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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.
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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).
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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.
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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.
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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?
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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.
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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).
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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?
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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.
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New Jersey is one of only four states that provide for rent control. Jersey City is one of 98 municipalities that enacted local rent-control laws. While Hoboken and Bayonne recently relaxed their rent-control ordinances, Jersey City maintains one of the State’s strongest rent-control laws. Jersey City tenants should aware of the most important part of Jersey City’s rent-control laws.
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