resolution of the conflict between the Anti-Eviction Act policy and the first-in-time, first-in-right policy underlying the recording acts and mortgage law should be left to the legislature, which is in the best position to resolve it.” Id. at 326.
Similarly, the Legislature is better suited than the courts to analyze the other effects of applying the Anti-Eviction Act to foreclosing mortgagees. In Guttenberg, we noted a substantial difference between the concerns of mortgagees and those of landlords regarding mortgaged property. 85 N.J. at 626-27, 428 A.2d at 1294-95. We recognized that the value of mortgagees’ *249security interests could be “substantially impaired by disadvantageous leases, adversely affecting the property’s value” were we to construe the Act to apply to foreclosing mortgagees. Id. at 627, 428 A.2d at 1295.
In Guttenberg we also cited evidence that undermining mortgagees’ security interests could, in turn, “accelerate the decrease in the supply of mortgagee funds” and could discourage lending for the rehabilitation of urban housing. Id. at 681, 428 A.2d at 1297. Those results would, of course, conflict with the larger purposes of the Anti-Eviction Act. If the value of real estate as security for loans fell, mortgagees would significantly reduce the level of lending in areas that traditionally experienced elevated default rates. That, of course, would most severely affect depressed urban areas.
The mortgagee banks’ reluctance to become involved in running apartment buildings creates additional problems. Furthermore, the costs of renegotiating leases with a defaulting mortgagor’s former tenants, or bringing legal action against tenants refusing to negotiate, may either diminish the property’s foreclosure value or create an impenetrable cloud on the property, thus rendering it unsalable. In this scenario, if subjected to the Anti-Eviction Act’s eviction-for-cause restraints, mortgagees presently conducting business in New Jersey may choose to follow the bank that refused to do business in Washington, D.C. Thus, while the amended Act indicates that tenants are to be accorded the broadest possible protections, the practical effect of including foreclosing mortgagees within the Act’s good cause restraints may significantly hinder mortgage funding in New Jersey.
[James E. Tonrey, Note, Protecting Tenants from Foreclosing Mortgagees: New Jersey Anti-Eviction Act In the Postr-Guttenberg Era, 23 Seton Hall L.Rev., 1006, 1064 (1993) (footnotes omitted) (hereinafter Tonrey).]
Take for example, the District of Columbia, which construed its anti-eviction legislation to cover foreclosing mortgagees. See Administrator of Veterans Affairs v. Valentine, 490 A.2d 1165, 1169— 79 (D.C.App.1985) (holding mortgage insurer prohibited from evicting tenants by District of Columbia’s Rental Housing Act despite fact that mortgagee had purchased property at foreclosure and had conveyed it to insurer). After that decision, one lender refused to make further loans in the District. Tonrey, supra, 23 Seton Hall L.Rev. at 1064.
*250Plaintiff argues that this Court’s holding today will seriously chill the development of affordable housing in New Jersey by scaring away potential mortgagees whose capital is vital to housing developments. Plaintiff focuses on the long-range impact that making all mortgagees’ rights subordinate to any and all tenants will have on the source of mortgage funds. It concludes that subjecting foreclosing mortgagees to the Anti-Eviction Act will decrease the supply of mortgage funds and will be particularly devastating to the inner cities. Additionally, plaintiff asserts that the economic burdens imposed on mortgagees by the renegotiation of leases with a defaulting mortgagor’s former tenants and by litigation in the event the parties cannot agree on new terms will undoubtedly make a potential mortgagee think twice about extending mortgage financing.
Defendants, on the other hand, allude to the impact of the present foreclosure climate on tenants. They assert that without the protection of the Anti-Eviction Act, tenants will experience a devastating impact from the present wave of foreclosures. They focus on the more immediate concerns of individual tenants facing eviction as a result of foreclosure.
I admit that one can muster good arguments on both sides of the issue. I do not profess to know which is better. However, I do know that the issue is more properly addressed by the Legislature than by this Court. The balance between the immediate concerns of the tenants and the long-term supply of mortgage funds is one more properly struck by the Legislature. Foreclosing mortgagees should be subject to the Anti-Eviction Act only by informed legislative judgment.
One final note: that the Legislature, as well as the banking and lending institutions, would have failed to address these important and complex public-policy issues had the Legislature intended the 1986 amendments to the Anti-Eviction Act to apply to foreclosing mortgagees is inconceivable. That no hearings were held and no banking or lending institutions voiced concerns again suggests that no one, including the Legislature, believed that the 1986 *?amendments applied to foreclosing mortgagees. The Legislature ordinarily does not try to slip such sweeping policy changes by both the general public and the special interests in the hope that no one will notice. The 1986 amendments were no aberration in that regard; they simply do not address foreclosing mortgagees.
CLIFFORD and POLLOCK, JJ., join in this opinion.
For reversal—Chief Justice WILENTZ and Justices HANDLER, O’HERN and STEIN—4.
For affirmance—Justices CLIFFORD, POLLOCK and GARIBALDI—3.