concurring in part and dissenting in part.
I concur in the majority opinion of Justice Pollock except insofar as it applies the second rent increase retroactively. To this extent, the Court has misapplied the law governing the relations of landlords and tenants in New Jersey. Moreover, the Court presents no justification for this result. On this narrow issue, I therefore dissent.
The majority properly concludes that when a rent control board or a court grants a rent increase pursuant to a rent control ordinance, the rent increase may not take effect until the landlord has given the tenants a valid notice to quit and notice of the rent increase. Ante at 585-586, 588. Month-to-month tenants have the legal right to at least one month’s notice either to accept a new tenancy at the increased rate or to move out of the premises. Tenants who stay on the *591premises after the beginning of the new tenancy are prospectively liable for the new rent after that date. Ante at 588-589.
The Egg Harbor Rent Review Board granted the landlord a rent, increase on April 10,1979, effective May 1,1979. However, the Board had no power to make such an increase effective on May 1 since one month’s notice is required. The increase cannot become effective until the landlord notifies the tenants individually of the increase. The landlord did not notify the tenants of the rent increase until May 24. That notice informed the tenants that if they did not pay the rent increase effective May 1, they must vacate by June 27. In effect, the landlord informed the tenants at the end of May that they had not paid enough rent for that month. Like the majority, I find that this increase did not become effective until July 1, ante at 587, after the tenants had a month to decide whether to accept a new tenancy at the increased rent or move out.
The trial court granted a second increase on June 9 to be applied retroactively to May 1. The landlord notified the tenants of this second rent increase on June 10. Thus, the tenants were notified in the middle of June that they had not paid enough rent for May and June. Like the majority, I find that this increase could not become effective until August 1, 1979. Ante at 588. Unlike the majority, I would not find the tenants who stayed after August 1 liable for this second increase for the month of July.
Although the majority properly holds that the tenants are liable for the first rent increase from the date on which it became effective, July 1, it applies a different rule to the second increase granted by the trial court. Rather than hold the tenants liable for the second increase from August 1 onward, the majority holds the tenants who remained after August 1 liable for this second increase for the month of July, the month preceding the effective date of the increase. I find no reason to apply a different rule when a rent increase is granted by a court *592than when it is granted by a Rent Review Board. Tenants should be liable for an increase only after they have received the required notice. I would therefore hold that those tenants who stayed after August 1 are not liable for the second increase until that date.1
The majority properly cites Stamboulos v. McKee, 134 N.J.Super. 567 (App.Div.1975), for the proposition that a tenant who remains in possession after receiving a notice to quit and a notice of rent increase is obligated to pay the higher rent beginning the date on which the increase becomes effective. Ante at 588-589. However, neither thatdecision nor any other has required tenants to pay the higher rent for months preceding the date on which the new tenancy commenced. On the contrary, the law in New Jersey has been that month-to-month tenants are entitled to one month’s notice before a new tenancy can be created at an increased rental. Id. at 570-71; Bhar Realty Corp. v. Becker, 49 N.J.Super. 585, 590 (App.Div.1958); Skyline Gardens, Inc. v. McGarry, 22 N.J.Super. 193, 196 (App.Div.1952).
A tenancy is a contractual relationship between landlord and tenant. Bhar Realty Corp. v. Becker, 49 N.J.Super. at 590. It continues until it is terminated by one party or the other. Stamboulos v. McKee, 134 N.J.Super. at 570-71. As the majority notes, the notice to quit terminates the old tenancy. The purpose of the notice of rent increase is to offer the tenant a new tenancy at an increased rent when the old tenancy ends. Ante at 584. There is no authority for the proposition that the landlord is free retroactively to change the terms of the old tenancy. In fact, the Appellate Division held in Stamboulos v. McKee, supra:
*593[A] month-to-month tenancy is a continuing tenancy, which does not give rise to a new relationship for each month. Even under the law as it existed prior to this statute, a new tenancy was established only when the existing monthly tenancy was actually ended and the new one commenced. Thus, where the landlord gave a proper notice to quit and demand for possession at the end of the month, unless the tenant paid an increased rental commencing the beginning of the following month, the holding over of the tenant created a new tenancy at the increased rental. [134 N.J.Super. at 570-71 (emphasis added)]
The purpose of the month’s notice is not only to give tenants time to decide whether to accept the terms of the new tenancy or to move. It is also to give them a chance to begin saving enough money to pay the increased rent. We can take judicial notice of the fact that rent consumes a substantial portion of most tenants’ income. In many cases, tenants require a certain amount of notice to arrange their financial affairs so that they can budget enough money to accommodate the increased housing costs. The notice requirement allows tenants to plan the amount of their income they must allocate to housing by giving them prior notice of any changes in the terms of their contract with the landlord.
Allowing rent increases to be awarded prior to the effective date of the new tenancy would frustrate the notice requirement. Tenants cannot easily avoid the increased rental by simply moving. In practice, most tenants would probably stay where they are. The result would be that tenants could never be sure that they had paid enough rent for any particular month since they might later get notice that in past months they had not been paying enough rent.
I find no justification for departing from the established rule when an increase is granted by a court rather than a Rent Review Board. Tenants should be secure in the knowledge that once they have paid the contractual rent for a certain month, their legal obligations have been satisfied. Before their rent can be increased, they will have at least one month’s notice. Landlords should not be allowed to notify tenants that they owe more rent for last month than they thought they owed. It is small consolation to tenants that they can avoid the retroactive *594increase by leaving their homes. The tightness of the rental housing market coupled with the high cost and burden of moving render it a notably unattractive alternative. These difficulties are exacerbated for low income tenants who will also be hurt the most by retroactive rent increases.
The majority expressly limits its holding to “the peculiar facts of this case.” Ante at 589. However, the reasons given for departing from the established rule are singularly unpersuasive. The majority notes that the tenants acquiesced in allowing the trial court to determine the appropriate rents. While it may be true that the tenants were content to have the appropriate rents determined by a court rather than the Rent Review Board, there is no evidence that the tenants agreed to retroactive increases.
The majority further argues that the tenants “were not surprised by a subsequent notice that previously paid rents were insufficient,” Ante at 589, because the tenants association was represented by counsel before the Board. This reasoning contradicts the entire basis for the majority’s opinion. The majority holds today that the law requires the landlord to give individual notice of a rent increase to each tenant. None of the tenants had advance warning that the trial court would grant a second increase. By holding the tenants liable for the court’s June 9 increase as of July 1, one month before its effective date, the majority has decided today that one-month notice is required to raise the rent—in all cases except this one.
The only remaining argument for not applying the usual rule to this situation is that the tenants have already paid the money. There is therefore no problem of surprise or need to give the tenants time to save money to make future rent payments. I find this argument the weakest of all. The effect of such a rule would be to allow landlords to evade the one-month notice requirement whenever their tenants are unaware of their legal right to the one-month notice. I do not think this Court should support a result that decreases the incentive for landlords to obey the law.
*595I would hold that the rent increases became effective on the dates when the new tenancies were created. I agree with the majority that the increase granted by the Board became effective July 1. The tenants who remained in Harry’s Village after July 1 are liable for that increase beginning in the month of July. The second increase, granted by the trial court, became effective August 1. The tenants who stayed after August 1 are liable for that increase from August onward. Because the majority holds otherwise, I dissent.
For affirmance—Chief Justice WILENTZ and Justices CLIFFORD, SCHREIBER, HANDLER, POLLOCK and O’HERN—6.
Concurring in part and dissenting in part—Justice PASHMAN—1.
The one month notice period is an important protection for tenants. Thus, even though the second increase is quite small, I feel compelled to discuss the existing legal rules in some detail. In its efforts to simplify the case and achieve a compromise, the majority failed to apply the existing law properly.