The New Jersey Department of Health & Senior Services ("DOH") maintains that if mold is found inside any building, corrective action must be taken immediately to prevent further exposure and property damage. However, the DOH correctly points out that "there are no standards, regulations, or [State] guidelines upon which to base a health determination or exposure." Mold Advisory Bulletin, Issue ADV-02-04, September 2004. The potential for the establishment of standards pertaining to mold in indoor air was first presented in 2008 when Senator Anthony Bucco introduced the Toxic Mold Protection Act of 2008 to the New Jersey Legislature. In September 2008, Greenbaum Rowe alerted clients and friends that if the bill was passed into law as written, standards for levels of mold in indoor air would be established by the Department of Community Affairs ("DCA") and as a result, landlords of residential, commercial, and industrial properties alike would have certain affirmative disclosure and remediation obligations. Two years later, the Act has been reintroduced as the Toxic Mold Protection Act of 2010. Therefore, there are still no standards for mold in indoor air. The lack of guidance can land a property owner in court.

New Decision

Although mold has been the subject of many personal injury and construction defect lawsuits, it has never served as a basis for constructive eviction in a landlord/tenant action, until now. In Marusiak v. McCall, A-1529-09T3, September 7, 2010, the Appellate Division upheld a ruling from the Special Civil Part of the Law Division where the visual observance of mold in an apartment was deemed a valid ground for a constructive eviction action by a tenant against a landlord. The facts of the case are as follows: On October 19, 2009, Plaintiff entered into a one-year lease for an apartment in Ringoes, New Jersey. Approximately four months later, Plaintiff observed mold on the bottom of the furniture, in her daughter's room, and on her daughter's toys. Plaintiff notified the Defendant about the mold who, after observing it for himself, provided Plaintiff with a dehumidifier. A lab report obtained by Defendant shortly thereafter confirmed that a mold condition existed in the apartment. On August 18, 2009, Plaintiff vacated the apartment and demanded the return of her security deposit in the amount of $1800. Defendant refused to return the deposit and held it as rent since Plaintiff failed to provide the requisite thirty (30) day notice to vacate.

Plaintiff then filed a lawsuit for $3600, double the amount of her security deposit, as permitted by law. At trial, Defendant did not dispute the presence of mold in the apartment but he maintained that he had corrected the problem with the dehumidifier. Plaintiff relied upon a provision in the Lease Agreement that stated, "If in any event...damage suffered to the premises results in that the premises is not suitable for the purpose for which it has been leased, it shall constitute a ground for the tenant or the landlord to cancel this lease." The court interpreted the cause of action as constructive eviction and the issue to ultimately be decided was whether the tenant was entitled to move out and/or make the necessary repairs and withhold the costs of the repairs from the rent. The court opined that "present day demands of fair treatment for tenants with respect to latent defects remediable by the landlord...require imposition on him of an implied warranty against such defects...where...there is such a covenant, whether express or implied, and it is breached substantially by the landlord, the courts have applied the doctrine of constructive eviction as a remedy for the tenant. Under this rule any act or omission of the landlord...which renders the premises substantially unsuitable for the purpose for which they are leased, or which seriously interferes with the beneficial enjoyment of the premises, is a breach of the covenant of quiet enjoyment and constitutes a constructive eviction of the tenant." A judgment for double damages was rendered in favor of Plaintiff, less certain costs for refrigerator cleaning. Defendant appealed, arguing that he was not given ample opportunity to fully remediate but the Appellate Division affirmed the lower court's ruling.

Since Marusiak is unreported, it could not bind another court but it could potentially be used to persuade. However, the facts and the outcome of the case raise questions about its potential reach. For example, the opinion specifically references covenants pertaining to "habitability" and as such, it is unknown whether this case could persuade another court considering a commercial or industrial landlord/tenant action (i.e. non-residential) where a mold condition negatively impacts the purpose for which the property is leased. Additionally, specific terms of a Lease Agreement are critical. In this case, whether and how the Lease Agreement at issue specifically addressed notices to cure and/or maintenance responsibilities is unknown. Finally, if the presence of mold can serve as adequate grounds for constructive eviction, can other environmental problems do the same? And if so, which ones and to what degree? The answers to these questions are as yet to be determined. Nevertheless, this case highlights the importance of a landlord's obligations with respect to mold and indoor air quality overall and the need for careful lease drafting.