New Jersey § 12a:2a-304

§ 12a:2a-304.

(1) Subject to 12A:2A-303, a subsequent lessee from a lessor of goods under an existing

lease contract obtains, to the extent of the leasehold interest transferred, the leasehold

interest in the goods that the lessor had or had power to transfer, and except as

provided in subsection (2) and 12A:2A-527(4), takes subject to the existing lease

contract. A lessor with voidable title has power to transfer a good leasehold interest to

a good faith subsequent lessee for value, but only to the extent set forth in the

preceding sentence. If goods have been delivered under a transaction of purchase, the lessor has that

power even though: (a) the lessor's transferor was deceived as to the identity of the lessor; (b) the delivery was in exchange for a check which is later dishonored; (c) it was agreed that the transaction was to be a “cash sale”; or (d) the delivery was procured through theft under the criminal law. (2) A subsequent lessee in the ordinary course of business from a lessor who is a

merchant dealing in goods of that kind to whom the goods were entrusted by the existing

lessee of that lessor before the interest of the subsequent lessee became enforceable

against that lessor obtains, to the extent of the leasehold interest transferred,

all of that lessor's and the existing lessee's rights to the goods, and takes free

of the existing lease contract. (3) A subsequent lessee from the lessor of goods that are subject to an existing lease

contract and are covered by a certificate of title issued under a statute of this

State or of another jurisdiction takes no greater rights than those provided both

by this section and by the certificate of title statute.