Landlord Tenant Seminar 2010

Brian Regan to Present at Landlord-Tenant Law Update (Sterling Education Systems)

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Landlord Tenant Obligations

1. Commencement of the Residential Tenancy

a.) Written or Oral Lease

1. Written Lease-Must comply with the Plain Language Law N.J.S.A. 56:12-1

2. Oral Lease-Landlord tenant relationship may be created by oral or written lease. It will arise by conduct of the parties even in the absence of a written agreement. See Housing Authority of East Orange v. Leff, 125 N.J. Super. 425, 433-434 (Law Div 1973).

b.) Residential Lease Requirements on Landlord

1. Truth in Renting Statement-published by Department of Community Affairs, the landlord must supply book at commencement of lease. This statement sets forth legal rights and responsibilities of landlord and tenant. Failure to supply Truth in Renting Statement renders the landlord liable for penalties under N.J.S.A. 2A:58-1 et. seq. See http://www.state.nj.us/dca/divisions/codes/publications/ to download/print Truth in Renting Booklet.

2. Landlord Registration Statement

a.) Landlords, in residential tenancies, unless excepted, must file a Landlord Registration Statement pursuant to N.J.S.A. 46:8-27 et.seq.

b.) Exception Landlord Registration Statement

No registration statement if it is an owner-occupied two (2) family residential property that:

1.) Has been certified to be lead paint free

2.) Was constructed and/or up after law

3.) Is a seasonal rental unit which is rented for six (6) months duration each year; or

4.) Has been certified as having a lead free interior by a certified inspector

c.) Must provide owner contact information, mortgage information, contact information for landlord representative in the county for tenant in case of emergency; name and address for maintenance supervisor. (See sample Landlord Registration Statement)

d.) File with municipality where property located if two (2) or fewer rental units. All other landlords must file with the Department of Community Affairs.

3. Crime Insurance

a.) Every landlord must notify the tenant within thirty (30) days of lease occupancy of the tenant's right to purchase insurance from theft and damages pursuant to N.J.S.A. 46:8-38 et.seq. Failure to provide this information renders the landlord liable for penalties under N.J.S.A. 2A:58-1 et.seq.

4. Security Deposit Act

a.) Application of Security Deposit Act

1.) Automatically applies in any residential tenancy except owner occupied properties with two (2) or fewer rental units N.J.S.A. 46:8-26.

2.) Tenant may request Act apply by providing thirty (30) days written notice to the landlord invoking the Act for owner occupied and less than two (2) rental units N.J.S.A. 46:8-26.

b.) Maximum Amount

1.) The landlord is limited to taking 1 2 times the monthly rent pursuant to N.J.S.A. 48:8-21.2.

c.) Depositing the Funds

1.) The funds must be deposited into an interest bearing account in a New Jersey Bank, Savings Bank or Savings and Loan Association.

2.) Landlord must notify the tenant within thirty (30) days of lease commencement of:

• Name & Address of depository institution
• The type of account
• The current rate of interest for that account
• The amount of the deposit

3.) No commingling of deposit funds with personal funds of the landlord.

d.) Payment and Interest

1.) The interest or earing shall be distributed as follows:

a.) Paid to the tenant at the end of the initial lease term

b.) Credited to the tenant on rent due at the renewal or anniversary date of the lease; or

c.) Credited to the rent due on January 31 if tenant has been given written notice before the next anniversary date that interest payments will be made on January 31 of each year

d.) Failure to Comply/Pay Interest

1.) Tenant may give notice that the security deposit plus interest at seven (7) percent is to be applied toward rent. No further security deposit may be taken or required of the tenant.

e.) Return of Deposit

a.) Within thirty (30) days of the termination of the lease or displacement, the landlord must return the deposit plus interest less any charges expended in accordance with the lease. N.J.S.A. 46:8-21.1

b.) The landlord must itemize in writing to the tenant the interest and the deductions by personal delivery registered or certified mail.

c.) No deductions shall be made from a security deposit of a tenant who remains in possession. Landlord cannot take unpaid rent out of security while tenant is still in possession. Must file eviction action to either collect unpaid rent or evict.

d.) Wrongfully withholding deposit in any action by tenant for money due under the Security Deposit Act: The Court shall award recovery of double money damages, together with full costs and in the Court's discretion, reasonable attorney's fees.

a.) Amount to be doubled-Only the amount wrongfully withheld may be doubled, not the initial deposit amount. See Kanginyi v. Re/Max Properties, Inc. and Wong, 338 N.J. Super. 534 (App. Div. 2001), certif. Denied 169 N. J. 610 (2001); Cottle v. Butler, 257 N.J. Super. 401 (Law Div. 1992)

e.) Where no money is due at the conclusion of a tenancy, the failure to send a written notice is of no import. See Lanzi v. North, 295 N.J. Super. 80 (App. Div. 1996). The landlord did not notify the tenant that the security deposit was being retained. The tenant sued approximately one (1) year later for the deposit. The Court found that since the tenant owed more in back rent than the security deposit, nothing was wrongfully withheld and no damages were awarded to the tenant. See also Alton v. Thomas, 161 N.J. Super. 403 (Cty. Ct. 1978); Jarenback v. Butler Ridge Apts., 166 N.J. Super. 84 (App. Div. 1979).

2. Landlord Obligations upon commencement of lease

a.) Provide Habitable Premises-regardless of any lease or agreement, any residential lease shall be subject to an implied warranty of habitability. The landlord warrants that at the inception of the lease there are no latent defects in facilities vital to the use o f the premises whether by faulty construction or normal wear and tear. This warranty continues through entire term of the lease. See Marini v. Ireland, 56 N.J. 130 (1970)

1.) Upon a breach of warranty of habitability a tenant may:

a.) Declare a constructive eviction and vacate, Reste Realty Corp. v. Cooper, 53 N.J. 444 (1969)

b.) Repair and deduct the cost of repair from rent. See Marini

c.) Withhold rent (and ultimately deposit into Court) pending a judicial hearing on the habitability claim. The Court may grant the tenant a rent abatement for extent and duration of habitability defect. Berzito v. Gambino, 63 N.J. 460 (1973)

d.) File a civil action to recover rent paid (overage). See Berzito

2.) Defect must rise to the level of habitability:

• Four (4) Part Test

a.) Were the premises reasonably fit for purposes they were rented? See Reste

b.) Do the defects render the premises uninhabitable in the eyes of a reasonable person. See Berzito

c.) Should the tenant reasonably be expected to live with the defect as an ordinary living condition. Millbridge Apts. V. Uniden, 151 N.J. Super. 168 (Camden Cty. Dist. Ct. 1977)

d.) Is the subject of the defect an amenity or a necessity? Timber Ridge Townhouse v. Dietz, 33 N.J. Super. 577 (Law Div. 1975)

• Criteria to be Considered:

1.) Has there been a violation of any applicable housing code or building or sanitary regulations?

2.) Is the nature of the deficiency or defect such as to affect a vital facility?

3.) What is its potential or actual effect upon safety and sanitation?

4.) For what length of time has it persisted?

5.) What is the age of the structure?

6.) What is the amount of rent? In Housing Authority of Newark v. Scott, 137 N.J. Super. 110 (App. Div. 1975), the Court held that tenants in public housing have the same right to a rent abatement as any other tenant.

7.) Can the tenant be said to have waived the defect or be estopped to complain?

8.) Was the tenant in any way responsible for the defective condition? 63 N.J. at 470

3.) Tenant must provide notice of defect and allow the landlord a reasonable time to cure. Marini, 63 N.J. at 469

4.) Examples of Habitability Defects

• Air Conditioning Park Hill Terrace Associates v. Glennon, 146 N.J. Super. 271 (App. Div. 1977)
• Failure to control noise from upstairs tenants Millbridge Apts. v. Linden.
• Sewage problem, drainage problems, rotten wood in the foundation, exposed wires C.F. Seabrook Co. v. Beck, 174 N.J. Super. 577, 595 (App. Div. 1980)

5.) Examples of items not arising to Habitability

• No swimming pool as promised in lease Timber Ridge Town House v. Dietz, 133 N.J. Super. 577 (Law Div. 1975)
• Inadequate papering and painting C.F. Seabrook Co. v. Beck

6.) Commercial Leases-The Marini Doctrine implied habitability has been applied to commercial tenants. Reste Realty, Deminari v. Burns, 204 N.J. Super. 274 (App. Div. 1973). The analysis would involve close scrutiny of lease terms to evaluate expectations of parties as to what is a necessity as opposed to merely an amenity.

b.) Return of Personal Property

1.) The Abandoned Property Act: N.J.S.A. 2A:18-72, et. seq.

a.) Does not apply to non-residential tenancies where there is a specific lease clause concerning disposition of tenant property.

b.) In order for property to be determined to have been abandoned, the landlord must first advise the tenant in writing that the property will be stored (the reasonable expenses charged to the tenant civilly) for a period of thirty (30) days whereupon tenant may pick up said property. N.J.S.A. 2A:18-73-74. After thirty (30) day period, landlord may dispose of tenant property at public and private sale in accordance with the U.C.C. 12A:9-504. Property deemed to have insignificant value may be destroyed.

c.) Perishables and pets no need to provide notice.

2.) Commercial Tenancy

a.) Although Act does not apply, constitutional due process rights still applicable. Callen v. Shermonstre, 92 N.J. 114 (1983). Unless waiver of notice on distraint of personalty is absolutely clear, landlord must proceed on Chancery Division Action with Order to Show Cause and Verified Complaint.

Eviction Process

I. No Self-Help Evictions

It is now a criminal offense for a landlord to force a residential tenant from the premises without judicial intervention. N.J.S.A. 2A:39-1

II. Causes of Action

In New Jersey, residential tenancies, (with the exception of) owner occupied premises with less than two (2) rental units are governed by the Anti-Eviction Act (N.J.S.A. 2A:18-61.1). Under the Act the Special Civil Part, Landlord/Tenant Section has exclusive jurisdiction on summary dispossess actions.

A.) Is the residential tenancy governed by the Act?

Residential tenancies excepted from the Act

1.) Owner occupied, less than two (2) rental units.

a.) Two (2) rental units = two (2) units capable of being rented or actually rented Demprey v. Mastropasqua , 242 N.J. Super. 234 App. Div. 1990 (Certif. denied, 126 N.J. 330 (1991).

b.) Separate dwelling/structure on one tax lot

1.)Where separate buildings are in close proximately, they will be considered one "premises" Harrison v. Zelko, 272 N.J. Super. 219 (App. Div. 1994) A 9.7 acre tract consisted of three structures; house, cottage and barn. The barn had two (2) rental units (first and second floor) but they considered it only one (1) rental unit because the downstairs unit was for servant quarters only (Certificate of Occupancy by town confirmed). They considered the house and barn one (1) premises; and found it was owner occupied with only one (1) rental unit (the servant quarters was excluded). Had The Court considered the barn a separate premises, it would not have been owner occupied (Contrast Estate of Evelyn Johnson v. Blakenship, (No. A 5968-96T3 App. Div. July 2, 1998) (unpublished) wherein The Court held that separate structures on a sixty (60) acre lot would not be considered as one (1) premises because they too were far away.

c.) Hotel, motel or other guest house or part thereof rented to a transient guest or seasonal tenant.

1.) Must be transient, or seasonal. Hotel resident who resided two (2) years in hotel was entitled to Act protections Williams v. Alexander Hotel, 249 N.J. Super. 234 (App. Div. 1990). Intent to stay indefinitely not enough to overcome "transient" status Francis v. Tremidale Motel, 261 N.J. Super. 252 (App. Div.) Certif. Denied, 133 N.J. 437. Intent plus long term residence required. See McNeil v. Estate of Lachman, 285 N.J. Super. 212 (App. Div. 1995)

2.) Dwelling unit held in trust on behalf of member of the immediate family of the person or persons establishing the trust, provided that the member of the immediate family on whose behalf the trust is established permanently occupies the unit.

3.) A dwelling unit which is permanently occupied by a member of the immediate family of the owner of that unit, provided however, that exception (2) or (3) shall apply only in cases in which the member of the immediate family has a developmental disability.

4.) Mixed Use

Where the property is both residential and commercial (ie. Coffee shop with apartment rental as one rental) it will be considered residential where the occupant's residential use, in terms of time or space, is equal to greater than the commercial aspect. Wasserman v. WR Grace & Co., 281 N.J. Super. 34 (App. Div. 1995)

B.) Tenancies covered by the Act

Grounds for Eviction

1.) Non-payment of Rent

No notice required.

a.) Rent based upon either oral or written agreement.

b.) Additional Rent-must be specifically defined as additional rent in the lease (ie. Utilities, late fees, attorney's fees) Ivy Hill Park Apts. v. Sidisin, 258 N.J. Super. 19, 22 (App. Div. 1992) Certif. denied 130 N.J. 397. HUD/Rental Assistance tenants cannot be charged late fees or attorney's fees or court costs.

c.) Acceptance of parties payments prior to judgment is acceptable and will not void the action. Acceptance of partial payments after judgment is entered vitiates the judgment. (unless pursuant to Court Order or agreement by the parties) See Housing Action of East Orange v. Leff, 125 N.J. 429, 434-435 (Law Div. 1973).

d.) Mandatory five (5) business days grace period. N.J.S.A. 2A:42-6.1. No delinquency or late charge Business days = (no weekends or holidays).

e.) Dismissal of the Complaint upon payment of rent. N.J.S.A. 2A:42-9. Pay prior to entry of judgment.

2.) Notice Cases

All causes other than non-payment are for "good cause."

C.) Tenancies not covered by the Act

1.) Ejectment Action

File in Law Division or Special Civil Part N.J.S.A. 2A:18-53.

A.) Basis for Ejectment Actions

1.) Holdover tenants after expiration of term and written notice for possession to tenant.

2.) Default of rent.

3.) Constantly violate landlord rules and regulations

• Breach of violation of the lease
• Disorderly conduct
• Willful destructive damage to premises

III. Complaint

A.) Complaint & Summons:

In Special Civil Part, Landlord/Tenant Rule 6:2-2 See form Complaint.

B.) Venue: County where premises located.

C.) Service of Process: By the Special Civil Part Officers.

IV. Summary Proceeding

All actions in the Special Civil Part, Landlord/Tenant section are summary in nature. No discovery. Rule 6:4-3

V. Trial Notices

Sent by the Clerk of the Special Civil Part.

Adjournments at discretion of Trial Court. Rule 6:4-7

VI. Judgment to Removal

Special Civil Part, Landlord/Tenant can only grant judgment for possession; not money damages.

a.) Entered by the Clerk after trial or upon Consent Judgment filing.

b.) Warrant of Removal-The Court will issue a Warrant of Removal three (3) business days after entry of judgment (excluding weekends or holidays). N.J.S.A. 2A:18-57

c.) Issuance of Warrant of Removal-Must apply in writing for Warrant following entry of judgment.

1.) By Default-If judgment entered by default, landlord applies in writing by submitting request for warrant issuance and:

a.) Certification of Landlord's Attorney

b.) Certification of Landlord

2.) Upon Breach of Agreement/Consent Judgment

1.) Submit Affidavit of Non-Compliance

2.) Attach Consent Judgment

d.) Execution of Warrant of Removal

1.) A Warrant of Removal cannot be executed until three (3) days after service of the Warrant on the tenant (excluding weekends or holidays). Rule 6:7-1(c)

2.) Landlord will schedule a lockout procedure with sheriff following the three (3) day period.

e.) Defects

1.) Landlord must apply for Warrant of Removal within thirty (30) days of judgment being entered unless extended by Court Order or written agreement. Rule 6:7-1(c)

2.) Acceptance of any funds by landlord, other than by Consent Judgment, after entry of judgment and prior to lockout will vitiate judgment.

VII. Stay Proceedings

A.) Hardship Stay

N.J.S.A. 2A:42-10.1 and N.J.S.A. 2A:42-10.6 The Court may (discretionary) stay the eviction for up to six (6) months after judgment entered. Tenant must show a hardship because of unavailability of other dwelling accommodations.

1.) Maximum length six (6) months.

2.) Tenant must pay all rent and arrear dues together with accrued costs of action.

3.) Continued payment of rent during hardship stay.

B.) Stay for Orderly Removal

The Court can stay execution on warrant for a reasonable time to permit a distressed tenant to proceed with an orderly removal. Housing Authority of Newark v. West, 69 N.J. 293 (1976).