The ongoing financial crisis continues to affect the negotiation of commercial leases in both obvious and subtle ways. The price of the space and the relative bargaining positions of landlord and tenant are issues that are discussed regularly. The effect of the current state of the marketplace with respect to the negotiation of a landlord’s rights of distraint and lien is less apparent, but is an issue on which the parties should focus more intently in the current environment.

In New Jersey a landlord can secure delinquent rent payments through the statutory remedy of distraint, or the right to exclude the tenant from the demised premises, and consequently gain control over the tenant’s goods and chattels, which is known as distress. Pursuant to the distraint statute, N.J.S.A. 2A:33-1 et seq., a landlord may, for arrears of rent, distrain goods and chattels located at the demised premises and belonging to the tenant, with certain limited exceptions. The landlord may only distrain for one year’s arrears of rent, and such distraint shall be made within six months after the rent becomes due, or, if the rent is payable in installments, within six months after the entire year’s rent has become due. N.J.S.A. 2A:33-7. No distraint shall be permitted for money owed on a lease or other agreement for the occupation of any real property used solely as a residence of the tenant. N.J.S.A. 2A:33-1.

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