## Facts

- A tenant rented a furnished second-floor apartment in Elizabeth, New Jersey, for herself and three minor children under an oral tenancy at $35 per week, utilities included.
- At the start of the tenancy, the apartment was in poor condition, and the landlord promised to make it “livable” and to complete specific repairs.
- Conditions included broken or missing screens and storm windows, boarded-up windows, missing radiators, holes in floors and walls, falling plaster, inoperable electrical fixtures, sewage backup, vermin infestation, and inadequate heat.
- Much of the furnished furniture was unusable; the tenant replaced items as needed.
- The landlord’s repair efforts were found to be slow and ineffective and were undertaken mainly after pressure from courts or municipal authorities.
- In a prior summary dispossess action for nonpayment, a court found a breach of an express warranty of habitability and reduced rent retroactively.
- After the tenant moved out, she sued to recover the difference between rent paid and the fair value of the premises while defective.
- The trial court awarded the tenant a net recovery based on the reasonable rental value of the apartment as actually maintained; the Appellate Division reversed.

## Issues

1. Whether a residential tenancy includes an implied warranty that the landlord will maintain the premises fit for human habitation during the term.
2. How to measure the tenant’s rent obligation and monetary relief when the landlord breaches habitability obligations.
3. Whether continued occupancy and rent payments waive, or estop, the tenant from obtaining rent abatement or damages.

## Decision

- The New Jersey Supreme Court reversed the Appellate Division and reinstated the tenant’s recovery with modification.
- The Court recognized an implied warranty of habitability in residential leases, requiring the landlord to maintain premises fit for human habitation throughout the tenancy.
- The Court held that when the warranty is breached, rent and damages should be determined by comparing the value of the dwelling as warranted with its value in defective condition; the tenant owes only the latter value for the affected period.
- The Court rejected automatic waiver based solely on the tenant’s continued occupancy and rent payments.

## Legal Principles

- A residential lease carries an implied warranty (or covenant) of habitability obligating the landlord to maintain livable conditions during the lease term.
- Residential leasing is treated as a contract relationship with interdependent obligations; the tenant’s rent duty is tied to the landlord’s performance of habitability duties.
- For breach of habitability, the trier of fact determines (1) fair rental value as warranted and (2) fair rental value as maintained in defective condition; the difference supports rent abatement or tenant damages for the relevant period.
- A tenant’s remaining in possession and paying rent does not, by itself, waive habitability claims or bar recovery for the period of substandard conditions.

## Conclusion

The court modernized New Jersey landlord-tenant law by recognizing an implied warranty of habitability and adopting a valuation-based method for rent abatement and damages, while allowing tenants to remain in possession without forfeiting monetary relief for uninhabitable conditions.


Berzito v. Gambino, 308 A.2d 17 (N.J. 1973)