A NJ commercial landlord-tenant relationship can be challenging to manage. A commercial landlord must balance the benefit of having a rent paying tenant in a space that can be difficult to rent with the realities of the tenant's behavior. In 2014, the Firm confronted this scenario: Pursue an eviction matter far enough to convince a commercial tenant to change his behavior while preserving the landlord-tenant relationship and rent payments to the Landlord.
A residential landlord client received financing for his building from the New Jersey Housing and Mortgage Finance Agency. In exchange for this financing, Landlord had to maintain a certain amount of low-income units in the building. This financing agreement serves the noble purpose of diversifying buildings, neighborhoods and cities. It has the added virtue of being successful. Unfortunately, it is subject to abuse. In this case, the tenant on the lease did not live in her low income unit. Instead, she lived far out of state and sublet her unit to the highest bidder. This conduct violated her lease, the landlord's rules and terms of the financing agreement. The Firm represented the Landlord in a case to evict the subletter.
2014 was a busy year for the Firm on the landlord side of the ledger. Some particularly notable NJ landlord-tenant cases include (1) a successful eviction in connection with a tenant's refusal to cooperate with the Landlord's lease (required by the NJ Housing and Mortgage Finance Agency); (2) A chronically difficult commercial tenant's total acquiescence to the Landlord's demands minutes before trial; (3) A successful defense of a tenant's illegal apartment claim against a landlord; (4) An eviction of a horrid with horrific behavior for damage to the apartment and (5) a trial judgment in favor of the landlord increasing a tenant's rent (the tenant refused to pay rent increases for years). Each case, discussed in a separate post, is an example of the Firm's commitment to delivering cost-effective results to Landlord's trying to get the most out of their investment.
Many New Jersey landlords require that tenants pay extra money for certain "extra" rights. For example, a landlord may require a pet fee in exchange for the right to keep a pet on the property. Some landlords charge tenants "finder's fees" for the right to rent an apartment (even though no real estate brokers are involved). Tenants often bristle at paying these extra fees, especially when a lease is renewed. This raises the question: Can a tenant be evicted for failure to pay additional fees?
Late payment of rent is one of the more common landlord complaints. Late-paying tenants interfere with their landlord's bottom line and create an atmosphere of disrespect toward the landlord's investment. The NJ Anti-Eviction Act allows a Landlord to evict a tenant for "habitual late payment of rent" when the tenant "after written notice to cease, has habitually and without legal justification failed to pay rent which is due and owing." N.J.S.A. 2A:18-61.1(j). Although the law seems clear, it's easy to say a tenant pays rent habitually late; evicting for late payments is more difficult proposition.
All New Jersey landlord-tenant cases have a mediation requirement. This means that the Landlord and the Tenant must, at least, try to resolve their dispute before the case goes before a judge. Mediation is a great opportunity to reach an agreement that works for both Parties and avoids the harshness of a judge calling a winner and a loser. In general, there are three types of landlord-tenant settlements.
Landlords Beware: Residential Form Leases Do Not Cure All Ills
The word "lease" is a fancy term for a simple agreement: The tenant agrees to pay rent and the landlord agrees to provide a habitable living space. Some leases are lengthy and contain conflicting terms which affect both the landlord's and the tenant's rights. In a landlord-tenant case, the court will look at the content of a lease very closely. This is where Google causes more problems than it solves. Free form leases from the internet can be dangerous.
Form residential leases are all over the internet for free. Like most things, if it's free its too good to be true. For landlords, a free form lease can cost money further down the line. This is especially true if the case goes to landlord-tenant court.
Form leases, by nature, are generic; generic leases can work in as many states as possible. Form leases do not apply relevant New Jersey law and some provisions that protect landlord may be void and inapplicable. Even form leases claiming to be customized for New Jersey may not meet for formal requirements set forth in the law.
The common problems with form leases often relate to two issues: 1) attorney's fees in connection to litigation and 2) late fees. For example, most form leases have the following attorney's fee clause:
ATTORNEY'S FEES: In the event that any action is filed in relation to this Lease, the unsuccessful party in the action will pay to the successful party, in addition to all the sums that either party may be called on the pay a reasonable sum for the successful party's attorney's fees.
The paragraph seems to say that if landlord sues a tenant, or vice versa, the losing party would pay the attorney's fees of the winning party. Remember, court hearings for evictions, are considered "legal actions." Contrary to the plain meaning of the attorney's fee clause, absent very specific language, attorney's fee clauses are unenforceable.
Many form leases have following late fee clause:
LATE CHARGE: A late fee of $________ shall be added and due for any payment of rent made after the _______ day of the month.
Even if the clause meets the formal requirements of New Jersey law, a late fee clause may be deemed unenforceable by a court if the late fee is found to be "unreasonable." Be sure to take care when filling the blanks of the late charge clause on a form lease.
Landlords should take care by having their leases reviewed by an attorney. The Major Law Firm practices landlord tenant law throughout New York and New Jersey assisting landlords and tenants in avoiding unnecessary and costly delays. The firm's geographic practice area includes: New Jersey (Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County, Paterson, Passaic County). The Firm invites you to visit the "Promises" page for our new way of doing business
Companies with on-going customer relationships often provide merchandise or services on regular basis. Invoices for services are sent to the customers while service continues. Ideally, each invoice is paid in full, but reality creeps in. Sometimes, customers let balances accrue and make slowly decreasing payments until payments cease. The company is left unpaid and outstanding invoices sit in accounts receivable. When legal collection on these accounts receivable is necessary, the law provides a range of causes of action. The "book account" is a simple and direct method of commercial collection.
New Jersey landlord-tenant actions (a/k/a "summary dispossession actions") are designed to be quick, efficient methods of disposing of landlord-tenant disputes. The efficiency of a landlord-tenant case lies in the prohibition of responsive pleadings and the "No Discovery" rule. NJ Court Rule 6:4-3 provides that interrogatories and other discovery methods are applicable in all actions except "summary landlord and tenant actions for recovery of the premises." The "No Discovery" rule poses a problem for landlords alleging wrongful conduct (for example, damage to the apartment or violation of lease rules) by the tenant. How does a landlord prove wrongful conduct? How does a tenant defend against an allegation of wrongful conduct?
New Jersey landlord-tenant relationships are controlled by applicable statutes (the Anti-Eviction Act, NJSA 2A:18-61.1 et. seq., or NJSA 2A:18-53) and the terms of the lease. Lease terms are interpreted by typical contractual principles. The most basic contractual principle requires that agreements be supported by consideration (a legal term for something of value given to support a contract). In a landlord-tenant context, the tenant's payment of rent is consideration for the landlord providing a habitable apartment. For tenants living in illegal apartments, the analysis could be much different. By renting an illegal apartment, the landlord may have failed to provide consideration required by the contract. In these cases, the tenant may be entitled to a refund of all rent paid.
New Jersey's Security Deposit Law, N.J.S.A. 46:8-21.1, requires strict compliance by Landlords. The law's most rigid requirement is the timing of the return of the deposit. As soon as a tenancy ends, a landlord should be prepared to follow the precise letter of the law. Even an honest mistake can lead to an award of double the security deposit and attorney's fee's against the landlord.
New Jersey's Security Deposit Law (NJSA 46:8-19) is one of the more tenant-friendly security deposit laws in the US. The Law requires strict compliance (almost to the letter) with each of its parts. Failing to follow the law, in detail, can expose a Landlord to a penalty of double the security deposit and attorney's fees. Landlords and Tenants should be aware of the most common area of noncompliance: Unauthorized deductions.
A prior post explained that under the Anti-Eviction Act rent increases are subject to a five-part test. Even though landlord-tenant trials can be simple and speedy, the Rules of Evidence still apply. Landlords must present competent evidence supporting their right to a rent increase. The types of evidence may vary, but should generally be in line with evidence offered in Fromet Properties, Inc. vs. Delores Buel, et al, 294 N.J. Super. 601 (App. Div. 1996).
Anti-Eviction tenancies are subject to rent increase on notice. This means a landlord must serve a tenant notice increasing the rent for the subsequent tenancy. But, simply serving the notice as required by the Anti-Eviction Act doesn't mean that the rent increase is legal. For a rent increase to be legal it must not unconscionable. Whether a rent increase is unconscionable turns on a five-part test.
New Jersey tenants are protected by the Anti-Eviction Act (NJSA 2A:18-61.1) and the Consumer Fraud Act (NJSA 56:8-1 et. seq.). Pursuant to Anti-Eviction Act, tenants living in illegal apartments are entitled a statutory relocation benefit of six times the monthly rent (NJSA 2A:18-61.1(g)(2) & NJSA 2A:18-61.1h). On the Consumer Fraud Act side, consumers are protected from unconscionable commercial practices which cause the consumer to suffer an "ascertainable loss." Violations of the Consumer Fraud Act can trigger a consumer's right to triple damages; an enhancing remedy in line with the relocation benefit. In the context of illegal apartments, can the Consumer Fraud Act and Anti-Eviction Act combine to give tenants two equally powerful remedies? The answer turns on how the damage to the tenant is characterized.