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(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

     Argued October 13, 1993 -- Decided April 13, 1994

    STEIN, J., writing for a majority of the Court.

    The issue on appeal is whether the 1986 amendment to N.J.S.A. 2A:18-61.3 of the Anti-Eviction Act, which extended the Act's anti-eviction restrictions to "an owner's or landlord's successors in possession or ownership," supersedes the Court's decision in Guttenberg Savings & Loan Ass'n v. Rivera, which held that the Anti-Eviction Act did not protect tenants from eviction by a foreclosing mortgagee.

    The Josephsons are month-to-month tenants against whom the Chancery Division entered an order for possession in favor of Chase Manhattan Bank (Chase), the mortgagee foreclosing on the property that the tenants occupy. The tenants contend that the amended Anti-Eviction Act prohibited the court from entering an order for possession for Chase absent a showing of statutory good cause. Chase contends that the 1986 amendments to the Act should not be construed to overrule the holding in Guttenberg; had the Legislature intended to overrule the Court's decision in Guttenberg, it would have expressed its intention to do so in more explicit language. The Chancery Division held that the month-to-month tenancy predated the mortgage and did not exempt the tenants from the holding in Guttenberg, and that the 1986 amendments to the Act were not sufficiently specific to supersede Guttenberg's exclusion of foreclosing mortgagees.

    On appeal, the Appellate Division affirmed the decision of the Chancery Division. The Appellate Division determined that if the Legislature had intended to amend the statute to overturn the decision in Guttenberg, that purpose would have been clearly expressed in the statutory language and reflected in the legislative history. Absent legislative intent, the court concluded that Guttenberg's interpretation of the Anti-Eviction Act survived the 1986 amendments and, therefore, the Act did not prohibit a court from entering an order of possession for a foreclosing mortgagee resulting in the eviction of tenants from the mortgaged property.

    The Supreme Court granted certification. Although the parties have resolved the underlying dispute, the Court considers the questions presented because of their public importance.

HELD:     N.J.S.A. 2A:18-61.3b applies the Anti-Eviction Act to foreclosing mortgagees and, thus, supersedes the Court's decision in Guttenberg Saving and Loan Ass'n v. Rivera. As amended, the Act protects tenants from eviction by foreclosing mortgagees irrespective of whether their tenancy was established before or after the execution of the mortgage. The Court's holding will be applied prospectively.

1.    Under the common law, a mortgagee is entitled to possession of a mortgaged premises on default of the loan secured by the mortgage. On default, the mortgagee has only a possessory interest, and obtains an ownership interest in the property only when the mortgagee purchases the property at a foreclosure sale. The mortgagee's possessory and ownership interests were encumbered by tenancies only to the extent that the mortgagor's interests were so encumbered at the time of the mortgage. If the mortgagor's interest in the property was subject to a tenancy at the time the mortgage was executed, the foreclosing mortgagee could eject the tenant at the termination of the tenancy. The Anti-Eviction Act prohibited the common-law ejectment of residential tenants or lessees simply because their tenancies or leases had expired. The landlord could terminate the lease only by establishing good cause. (pp. 7-10)

2.    In Guttenberg, the Court held that the Act did not apply to the foreclosing mortgagees holding a mortgage that predated the tenants' leasehold interest. Because the Act's plain language did not include reference to foreclosing mortgagees, the Court declined to construe the statutory language to encompass mortgagees. (pp. 11-13)    

3.    Here, the tenants are protected by the Act, even under its pre-amendment interpretation in Guttenberg. Where a tenant's interest predated the mortgage, that interest would not have been extinguished by the mortgage default, and the mortgagee's interests would be subject to the tenancy. Thus, the Anti-Eviction Act would apply to the mortgagee as a landlord. (pp. 13-17)

4.     The plain language of the statute encompasses both foreclosing mortgagees and purchasers at foreclosure sales. The prohibition of 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 includes foreclosing mortgagees seeking possession from tenants residing in the mortgaged premises. The purchaser of the mortgaged lands at a foreclosure sale, including the mortgagee, succeeds to the estate the mortgagor had at the time of the execution of the mortgage. Such a purchaser is the owner's or landlord's successor in ownership and is encompassed by the plain language of the Act. That reading is consistent with the Act's overall purpose of protecting blameless tenants from eviction. Moreover, the amended language of N.J.S.A. 2A:18-63.1 addresses many of the concerns raised in Guttenberg and reflects the Legislature's intent to supersede Guttenberg's interpretation of the statute. In addition, the Act specifically exempts foreclosing mortgagees from the treble-damage liability imposed for pretextual evictions; however, the Legislature did not exempt foreclosing mortgagees from liability under the anti-eviction section of the Act. When the Legislature sought to limit application of the Act in order specifically to protect foreclosing mortgagees, it did so by enacting a specific exemption from provisions of the Act not intended to affect them, demonstrating its recognition of the special concerns of foreclosing mortgagees. That it did not exempt foreclosing mortgagees from the Act's anti-eviction provisions strongly suggests a legislative determination that those provisions should apply to all successors in ownership or possession, including mortgagees. (pp. 17-28)

5.    Although the application of the Act to foreclosing mortgagees may alter their contractual and common-law property rights, the effect on those interests do not infringe on constitutional contract protections or due process. Enforcement of legislation that adversely affects property rights is valid when the public interest being served clearly outweighs the impairment. There is a substantial public interest in preventing the eviction of blameless tenants. The specific interest impaired by the application of the Act to mortgagees is the possibility that the resale value of the residential property may be greater if the property were vacant. That potential impairment is substantially outweighed by the public concerns the Act addresses. (pp. 28-32)

    Judgment of the Appellate Division is REVERSED.

     JUSTICE GARIBALDI, dissenting, in which JUSTICES CLIFFORD and POLLOCK join, is of the view that the Court, relying on the ambiguous words "the owner's or landlord's successor in ownership or possession," does away with the well-settled property rights of foreclosing mortgagees as well as the priorities set forth in the New Jersey Recording Act. The Court ignores the legislative history of the 1986 amendments, abandons the relevant principles underlying Guttenberg, and erroneously finds a legislative intent to overrule the unmistakably clear holding of Guttenberg. Such change should be achieved only where there is a clear manifestation of legislative intent. Here, there is little evidence to support the majority's conclusion that the Legislature intended the amended Anti-Eviction Act to apply to foreclosing mortgagees.

     CHIEF JUSTICE WILENTZ and JUSTICES HANDLER and O'HERN join in JUSTICE STEIN's opinion. JUSTICE GARIBALDI filed a separate dissenting opinion in which JUSTICES CLIFFORD and POLLOCK join.

SUPREME COURT OF NEW JERSEY
A- 22 September Term 1993

THE CHASE MANHATTAN BANK,
a National Association

    Plaintiff-Respondent,

        v.

MR. AND MRS. SEYMOUR JOSEPHSON,
SHERRI BAGNELL and ROBERT
HANSELMANN,

    Defendants-Appellants,

     and

SAUL WERNER and GRACE WERNER,
MATTHEW STEINFELD, KIM
CAGLIARI, CORRINE McLAUGHLIN,
and ALEX CAPRIO,

    Defendants.

        Argued October 13, 1993 -- Decided April 13, 1994

On certification to the Superior Court, Appellate Division, whose opinion is reported at 261 N.J. Super. 428 (1993).

Susan R. Oxford, Assistant Deputy Public Defender, argued the cause for appellants (Zulima V. Farber, Public Advocate, attorney).

Kenneth D. McPherson, Jr., argued the cause for respondent (Waters, McPherson, McNeill, attorneys; Mr. McPherson and Gregory J. Castano, of counsel; Robert J. Donaher, on the brief).

Melville D. Miller, Jr., argued the cause for amicus curiae Legal Services of New Jersey. (Mr. Miller, attorney; Mr. Miller and Stephen St. Hilaire, on the brief).

Dennis R. Casale argued the cause for amicus curiae New Jersey Bankers Association (Jamieson, Moore, Peskin & Spicer, attorneys).

Gregory C. Diebold submitted a brief on behalf of amicus curiae Hudson County Legal Services (Timothy K. Madden, Director, attorney).

Judith Trachtenberg submitted a letter brief on behalf of amicus curiae Non-Profit Affordable Housing Network of New Jersey, Inc.

    The opinion of the Court was delivered by

STEIN, J.

    The issue presented by this appeal is whether the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12, as amended by L. 1986, c. 138, protects tenants from eviction by foreclosing mortgagees unable to establish any of the statutory grounds for which eviction is authorized. See N.J.S.A. 2A:18-61.1. More specifically, we consider whether the 1986 amendment to N.J.S.A. 2A:18-61.3, which extended the Act's anti-eviction restrictions to "an owner's or landlord's successors in possession or ownership," superseded this Court's decision in Guttenberg Savings & Loan Ass'n v. Rivera, 85 N.J. 617 (1981), in which we held that the Anti-Eviction Act did not protect tenants from eviction by a foreclosing mortgagee.
    Appellants are tenants against whom the Chancery Division entered an order for possession in favor of Chase Manhattan Bank ("Chase"), the mortgagee foreclosing on the property that the tenants occupy. They contend that the amended Anti-Eviction Act prohibited the court from entering an order for possession for Chase absent a showing of statutory good cause. Chase responds

that the 1986 amendments to the Act should not be construed to overrule the holding in Guttenberg. It asserts that the Legislature, had it intended to overrule our decision in Guttenberg, would have expressed its intention to do so in more explicit language.
    The Appellate Division agreed with Chase's contention and affirmed the Chancery Division. 261 N.J. Super. 428 (1993). The court determined that if the Legislature had intended to amend the statute to overturn the decision in Guttenberg, that purpose would have been clearly expressed in the statutory language and reflected in the legislative history. Absent such expression, the court concluded, Guttenberg's interpretation of the Anti-Eviction Act survived the 1986 amendments and, therefore, the Act did not diminish a court's authority to enter an order of possession for a foreclosing mortgagee resulting in the eviction of tenants from the mortgaged property.
    We granted the tenants' petition for certification, 133 N.J. 439 (1993). Although the parties have resolved the underlying dispute, we elect to consider and decide the questions presented

because of their public importance.See footnote 1 See In re J.I.S. Indus. Serv. Co. Landfill, 110 N.J. 101, 104-05 (1988).

Manhattan, secured by a mortgage and an assignment of rents and leases. The deed and mortgage contained a standard clause providing that the mortgagee would be entitled to possession on default by the mortgagor.
    The Werners subsequently defaulted on the loan, and Chase filed a complaint in June 1990 to foreclose the mortgage. In March 1991 the Werners settled with Chase by conveying a deed for the property in lieu of foreclosure. Thus, Chase obtained not only the possessory interest to which it had been entitled on the Werners' default, but also became the owner of the property by virtue of the deed from the Werners.
    Because the three single-family homes on the property were occupied by tenants paying from $550 to $560 monthly, rents described by Chase as far below fair-market value, Chase obtained leave to amend its complaint to add the tenants as defendants so that it could evict them and obtain exclusive possession of the property. In its complaint, Chase asserted that it had taken its mortgage on the property subject to no encumbrances. The Josephsons failed to answer the complaint and requested only that Chase afford them additional time within which to secure adequate alternative housing. Chase agreed and, instead of seeking a default judgment and order for eviction, moved for summary judgment and permitted the Josephsons to remain in their home rent-free pending their relocation.
    Approximately one month later, in January 1992, the Chancery Division granted Chase's motion for summary judgment. Chase

continued to forbear in collecting rental income from the Josephsons and permitted them additional time to relocate. Subsequently, in February 1992, the Public Advocate, acting on behalf of the Josephsons and other defendants, filed a motion in the Chancery Division seeking reconsideration of its judgment pursuant to Rule 4:49-2 or, alternatively, relief from its judgment under Rule 4:50-1(f). (Chase's complaint originally sought the eviction of other tenants as well as the Josephsons. The Appellate Division dismissed the appeal with regard to those other tenants because they had voluntarily surrendered possession of the premises. 261 N.J. Super. at 433.) The Public Advocate argued that the 1986 amendments to the Act made its provisions applicable to evictions by foreclosing mortgagees. Alternatively, the Public Advocate maintained that the Court's holding in Guttenberg, supra, 85 N.J. 617, exempted foreclosing mortgagees from the Act only with respect to tenancies that had commenced subsequent to the mortgage and that because the Josephsons' tenancy predated the execution of the mortgage, the Act protected them from eviction.
    The court denied the Josephsons' motion, finding first that the fact that their oral month-to-month tenancy predated the mortgage did not exempt them from our holding in Guttenberg, and also that the 1986 amendments to the Act were not sufficiently specific to supersede Guttenberg's exclusion of foreclosing mortgagees. However, the court stayed execution of the judgment

for possession pending appeal and the Josephsons' payment to Chase of both the past rent that Chase had excused and their continuing rental obligations. The Josephsons tendered the rental payments to Chase with assistance from the Homelessness Prevention Program of the Department of Community Affairs.
    Affirming the judgment of the Chancery Division, the Appellate Division first determined that Guttenberg did not afford an exemption under the Act to tenants without a lease whose possession predated the mortgage. 261 N.J. Super. at 433-35. The court recognized, however, that if the 1986 amendments superseded Guttenberg and applied the Act to mortgagees, the distinction between a tenancy and a leasehold would be irrelevant because the Act would protect tenants holding possession under either interest. Id. at 435. The court concluded, however, that the Josephsons were not protected because the language amending the Act, although broad enough to encompass foreclosing mortgagees, was not sufficiently precise in its reference to mortgagees to support a finding that the Legislature intended to overturn Guttenberg. Id. at 437-40.

effected by the Act, interpretation of the Act by this Court in Guttenberg, and the amendment of the Act in 1986.

Carteret Sav. & Loan Ass'n v. Davis, 105 N.J. 344, 347-48 (1987). The foreclosing mortgagee obtains an ownership interest in the property only when the mortgagee purchases the property at the foreclosure sale. See Guttenberg, supra, 85 N.J. at 630.
    The scope of the possessory and ownership interests obtained by the foreclosing mortgagee is determined by the mortgagor's interests at the time the mortgage was executed. See Sears, Roebuck, supra, 124 N.J. Eq. at 410. Thus, at common law, the mortgagee's possessory and ownership interests were encumbered by tenancies only to the extent that the mortgagor's interests were so encumbered at the time of the mortgage.
    At common law, the terms of the tenancy controlled the right of the owner or landlord to eject the tenant, whether that tenancy was a term of years or a periodic tenancy. Once the tenancy expired and the tenant received proper notice, the tenant's right to possession terminated and the landlord or owner of the property could eject the tenant who attempted to hold over. See Cornelius J. Moynihan, Introduction to the Law of Real Property ch. 3, § 7 (2d ed. 1988) (hereinafter Moynihan).
    That general principle was reflected in N.J.S.A. 2A:18-53a, which, prior to passage of the Anti-Eviction Act in 1974, established a summary action for possession that could be brought to remove a tenant who held over and continued in possession of premises after the expiration of the tenant's term. Therefore, if the mortgagor's interest in the property was subject to a tenancy at the time the mortgage was executed, the foreclosing

mortgagee could eject the tenant at the termination of the tenancy. Guttenberg, supra, 85 N.J. at 626-27.

because those interests previously would have been extinguished by the default and foreclosure. Id. at 626-27, 630.
    Because the Act's plain language did not include reference to foreclosing mortgagees, the Court declined to construe the statutory language to encompass mortgagees. Although the Act had abridged long-standing property rights of landlords and property owners in respect of their tenants and lessees, we were persuaded that that result did not compel a finding that the Act had similarly affected mortgagees' rights. In that connection, we noted that the value of residential property to the landlord or owner was principally derived from the income stream generated by rentals, while the value of the same property to a mortgagee was based primarily on its collateral value as security for a loan. 85 N.J. at 631. We observed that a mortgagee's interests might be best served if the mortgagee could sell the property unencumbered by tenancies. Id. at 633.
    We also noted that application of the Act to foreclosing mortgagees would have presented practical inequities that also weighed against that interpretation. When Guttenberg was decided, federal mortgage-insurance programs required mortgagees to convey foreclosed property to the Federal Housing Authority ("FHA") in vacant condition. Id. at 631 (citing 45 Fed. Reg. 59,561, 59,563 (1980) (codified at 24 C.F.R. § 203.381 (1993))). Thus, application of the Act to mortgagees would have conflicted with the requirements of the federal mortgage-insurance programs, potentially resulting in the loss of access to those programs for

New Jersey mortgagees and prospective home buyers. (We note that the requirement that homes with federally-insured mortgages be conveyed to the FHA in vacant condition has been amended. In 1991, the Department of Housing and Urban Development adopted regulations that permit conveyance of occupied property if state or local law prohibits the eviction of tenants by mortgagees. See 24 C.F.R. § 203.670(b)(2) (1993).) Finally, we cited the inequity of saddling mortgagees with various types of burdensome leases improvidently entered into by the mortgagor subsequent to execution of the mortgage. 85 N.J. at 632-33.

liability provisions to subsequent purchasers. The additions to N.J.S.A. 2A:18-61.6c extend liability for pretextual evictions to subsequent owners and require that those owners be informed of their responsibilities or indemnified by previous owners.
    Most relevant to the issues before us are the 1986 amendments to N.J.S.A. 2A:18-61.3. As originally enacted in L. 1974, c. 49, that provision in its entirety stated:
            No landlord may evict or fail to renew any lease of any premises covered by [N.J.S.A. 2A:18-61.1] except for good cause as defined in [N.J.S.A. 2A:18-61.1].
    L. 1986, c. 138, § 7 amended N.J.S.A. 2A:18-61.3 by adding subsection b, which expanded the Act's coverage to include not only landlords but also "the owner's or landlord's successor in ownership or possession." N.J.S.A. 2A:18-61.3 now reads:
            a.    No landlord may evict or fail to renew any lease of any premises covered by [N.J.S.A. 2A:18-61.1] except for good cause as defined in [N.J.S.A. 2A:18-61.1].
            b.    A person who was a tenant of a landlord in premises covered by [N.J.S.A. 2A:18-61.1] may not be removed by any order or judgment for possession from the premises by the owner's or landlord's successor in ownership or possession except:
            (1)    For good cause in accordance with the requirements which apply to premises covered pursuant to [the Anti-Eviction Act]; or
            (2)    For proceedings in premises where federal law supersedes applicable State law governing removal of occupants; or
            (3)    For proceedings where removal of occupants is sought by an authorized State or local agency pursuant to eminent domain or code enforcement laws and which comply with applicable relocation laws pursuant to the "Relocation Assistance Law of 1967," * * * and the "Relocation Assistance Act[]" * * * .

            Where the owner's or landlord's successor in ownership or possession is not bound by the lease entered into with the former tenant and may offer a different lease to the former tenant, nothing in this 1986 amendatory and supplementary act shall limit that right.

possessory interest encompassed the possessory interest held by the mortgagor when the mortgage was executed. 85 N.J. at 626-27. We determined that because the default extinguished the tenancy, the mortgagee was not a landlord and would not become a landlord until the mortgagee became an owner of the property and established a new tenancy with the occupants. Id. at 630. Clearly, that reasoning would not apply if the tenancy had antedated the mortgage. In that circumstance the tenant's interest would not have been extinguished by the mortgage default, and the mortgagee's interest would be subject to the tenancy. Thus, the Anti-Eviction Act would apply to the mortgagee as landlord.
    Our cases regard "[a] month-to-month tenancy [as] a continuing relationship that remains unabated at its original terms until terminated by one of the parties." Harry's Village, Inc. v. Egg Harbor Township, 89 N.J. 576, 583 (1982). Accordingly, the Josephsons' month-to-month tenancy was a continuing tenancy and not an interest that was re-established each month. See Stamboulos v. McKee, 134 N.J. Super. 567, 570-71 (App. Div. 1975). Rather, it began in 1978 and remained in force since its establishment nine years prior to the execution of Chase's mortgage. When the Werners defaulted on their loan, Chase's possessory interest was subject to the Josephsons' tenancy. Accordingly, Chase stood in the relationship of owner and landlord to the Josephsons and was subject to the provisions of the Anti-Eviction Act in those capacities. We therefore

conclude that even prior to the 1986 amendments the Act would have protected the Josephsons.

plain language. State v. Sutton, 132 N.J. 471, 479 (1993). If the language's meaning is clear and unambiguous, it will be given effect "absent any specific indication of legislative intent to the contrary." Town of Morristown v. Woman's Club, 124 N.J. 605, 610 (1991) (emphasis added); see GE Solid State, Inc. v. Director, Div. of Taxation, 132 N.J. 298, 307 (1993).
    However, in determining whether contrary intent exists, courts may examine whether a provision's plain meaning supports a result that is consistent with the overall statutory scheme. See State v. Brown, 22 N.J. 405, 415 (1956) (stating that legislative intent and meaning of statute is derived from nature of subject matter, contextual setting, and relationship to statutes in pari materia as well as cognate statutes in order to create "symmetrical system"). Further inquiry into a statute's intended meaning is warranted, for example, where the plain meaning seems inconsistent with the statutory scheme. See, e.g., State v. State Troopers Fraternal Ass'n, 134 N.J. 393 (1993).
    The plain language of N.J.S.A. 2A:18-61.3b encompasses both foreclosing mortgagees and purchasers at foreclosure sales. As noted earlier, supra at ___ (slip op. at 7), prior to default a mortgagor is entitled to possession of the premises, and after default the mortgagee is entitled to possession. To gain possession, the mortgagee must obtain an order for possession from the Superior Court, either in an action for possession pursuant to N.J.S.A. 2A:35-1 or as part of the action to foreclose the mortgage. 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 appear to include foreclosing mortgagees seeking possession from tenants residing in the mortgaged premises.
    Moreover, "[t]he purchaser of the mortgaged lands at a foreclosure sale," including the mortgagee, "'succeeds * * * to the estate the mortgagor had at the time of the execution of the mortgage.'" Sears, Roebuck, supra, 124 N.J. Eq. at 410 (quoting Champion v. Hinkle, 45 N.J. Eq. 162, 165 (E. & A. 1888)). Such a purchaser is, therefore, "the owner's or landlord's successor in ownership" and would be encompassed by the plain language of the statute. The Appellate Division's concession that the new language in N.J.S.A. 2A:18-61.3b is "broad enough to include mortgagees," 261 N.J. Super. at 439, is an understatement: the Act, read literally, applies to mortgagees.
    Furthermore, that reading of N.J.S.A. 2A:18-61.3b is consistent with the Act's overall purpose of protecting blameless tenants from eviction. See Statement attached to Assembly Bill A-1586 (enacted by L. 1974, c. 49) ("[R]esidential tenants frequently have been unfairly and arbitrarily ousted from housing quarters in which they have been comfortable and where they have not caused any problems." (emphasis added)) (hereinafter Statement); 447 Assocs. v. Miranda, 115 N.J. 522, 527-28 (1989) (quoting language from Statement, supra, and concluding that Act's purpose was to protect tenants from arbitrary and unfair

evictions). In passing the Act the Legislature was responding to "a critical shortage of rental housing space in New Jersey," Statement, supra, a situation that has not abated. See Montgomery Gateway East I v. Herrera, 261 N.J. Super. 235, 241 (App. Div. 1992) ("The Anti-Eviction Act * * * protect[s] residential tenants from the effects of what has become a critical housing shortage."). Application of the Act to the tenants of defaulting mortgagors would protect those tenants from having to confront the devastating effects of eviction not through any fault of their own but merely because they had rented property from landlords that were either unwilling or unable to meet their mortgage obligations.
    Moreover, we presume that the Legislature is familiar with existing judicial statutory interpretations. Brewer v. Porch, 53 N.J. 167, 174 (1969); County of Essex v. Commissioner, N.J. Dep't of Human Servs., 252 N.J. Super. 1, 11 (App. Div.), certif. denied, 127 N.J. 553 (1991). That a statutory amendment uses specific language to address concerns raised in prior judicial interpretations of the amended statute suggests that the Legislature considered those interpretations in drafting and enacting the amendment. Cf. Data Access Sys., Inc. v. State, 63 N.J. 158, 166 (1973) (noting that where statutory language is clear, extrinsic aids may supply "reassuring confirmation of literally apparent meaning"). We believe that the amended language of N.J.S.A. 2A:18-61.3 addresses many of the concerns

raised in Guttenberg and reflects the Legislature's intent to supersede Guttenberg's interpretation of the statute.
    In Guttenberg, the Court expressly stated that a mortgagee had the right to possession on the mortgagor's default. 85 N.J. at 626. More specifically, we observed that "the mortgagee, upon default, could foreclose on the leasehold and obtain an order for possession against the mortgagor's tenant." Id. at 626-27 (footnote omitted) (emphasis added). The language amending N.J.S.A. 2A:18-61.3 fairly mirrors the Guttenberg language, stating for the first time that a tenant "may not be removed by any order or judgment for possession * * * by the owner's * * * successor * * * in * * * possession." N.J.S.A. 2A:18-61.3b.
    Furthermore, Guttenberg pointed out that a mortgagee would become the mortgagor's successor in ownership only if and when the mortgagee purchased the property at a foreclosure sale. We there concluded that because the default had cut off the subsequent leasehold and had given the mortgagee the right to possession, the landlord-tenant relationship between the mortgagee and tenant had already been severed by the time the mortgagee had become an owner through the foreclosure-sale purchase. 85 N.J. at 630. Once again, N.J.S.A. 2A:18-61.3b specifically addresses that issue because it now forbids orders for possession against "[a] person who was a tenant of a landlord" in favor of "the owner's or landlord's successor in ownership or possession." N.J.S.A. 2A:18-61.3b (emphasis added).

    The Guttenberg decision also noted the practical problems that would result from application of the Anti-Eviction Act to foreclosing mortgagees. We observed in Guttenberg that homes with federally-insured mortgages were required by federal regulations to be conveyed to the federal agency in vacant condition after foreclosure. Application of the Act to foreclosing mortgagees would thus have created a conflict with the federal requirements. 85 N.J. at 631-32. In our view, the 1986 amendments address those concerns, providing an exception to the Act "[f]or proceedings in premises where federal law supersedes applicable State law governing removal of occupants." N.J.S.A. 2A:18-61.3b(2). Although amendments to federal regulations have removed the vacancy requirement, supra at ___ (slip op. at 12), we infer that the exception in the 1986 legislation was designed to address the specific problem described in Guttenberg.
    We also noted in Guttenberg the inequity of saddling mortgagees with unfavorable lease arrangements entered into by their mortgagors. 85 N.J. at 632. The last paragraph of N.J.S.A. 2A:18-61.3b addresses that problem by permitting a mortgagee to offer a tenant a new lease when the mortgagee is not bound by the previous one. Thus, the amendment provides that in situations in which a mortgagor has entered into an unfavorable lease subsequent to the execution of the mortgage, the mortgagee, on default, is not bound by that lease and can offer the tenant a new lease, presumably with more reasonable terms. Our dissenting

colleagues, however, overstate the significance of our reference to this statutory authorization, attributing to the majority opinion the conclusion that the mortgagee's "ability to renegotiate the lease of a tenant in possession is some cure-all or panacea," post at ___ (slip op. at 4). No such inference is suggested or intended. The 1986 amendment simply confirms that when an owner's or landlord's successor is not bound by the lease with a prior tenant, the prohibition against eviction without fault does not preclude renegotiation of the lease.
    Amicus New Jersey Bankers Association argues that the Act nevertheless prohibits mortgagees from evicting tenants who refuse the new terms. We note, however, that N.J.S.A. 2A:18-61.1.f specifically permits eviction for refusal to pay lawful rent increases that are not unconscionable. See 447 Assocs., supra, 115 N.J. at 530 (distinguishing "reasonableness" requirement for lease-term change under N.J.S.A. 2A:18-61.1i from more relaxed "unconscionability" standard for rent increases under N.J.S.A. 2A:18-61.1.f). Although N.J.S.A. 2A:18-61.1.f requires that such increases comply with local rent ordinances, those ordinances are intended to permit an owner to receive a fair and reasonable return on the property. Mayes v. Jackson Township Rent Leveling Bd., 103 N.J. 362, 367 (1986), cert. denied, 479 U.S. 1090, 107 S. Ct. 1300, 94 L. Ed.2d 155 (1987).
    We also expressed our concern in Guttenberg that application of the Act to mortgagees would cause them either to forego lending to rehabilitative projects or defer foreclosure in

situations in which the mortgaged property required renovations but was occupied, deciding instead to allow the owner to hold the property until it had deteriorated sufficiently to cause constructive eviction of the tenants. 85 N.J. at 632. We note initially that a strategy designed to force tenants out of a building by allowing it to become uninhabitable is not one that we should countenance by permitting its threatened use to influence our interpretation of the Act. More importantly, however, we observe that the Act does permit a good-cause eviction in situations in which property has been cited for housing-code violations and the owner seeks to board up the property because repair is economically unfeasible. See N.J.S.A. 2A:18-61.1.g(1). Furthermore, N.J.S.A. 2A:18-61.3b(1) makes that ground for eviction available to foreclosing mortgagees in their capacity as the owner's successor in possession or ownership, and N.J.S.A. 2A:18-61.6e exempts the purchaser of the vacant property at a foreclosure, execution, or bankruptcy sale from the treble-damages liability otherwise imposed by N.J.S.A. 2A:18-61.6c on a subsequent owner who prematurely returns the property to residential use. The purchaser at foreclosure is required only to provide the evicted tenants with notice of the property's return to residential use, see N.J.S.A. 2A:18-61.6e(4), a condition that is consistent with the housing rehabilitation purpose. That overall statutory scheme allows mortgagees to provide loans for the rehabilitation of housing without running

the risk of being saddled with the management of occupied and unmarketable deteriorated housing.
    Our conclusion that the Act, as amended, applies to mortgagees is significantly influenced by the difference in the Act's provisions concerning the treble-damage liability imposed on owners or their successors for unlawful evictions, and the provisions in respect of the treble-damage liability imposed on owners or their successors pursuant to N.J.S.A. 2A:18-61.6c for pretextual evictions. N.J.S.A. 2A:18-61.3, in conjunction with N.J.S.A. 2A:18-61.6d -- the anti-eviction provisions -- and N.J.S.A. 2A:18-61.6c -- the pretextual-eviction liability provision -- impose liability on "owners," and their successors in interest. (Specifically, N.J.S.A. 2A:18-61.3 prohibits unlawful evictions by the landlord or by "the owner's or landlord's successor in ownership or possession," and N.J.S.A. 2A:18-61.6d authorizes imposition of treble damages on those prohibited from engaging in unlawful evictions. N.J.S.A. 2A:18-61.6d defines "owner" to include "lessee, successor owner and lessee, and other successors in interest," and that definition applies to owners subject to liability for pretextual evictions under N.J.S.A. 2A:18-61.6c.)
    Pursuant to the 1986 amendments, N.J.S.A. 2A:18-61.6e exempts purchasers at a foreclosure sale from the pretextual-eviction treble-damage provisions of N.J.S.A. 2A:18-61.6c. Such purchasers are typically foreclosing mortgagees. See Carteret Sav. & Loan Ass'n, supra, 105 N.J. at 351 (citing ten-year study

of county foreclosure sales showing that 89" of sales resulted in nominal-bid purchases by mortgagees); 30 New Jersey Practice, supra, § 356, at 292 n.63; William C. Prather, Foreclosure of the Security Interest, 1 957 U. Ill. L.F. 420, 427-30, reprinted in Allan Axelrod et al., Land Transfer and Finance 267 (3d ed. 1986). The pretextual-eviction treble-damage liability imposed by N.J.S.A. 2A:18-61.6c ordinarily applies to "an owner" or its successor that returns property to residential use less than five years after it had been boarded up or ostensibly retired from residential use. Presumably, the Legislature concluded that a foreclosing mortgagee who had no responsibility for the pretextual removal of property from the residential market should have no liability if the property were returned to the market before the five-year statutory bar had expired.
    By specifically exempting foreclosing mortgagees from the treble-damage liability imposed by N.J.S.A. 2A:18-61.6c, the Legislature demonstrated its understanding that foreclosing mortgagees otherwise would be subject to that liability because a foreclosing mortgagee was either "an owner," N.J.S.A. 2A:18-61.6c, a "successor owner," N.J.S.A. 2A:18-61.6d, or "other successor[] in interest." Id. Because the Legislature understood those terms to encompass foreclosing mortgagees, the Legislature similarly must have understood that the phrase "an owner's * * * successor in ownership or possession" -- the phrase added to the amended language of N.J.S.A. 2A:18-61.3, the anti-eviction provision, -- also encompassed foreclosing mortgagees.

However, the Legislature    did not exempt foreclosing mortgagees from liability under the anti-eviction section of the Act.
    Similarly, recent additions to the Anti-Eviction Act demonstrate the Legislature's understanding that the amended language in the anti-eviction provision encompasses foreclosing mortgagees. On December 27, 1993, the Legislature added to the Anti-Eviction Act sections N.J.S.A. 2A:18-61.1g and -61.1h. See L. 1993, c. 342, §§ 3-4. N.J.S.A. 2A:18-61.1g authorizes municipalities to enact ordinances that would require "the owner of a structure" to pay relocation costs for tenants who are evicted due to zoning or building-code enforcement, pursuant to N.J.S.A. 2A:18-61.1.g(3). N.J.S.A. 2A:18-61.1h requires "the owner" to make such payments in municipalities that have not passed the ordinances authorized by N.J.S.A. 2A:18-61.1g. Both new sections contain subsections that expressly exclude foreclosing mortgagees. Subsection d of N.J.S.A. 2A:18-61.1g and subsection e of N.J.S.A. 2A:18-61.1h each state: "For the purposes of this section, the owner of a structure shall exclude mortgagees in possession of a structure through foreclosure." Furthermore, L. 1993, c. 342, § 2 amends the anti-eviction provision, N.J.S.A. 2A:18-61.3, by adding a specific reference to the new relocation-cost section enacted in L. 1993, c. 342, § 3. Thus, when the Legislature exempted foreclosing mortgagees from the relocation-cost liability imposed by the new sections, it expressly considered the anti-eviction provision and excluded foreclosing mortgagees from the term "owner" only for the

purposes of the new sections. Once again, no such exemption would have been required had the Legislature believed that the anti-eviction provision or the term "owner" as used throughout the Act, see N.J.S.A. 2A:18-61.6d, did not encompass foreclosing mortgagees.
    Thus, when the Legislature sought to limit application of the Act in order specifically to protect foreclosing mortgagees, it did so by enacting a specific exemption from provisions of the Act not intended to affect them, demonstrating its recognition of the special concerns of foreclosing mortgagees. That it did not exempt foreclosing mortgagees from the Act's anti-eviction provisions strongly suggests a legislative determination that those provisions should apply to all successors in ownership or possession, including mortgagees.

Const. art. IV, § 7, para. 3, or due process, see U.S. Const. amends. V, XIV; N.J. Const. art. I, para. 1.
    We have long recognized that "[r]estrictions on the use of property, if in furtherance of a valid governmental purpose, serve the public interest and are considered a proper exercise of the police power even though they may result in some economic disadvantage." New Jersey Ass'n of Health Care Facilities v. Finley (In re Review of Admin. Promulgation of Health Care Admin. Bd.: N.J.A.C. 8:30-14.1 through 8:30-14.6), 83 N.J. 67, 81, appeal dismissed and cert. denied sub nom. Wayne Haven Nursing Home v. Finley, 449 U.S. 944, 101 S. Ct. 342, 66 L. Ed.2d 208 (1980); see also Stuyvesant Town, Inc. v. Ligham, 17 N.J. 473, 483 (1955). All that is required is that the legislation be a reasonable restriction that serves the public welfare. See State v. Schmid, 84 N.J. 535, 561 (1980), appeal dismissed, 455 U.S. 982, 101 S. Ct. 2312, 68 L. Ed.2d 838 (1981). Enforcement of legislation that adversely affects property rights is valid when the public interest being served clearly outweighs the impairment. See State, Dep't of Envtl. Protection v. Ventron Corp., 94 N.J. 473, 499 (1983); see also Phillips v. Curiale, 128 N.J. 608, 622 (1992) ("Fairly-debatable questions concerning the need and propriety of the means used to meet the [public interest] fall within the Legislature's police power * * * and thus * * * '"[e]very reasonable presumption is to be made in favor of the validity of the legislative act."'" (quoting Rothman

v. Rothman, 65 N.J. 219, 227 (1974) (quoting Reingold v. Harper, 6 N.J. 182, 194 (1951)))).
    Given the continued shortage of residential housing and the related threat of homelessness, the substantial public interest in preventing the eviction of blameless tenants is indisputable. The specific interest impaired by application of the Act to mortgagees is the possibility that the resale value of residential property may be greater in vacant condition than if occupied by tenants. See Guttenberg, supra, 85 N.J. at 631. We are convinced that the injury from that possible impairment is substantially outweighed by the public concerns that the Act addresses.
    That conclusion is consistent with the established constitutionality of the Act's restrictions on the rights of property owners, see Puttrich v. Smith, 170 N.J. Super. 572, 575-76 (App. Div. 1979), because the Act's effect on an owner's property interests is likely to be even greater than its effect on the limited interest of a foreclosing mortgagee. See Guttenberg, supra, 85 N.J. at 637 (Pashman, J., dissenting). The value of the property to the mortgagee is primarily as collateral, which is realized through sale of the property. The opportunity to realize that sale value is also an interest held by the conventional property owner. In addition, conventional owners are confronted with eviction restrictions that affect their ongoing use of the property. Thus, the restrictions on property interests that were addressed in sustaining the

constitutionality of the Act affect mortgagees as well as owners. Id. at 636.
    We draw the same conclusion with respect to claims alleging an unconstitutional impairment of contracts. In Edgewater Investment Associates v. Borough of Edgewater, 103 N.J. 227 (1986), this Court considered a comparable challenge to the Senior Citizens and Disabled Protected Tenancy Act, a statute that increased protections for certain tenants beyond those already provided by the Anti-Eviction Act. Id. at 232-33. We agreed with the Appellate Division that the tenant protections did not substantially impair contractual rights of property owners and were reasonably related to the legitimate purpose of providing protection to tenants. Id. at 234 (citing Edgewater Inv. Assocs. v. Borough of Edgewater, 201 N.J. Super. 267, 278-80 (1985)). We now conclude that that reasoning applies as well to the Anti-Eviction Act. We find no distinction of constitutional significance between the dilution of the contractual rights of mortgagees and those of owners resulting from the Act's provisions that afford enhanced protection to tenants.

whether their tenancy was established before or after the execution of the mortgage.
    Although retroactive application of judicial decisions is the general rule, Rutherford Educ. Ass'n v. Board of Educ., 99 N.J. 8, 21 (1985), our holding will be applied only prospectively, in view of "the uncertainty over the issue that has persisted" since enactment of the 1986 amendments. Green v. Auerbach Chevrolet Corp., 127 N.J. 591, 601 (1992). Because the exposure of mortgagees to liability for the past eviction of tenants would be inequitable, we are satisfied that the interests of justice will be best served by prospective application of our decision.
    The judgment of the Appellate Division is reversed.

    Chief Justice Wilentz and Justices Handler and O'Hern join in this opinion. Justice Garibaldi has filed a separate dissenting opinion in which Justices Clifford and Pollock join.                             SUPREME COURT OF NEW JERSEY
                            A- 22 September Term l993

THE CHASE MANHATTAN BANK,
a National Association

    Plaintiff-Respondent,

     v.

MR. AND MRS. SEYMOUR JOSEPHSON,
SHERRI BAGNELL and ROBERT HANSELMANN,

    Defendants-Appellants,

    and

SAUL WERNER and GRACE WERNER,
MATTHEW STEINFELD, KIM
CAGLIARI, CORRINE McLAUGHLIN,
and ALEX CAPRIO,

    Defendants.
______________________________________

GARIBALDI, J., dissenting.

    Today, the majority holds that the Anti-Eviction Act, as amended by L. l986, 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 (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. 46:2l-l to -4.
    The Court achieves that surprising result by ignoring the legislative history of the l986 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.

l99l, the mortgagee, Maryland National Mortgage Corporation, filed a complaint seeking foreclosure and possession of the property. A lis pendens was filed on December 9, l99l. After Maryland National had filed both the complaint and the lis pendens, 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