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.
The Jersey City Rent Control Ordinance requires landlords to provide new tenants with specific information. At the start of each new tenancy a landlord must provide a tenant with a "rental statement" that informs of the tenant of "rent of the prior tenant and notification of the existence of the rent registration law." The point is pretty simple: If a new tenant finds out her rent is three times what the old tenant paid, she's more likely to question the legality of the rent. An interesting question presented itself a few weeks ago: What if the owner was the "prior tenant?" What notice is a tenant occupying an apartment after the owner entitled to?
Northern New Jersey cities like Hoboken and Jersey City maintain sophisticated rent control ordinances. Rent control ordinances are designed to provide landlord's a "fair" return on investment while keeping urban housing rents affordable. When a tenant is charged an illegal rent (a rent in excess of what rent control ordinance provides) most ordinances require a landlord to give the tenant a credit towards future rent. The credit is the amount of the overcharge per month for as many months as the tenant was overcharged. But, the time length of the overcharge is not unlimited. Jersey City and Hoboken have two very different approaches to determining the amount of a rent control overcharge. The distinction lies in the difference between a statute of limitation and a statute of repose.
Local rent control laws are an important part of maintaining an affordable housing supply in densely populated areas. Prior posts explained the basics of rent control and some nuances between cities. Generally, tenants who pay rent in excess of the rent control rent (the "legal rent") have two remedies. The first is an application to the local rent control board (sometimes called a rent leveling board) for a credit. The credit allows a tenant to pay a reduced rent going forward until the tenant "catches up" with the overcharge. The second remedy is much more powerful. Violations of rent control ordinances are actionable under the New Jersey Consumer Fraud Act (the "CFA"). Under the CFA, a rent control overcharge may entitle a tenant to triple damages and mandatory attorney's fees. The principle that a rent control violation is also a consumer fraud violation comes from an Appellate Division decision called Wozniak v. Pennella, 373 N.J. Super. 445 (App. Div. 2004).
The dynamics of dealing with a NJ illegal apartment can be tricky. In general, an illegal occupancy is one that violates the local zoning or building code laws. For example, in Jersey City many illegal apartments are an additional third rental unit in a two family zone. When a landlord seeks to evict a tenant from this illegal occupancy, the landlord must pay six times the monthly rent to the tenant. Usually, the relocation benefit comes up in the context of an eviction for nonpayment. When the tenant finds out his/her apartment is illegal, the first step is to stop paying the rent. By this time the landlord is cited by zoning or building code enforcement for maintaining the illegal occupancy. When the tenant stops paying the rent, the landlord files an eviction for nonpayment case. Once everyone shows up in court, what happens next?
Rent-control ordinances across New Jersey control the legal rent a landlord is entitled to from each rental unit. Most rent-control ordinances provide landlords an opportunity to raise the rent between tenants. As noted in a prior post, Jersey City's rent-control ordinance does not provide for such "vacancy decontrol." The absence of vacancy decontrol raises interesting questions in the context of eviction for nonpayment proceedings. To what extent must a landlord show compliance with rent control when alleging a tenant failed to pay rent "due and owing?" If the Landlord can't show compliance with rent control should the complaint be dismissed? These questions came up in a case in Hudson County a short time ago. The outcome has important implications for tenants and landlords across New Jersey.