New Jersey Real Estate Attorney Blog

In the week between Christmas and New Year's Day, when landlords have historically encountered the most difficulty finding tenants to fill their vacancies, the issue of rent loss is once again in the forefront of our discussion on maximizing revenues for all the landlords we represent. In 2007, we saw a surge of buildings being sold and converted to condominiums. Unfortunately, in many cases, their developers have been unable to sell those condominiums. To make matters worse, the bad economic conditions and failing job market have forced younger rental prospects to continue to live with their parents, and older prospects to either downsize, move in with roommates, or to simply move out of New Jersey. The result is a high number of vacancies and few tenants to fill them. Landlords who are used to pre-screening their tenants for credit problems and eviction history may no longer have that luxury. Higher than ever vacancy rates have forced landlords to either rent to a high risk tenant face the proposition of leaving the apartment vacant. But perhaps there is another option that has been overlooked.

In a recent event our office sponsored, we met a gentleman with a rather unique business. He insures risky tenants. When a tenant with a less than perfect credit rating or eviction history wants to get an apartment, and landlords do not want to take the risk, the tenant can pay the business a rather modest fee to essentially write an insurance policy. In the event that the tenant default s in the lease, the landlord still gets paid, and therefore has not assumed any risk. The company calling themselves "Insurent" has insured thousands of tenants throughout New York State and is now in the process of expanding their practice into New Jersey. Offering a variety of services focused on securing the performance of tenants, Insurent enables landlords to keep their buildings full, while also guaranteeing that the landlord will not take the risk.

Finally, with the increase in the number of companies now offering rental insurance services, landlords who avail themselves of rent guaranteeing services must remember to use extra caution to ensure that they continue to employ the same uniform standards for acceptance of all applicants. Historically, income, credit worthiness, eviction history and criminal background have been the four major factors in determining whether to accept or reject a tenant. Landlords who now choose to use rental insurance programs, will now be faced with the increased challenge of developing standards that will keep them protected from discrimination claims.

The recent downturn in the economy has substantially impacted the business of residential rentals. As tenants continue to struggle to pay their rents on time, they also continue to incur late fees, thus further depleting their limited resources. The question then becomes whether late fees are allowed, and if so, how much of a late fee can be charged?

When Can the Late Fee be Charged?
In a standard non-payment of rent eviction case, it is clear that the Court's jurisdiction is limited strictly to the issue of rents. It is therefore necessary for a landlord seeking a late fee as part an eviction mater to demonstrate that there is a written lease setting forth that late fees are "additional rent." In cases where there is no written lease, or in cases where the written lease does not use the term "additional rent," the late fee cannot be included as part of the balance that the tenant must pay in order to avoid eviction. It should also be noted that even when there is a written leases calling late fees "additional rent," the landlord still cannot include that item in cases where the tenant is receiving Federal housing assistance.

Is there a limit to the Late Fee?
With regard to limitations on late fees, there is apparently a difference of opinion among Judges. Several Court decisions have held that a late fee should not be punitive and must reflect the actual "administrative expense" that the creditor incurs in processing the late payment. In the matter of Kuhn v. Hopkins, A-4507-96T1 (App. Div. 1998), the Court ruled that a late fee would not be enforceable if it exceeded the landlord's actual damages caused by the late payment. To this end, some Judges have enforced a 5% limitation on late fees.

Mandatory Grace Period
Most leases provide for a grace period before a late fee can be imposed. However, even in cases where the lease does not provide for a grace period, N.J.S.A. 2A:42-6.1 provides that certain tenants are automatically afforded a 5 business day grace period before a late fee can be imposed. Under N.J.S.A. 2A:42-6.3, those tenants are limited to those individuals receiving:

1. Social Security old age pensions
2. Railroad Retirement Pensions
3. Other governmental pensions in lieu of Social Security Old Age Pensions
4. Social Security Disability Benefits
5. Supplemental Security Income, or
6. Benefits under Work First New Jersey

Our firm previously reported on the importance of obtaining a Landlord Registration Statement. This time, we are going to discuss the Certificate of Occupancy. Unlike the Landlord Registration Statement, a Certificate of Occupancy is not a requirement for evicting a tenant in New Jersey. The lack of a Certificate of Occupancy may, however, bar recovery of rents in a civil action.

Most towns in New Jersey require a landlord to obtain a new Certificate of Occupancy each and every time a new tenant moves in to a residential dwelling. Some towns even require Certificates of Occupancy for commercial rentals. Inspections requirements for a certificate of occupancy vary greatly by municipality. All towns will check the operation of the smoke detectors, and in cases where there is gas heating, the carbon monoxide detector will also be inspected. Some municipalities will conduct much more thorough examinations, including items that are not even remotely related to safety issues in the rented premises.

While most landlords are familiar with the fines which the town may impose for failing to obtain a certificate of occupancy, few landlords are familiar with the more costly consequences which can result from such failure. In towns where certificates of occupancy are required, a dwelling rented without a certificate of occupancy constitutes an illegal contract. Consequently, in the matter of Khoudary v. Salem Board of Social Services, 260 N.J.S. 79 (App. Div. 1992), the Court ruled that a landlord who rents a dwelling without a certificate of occupancy does not have the right to file a suit for rents.

Put simply, the Khoudary Court reiterated the well known concept that it would not help the Plaintiff enforce an illegal contract. In the event that a tenant vacates the dwelling owing rents, either for prior months or months that may become due under the unexpired lease, a landlord may not file an action to collect the rents, and furthermore, may not apply any of the tenant's security deposit toward these rents. The landlord could, however, still bring an action or withhold security for physical damages, such as destruction of the rented dwelling. While it remains unclear, under the Khoudary decision, whether a Court would allow a tenant to file an action for return of all rents previously paid under the illegal contract; it is likely that most Courts would rule that the tenant should pay some rents for the benefit of the use of the apartment, under principles of quantum meruit.

For many years, Courts had interpreted the decision in Khoudary to mean that failure to obtain a Certificate of Occupancy was a bar to evictions. However, that issue has been since clarified. In the matter of McQueen v. Brown and Cook, 342 NJS 120 (App. Div. 2001), the Court determined that since it is clear that letting a tenant remain in the illegal rental would be contrary to public policy, and since a tenant should not be able to benefit from the illegal contract, a landlord still maintained the right to evict the tenant, even if he or she did not obtain a Certificate of Occupancy.

Since 2002, the Law Office of Michael D. Mirne, L.L.C. has filed several thousand eviction complaints in 13 different counties throughout New Jersey. Each week, a few landlords ask us whether they need to be present on the day of Court. While the question may sound simple, the answer is sometimes more complicated.

Defaults
The vast majority of all evictions filed in New Jersey are based upon non-payment of rent. Over 1/3 of evictions based upon nonpayment of rent result in Defaults. These are matters in which the tenant fails to appear for Court, and a Judgment for Possession is issued. The remainder of cases, in which both parties appear at Court, are then marked "Ready." These matters are, in most counties, mediated by either the parties on their own, or by an employee of the Court, skilled at bringing the matter to a fast resolution without trial. Based on our experience, only about 5% of non-payment of rent cases remain unsettled after mediation and must proceed to trial.

Non Contested Cases
Out of the 5% of cases that go to trial, some are what we may call "uncontested fact cases." Anyone who has been to landlord tenant Court in the last 10 years is familiar with the instructions that are read prior to the calendar call. In particular is the instruction that states "the Judge has no authority to make the landlord wait for rent or force the landlord to take it in installments." Notwithstanding this instruction, we still see cases in which a tenant who agrees he or she owes money still insists on going to trial in the erroneous belief that the Judge will take the tenant's circumstances into account and grant some leniency. Tenancy Court is somewhat unique in the number of Defendants who go to trial, essentially admitting to all the allegations of the Complaint. Not surprisingly, these cases always result in a Judgment for Possession.

Contested Cases
The presumption among many clients is that an attorney can testify for them so they don't need to be present. Unfortunately, RPC 3.7 specifically excludes a lawyer from giving any testimony in a trial in which he or she is also acting as the attorney for his or her client. Therefore, any contested matter, in which a fact is in dispute, requires the testimony of a witness for the Plaintiff. Usually, the landlord or the property manager is the best witness. But on occasion, other witnesses need to be called to address the issue of the amount of rent that is due.

Notice Cases
While the vast majority of cases heard in Landlord Tenant Court involve the non-payment of rent, other causes for eviction, such as lease violations, damage to the premises, and disorderly conduct occasionally arise. In these types of cases, the Court requires oral testimony from the Plaintiff even in cases when the tenant does not appear in Court to contest the matter. These types of cases are generally referred to as "Notice Cases" and the hearing that follows is called a Proof Hearing. Since testimony is always required for these types of cases, our office will call you to discuss your case at least 10 days prior to trial and we will subpoena any necessary witnesses.

In the State of New Jersey, the amount of real estate tax you must pay is based in part on the municipality's "assessment" or assigned value of your property. As property values have declined over recent years, some towns have reduced their assessments in order to keep up with the changes in value. They have then raised their assessments to make sure their budgets can continue to grow. The net result is that, even though the assessments have gone down, the taxes still have gone up.

Other municipalities have kept their assessments high, and have then been forced to defend a deluge of tax appeals from property owners and their attorneys. Unfortunately, these towns have relied on various unscrupulous methods to defend otherwise indefensible property tax assessments. One method employed is the use of the "N.U." or "Non-usable" code. Here's how it works:

In most cases, the taxpayer will attempt to prove his assessment is too high by offering evidence of comparable sales. The goal, when choosing a comparable sale, is to pick the properties that are most similar to your property, while also confining your search to sales that occurred soon before October 1 of the pre-tax year, or in some cases, within a month or two after October 1. The other requirement that had been imposed upon the taxpayer is that the sales must be "usable." N.J.A.C. 18:12-1.1 sets forth several categories of sales that may be considered non-usable by the tax assessor. Historically, the designation of non-usable or "NU" meant that the Tax Board or Tax Court did not need to consider the sale reliable in their determination of value of the subject property. The only sales that would be considered would be "arms length sales." With the surge of "distress sales" including foreclosures and short sales, it is becoming increasingly prevalent that the distress sales are defining the market. Put simply, the price that a buyer is willing to pay will be substantially affected by the abundance of bank sales.

For several years, objections to the use of "non-usable" sales have plagued tax appeal practitioners due to this fact that a large number of otherwise perfect sales data were eliminated, based solely on an administrative code. However, earlier this year, we received some great news when the Tax Court decided the Matter of Greenblatt v. Englewood City. In that matter, the Court concluded that "As it is the Defendant [the municipality] that is putting the issue of the reliability of sales [comparables]... it is the Defendant's burden to prove that the sales do not reflect market value. Simply saying that a sale was determined by the assessor to be non-usable for purposes of the Director's sales ratio study does not render the sale non-usable for valuation purposes. One opposing the sale must demonstrate with competent credible evidence that the sale does not reflect true market value." While we have continued to receive objections from Municipal attorneys who disagree with our use of non-usable sales, we now can state with confidence that the municipality that has the burden of proving that these sales do not accurately reflect value.

As real estate values continue to drop, municipalities are once again scrambling to budget for reimbursements to taxpayers who win their appeals. While real estate tax appeals are typically filed by April 1, they are often not heard until July or August. In some cases, the County Tax Board will then take as long as 4 to 6 weeks to render a decision. Since Real Estate Tax payments are due in February, May, August and November of each year, taxpayers who have filed appeals very often will have paid at least three quarters of real estate taxes prior to the County Board of Taxation rendering a decision as to whether they are entitled to a reduction. For the majority of our clients, who do obtain reductions in their assessments, the question then asked is when are they going to see an adjustment or credit on their tax bills. Under N.J.S.A. 54:3-27.2, the Tax Collector of the municipality shall refund any excess paid within 60 days of the date of judgment. Should the matter proceed to Tax Court, it is very possible that a Judgment would not be rendered until a couple of years after the Tax year for which the appeal is sought. In those cases, where the municipality is forced to give back overpayments for multiple years, it is not unusual for the municipality to delay reimbursement and pay the taxpayer a 5% interest penalty as per statute until the overpayment can be fully reimbursed.

We recently learned of the case of an Essex County man who has repeatedly delayed evictions through various techniques. The most common technique involved the practice of causing substantial damages to his rented dwelling, and then reporting the damages to code enforcement, under the misrepresentation that the damages were either present when he took possession, or became present by reasons other than his own malfeasance. Under recent amendments to New Jersey's Forcible Entry and Detainer Act, it is a Disorderly Persons offense for a tenant who is facing eviction to vandalize his apartment. Nevertheless, it is very often the landlords who are brought before Municipal Court Judges to try to explain why they rented an apartment with numerous habitability defects.

Several years ago, when I was working as a property manager, I encountered a similar situation with a tenant who moved in to one of the buildings I was managing, and promptly proceeded to remove the strike plate from his front door entry. He then called Code Enforcement to advise that office that I had rented an apartment that was not secure. Code Enforcement then called me and told me that I would be fined if I did not immediately fix the apartment. I then conducted some further research and contacted a previous landlord of this particular tenant. Needless to say, that landlord had some choice words to say about the tenant to who I had rented one of my apartments.

The lesson I quickly learned is to get the complete history of all tenants before renting to them. There are several sources for this information, including interviewing the prior landlords, as well as various internet based companies that will inform you of an applicant's eviction history for a very modest price. In the case of the Essex County man, who has already cost several landlords thousands of dollars, some landlords have reported that they "inherited" the tenant when they purchased the property from a prior landlord. In these cases, proper due diligence would require conducting a background search on every tenant residing in a property before closing. The lesson in that case is "when buying an investment property, make sure you know what you are investing in." For the landlords who have already fallen victim to this scam, it is a difficult lesson to learn. For the rest of us, it serves as a reminder to make sure we know who we are renting to, before we sign our contract.

Anyone who has been to Landlord Tenant Court during the last ten years has heard the pre-calendar instructions, and by now, may even have those instructions memorized. Each time, when the Judge gets to the part that states "a Landlord may not lock out a tenant by himself or herself," most of us have wondered, at some point, what kind of landlord would attempt to do such a thing. Perhaps even more important, is the question of what would be the consequences if a Landlord were to illegally lock out a tenant? During the past several weeks, an alarming number of commercial tenants have come to our office with complaints that their landlords have threatened to lock them out. In an effort to answer some of their questions, we have compiled some of the key points in the law.

Under N.J.S.A. 2A:39-1, a landlord who illegally locks out a tenant may be subject to both civil and criminal penalties. As far as the civil penalties go, the landlord may need to reimburse the tenant for up to three times the monthly rent and all damages proximately caused including attorney's fees. The criminal penalties, which were recently added to the Statute, include a charge of disorderly persons for anyone either performing the illegal lockout or owning the property where the illegal lockout was performed. As an ancillary matter, landlords should keep in mind the fact that shutting off any utility which the tenant has been receiving is considered to be tantamount to an illegal lockout under the law.

The immediate concern of tenants who are illegally locked out is getting back possession of the dwelling. This is done by filing an emergent application, known as an Order to Show Cause, with the Court. The fee for this application is $50 and the Court will take all steps necessary to try to ensure that the tenant's application can be heard on the day it is filed. Since there is a significant chance that the landlord will not be available to appear that day in Court, on such short notice, to give the Court his or her argument, the Judge will usually sign a temporary order at the time of the tenant's appearance, allowing the tenant back into the premises, but also setting up a "return date," usually 3 to 5 later, when the landlord and tenant can both attend to argue whether or not the tenant should be permanently allowed back into the premises. Any argument regarding financial losses will usually be saved for a later date when a proper trial can be held.

The Current Problem
Each year, New Jersey municipalities have suffered substantial shortfalls as the result of Tax Appeals being filed after the municipal budgets have been adopted. Under the current law, each municipality must adopt its budget by March 31 and the deadline to file a tax appeal is generally April 1. In some cases, tax appeals do not get heard until several months after they are filed. The judgments resulting from those Tax Appeal applications are then mailed out several weeks later. The result for most municipalities is a major budget shortfall. Furthermore, the school system, which usually accounts for the majority of a municipal budget, is not bound to return any of the funds previously guaranteed under the March 31 budget.

The solution that many municipalities have employed is the same solution that any governmental entity employs when it has a budget shortfall. They have sold bonds, which they must pay back with interest at a later date. This solution, however, only forestalls the impact of the tax appeals. Another solution, employed by assessors is to offer to settle a matter with the stipulation that the lower assessment will not become effective until the following year. This solution allows a municipality to account for an adjustment in some of their line items prior to a budget being adopted. Nevertheless, this solution is used relatively rarely, and can only be used for settled matters.

The Proposed Solution
In light of the current issues, a bill has been proposed that would attempt to fix these problems by simply changing the taxation calendar. Under the proposed calendar, taxpayers would receive their assessment postcards by November 15. Tax Appeal applications would be due by January 15, and decisions would be mailed no later than April 30. The final piece of the proposed bill is that the municipal budget would not be due until May 15, and the tax rates would not be set until May 31, after the municipality already has an accurate picture of what the total tax base would be.

Of course, it is not realistic to expect that appeals filed before the State Tax Court will be handled with the same alacrity of the County Tax Boards. But the State Tax Court Appeals make up a small percentage of the total number of appeals, and accordingly will not, in most cases, substantially affect the budgets to the same degree as the County Appeals.

The bill entitled S2234-A3227 has not yet been adopted, but is scheduled for a "pilot run" in Monmouth County, possibly as early as this fall. The Monmouth County Board of Taxation is already on the cutting edge of technological of innovation by becoming the first County to introduce electronic filing of tax appeals in 2010. If the proposed plan goes into effect this year as planned, Monmouth County taxpayers will need to remember that their 2012 tax appeals filed no later than January 15, 2012.

According to some experts, New Jersey's real estate market reached its peak in the summer of 2006. Since then, real estate values have consistently dropped. Among the properties that have seen the most dramatic decreases in values are New Jersey apartment buildings. As the real estate values have continued to plummet, tax assessors have scrambled to try to ensure that their assessments do not exceed the values. In some cases when a reassessment or revaluation has not been performed to reflect the diminution in values, owners of apartment buildings have enjoyed success in their tax appeals.

While apartment buildings were historically valued based upon the income streams that investors could expect to receive, the prospect of condominium conversions from 2003 through 2008 forced apartment building values to increase far beyond what could normally be justified if the investor were only looking at rental income. In fact, in many cases, the expenses for the recently sold buildings far exceeded the rent rolls. The belief among investors was that their profits would be realized once the buildings were converted into condominiums and their units were sold off to individual owners. When these prospects did not come to fruition, the unfortunate result was a high inventory of vacant condominium and apartment units and a substantial depreciation in residential rents. These factors have all contributed to a decrease in the values of apartment buildings, and an increased number of tax appeals.

To further complicate matters, New Jersey municipalities that conducted their most recent revaluations or re-assessments at or near the height of the real estate market are now substantially over-assessed for most properties. In these instances, filing a Tax Appeal is essential. However, in some towns, properties are valued at as little as 20% of their true value. The reason for this is that conducting revaluations or re-assessments is an expensive process for municipalities to undertake. Some towns have not conducted revaluations in several years. Those under-assessed municipalities will therefore operate under the sometimes faulty assumption that all of their properties are under assessed by the same ratio and will increase their tax rates accordingly.

In cases where your property is located in an under-assessed municipality, you still may have a good case for a Tax Appeal if your "true value assessment" exceeds the value of your property. The True Value Assessment can be easily derived by taking your assessment and dividing it by the equalization ratio for your municipality. Your town's equalization ratio can be obtained by either calling your assessor or the County Board of Taxation. If you feel that your True Value Assessment exceeds the actual value of your property by more than 15%, then a Tax Appeal may be justified.

The tax appeal procedure begins with an application which is generally due on April 1st. Filing fees for the application range between $5 and $150 depending upon the assessed value of the property. In cases where an attorney is retained, the attorney will often handle the appeal on a contingency fee basis. While property owners who are not corporations or limited liability companies may represent themselves in the tax appeal proceeding, the applicant should have an appraiser at the hearing in all cases where a discrepancy in valuation is at issue.

In recent months, Tenancy Courts have begun seeing an increasing number of eviction actions based upon the claim of "Habitual Late Payment of Rent." While the Statute addressing this issue, N.J.S.A. 2A:18-61.1(j), was clear in its intent, recent case law has added to the requirements originally contemplated by the Statute. In addition, some case law has even suggested that the issue of non-payment of rent is not even an issue of law, but rather an issue of fact. In this week's article we will discuss the most recent mandates for landlords seeking to evict a tenant for Habitual Late Payment of Rent.

Notice to Cease
The Notice to Cease is a required notice in for certain grounds for eviction under New Jersey landlord tenant law. It is a warning notice, which advises the tenant that he or she is doing something wrong and that an eviction will be filed unless the wrongful action ceases. Actions for Habitual Late Payment require this Notice. However, in recognition of the fact that very often the late payments by the tenants are not consecutive, and in fact sometimes there will be several "on-time" payments in between the late payments, recent case law suggests that two Notices to Cease are required for this ground. The first Notice to Cease can be sent as early as the second late payment. In the event that the tenant is late a third time, a second Notice to Cease should be served.

Notice to Quit
In the event that the tenant is late a fourth time, the tenant may be served with a Notice to Quit. The Notice to Quit is the Notice terminating the tenancy, and must give the tenant not less than 1 month from the next rental payment becoming due before the lease is terminated. At the expiration of the time period set forth in the Notice to Quit, an eviction action may be filed.

Recent Case Law
In the matter of Matthew Carter Apartments v. Kathy Richardson, the Appellate Division re-examined the issue of Habitual Late Payment of Rent. In that matter, the Court debated over the issue of whether late payments following the various notices actually constituted cause for eviction under the Statute. It is implausible that the Statute could leave any room for interpretation. However, the Appellate Division noted that, in certain cases, where the rent had been paid on time for several months, it is possible that one more late payment several months later may not constitute Habitual Late Payment, even though the Statute included no indication that such conduct would not constitute Habitual Late Payment of Rent. The Court therefore held that the issue of whether Habitual Late Payment of Rent exists is ultimately a question of fact for the Judge to decide, rather than a question of law, which would only require the necessary late payments in order to prove.

New Jersey's Landlord Tenant rules are overdue for a major overhaul. Many of the laws concerning landlord tenant relationships have evolved over the course of several hundred years. The resulting tenancy law has been a compilation of a myriad of Statutes, Court Rules and Administrative Codes, many of which are ambiguous, antiquated, or simply conflicting with each other.

A proposed new proposed Statute, entitled N.J.S.A. 46A, has been drafted to replace existing Landlord Tenant Laws. While the legislature has not yet adopted the proposal, it is expected that the newly refined Statute will become law within a few years. It remains uncertain what effect the new Statute will have on the existing case law, much of which is based upon the Court's interpretation of the prior Statute.

Most of the changes in the proposed are minor corrections, clarifications and reorganizations of the prior law. Added to the revised Statute are various items including a new cause for eviction for tenants who create imminent serious danger to others, the rental property or to the immediate vicinity of the rental premises. The new proposal also includes model forms for various notices that continue to be a prerequesite for all grounds for eviction other than non-payment of rent.

Finally, we regret that the obscure law that enabled us to sue a holdover tenant for double rent, will be replaced with a far more tenant friendly version, which only allows a residential landlord to seek "actual damages" caused by the tenant's willful holdover.

In the wake of the recent epidemic of beg bug outbreaks in both residential and commercial properties, an increasing number of lawsuits have followed. In this week's article, we will examine some of the legal issues that may arise during a bed bug suit.

Tenants seeking to bring an action against a landlord due to bed bugs must not only prove that the bed bugs caused an injury, but they must also prove that the landlord was negligent. The matter of Marilyn Mitchell v. Capitol Management Corp (2010) involved a residential tenant who had discovered bed bugs in her apartment. She had contacted the landlord to report the infestation and the landlord responded by having the apartment exterminated that week. The tenant then discarded most of her clothing and furniture in order to ensure that the bed bug problem would not return. The tenant, who was living with her ten year old son, moved to a new location and did not return to the apartment.

In addition to the physical injuries suffered by the tenant, she also claimed that she suffered from post traumatic stress disorder. On Appeal, the tenant argued that the mere existence of bed bugs should create a "presumption of negligence" on the part of the landlord. She further argued that the failure of the landlord to take "aggressive measures to eradicate infestation" is also negligence. The Appellate Court disagreed with both of the tenant's theories, and ruled in favor of the landlord. While the Appellate Division did not question the legitimacy of the injuries allegedly suffered by the tenant, it did not find any evidence to support the notion that the landlord was negligent.

An increasing number of New Jersey residents have become dependent on affordable housing to be able to continue to live in New Jersey. In the matter of South Burlington County NAACP v. Mount Laurel, 67 N.J. 151 (1975) and later, in the subsequent matter of South Burlington County NAACP v. Mount Laurel, 92 N.J. 158 (1983), the Supreme Court of New Jersey visited the issue of affordable housing. The Court determined that municipalities in "growth areas" have a constitutional responsibility to provide affordable housing to low and moderate income families. Out of these two rulings came a comprehensive set of laws and guidelines aimed at forcing New Jersey municipalities to meet their "fair shares" of affordable housing. To this end, the Council on Affordable Housing (COAH) was established to help oversee the process. At least one New Jersey municipality is now challenging the ruling as it pertains to its own obligation.

The issue began a few months ago when COAH removed Marlboro from its protections after multiple complaints that Marlboro allegedly failed to demonstrate good faith in meeting its fair housing obligations. Subsequently, four developers brought suit against Marlboro in attempt to force it to allow additional affordable housing. With the costs of real estate construction continuing to increase, and the values of real estate continuing to decrease, Marlboro may be only one of several towns that will eventually be targeted by opportunistic developers seeking to exploit the COAH rulings for their benefit. In the meantime, Marlboro is appealing the COAH decision to remove its protections.

In a previous article, we discussed Marini defenses available to tenants who are experiencing habitability problems which do not necessarily render their dwellings completely uninhabitable. In more severe cases, it may become necessary for the tenant to permanently vacate the dwelling, by claiming a "constructive eviction." The matter of Reste Realty v. Cooper, 251 A.2d 268 (1969) involved a commercial tenant who was experiencing chronic and persistent flooding. The landlord argued that since there was no written covenant of habitability, that the tenant assumed the full risk for any loss of use of the premises. The Court ruled in favor of the tenant, citing the theory that it is the duty of the landlord to alert the tenant to any hidden or latent defects of which the landlord is aware and of which the tenant may not easily discover.

Recently, the Court has applied the theory of constructive eviction to a complaint for mold. In the recent matter of Marusiak v. McCall, the Tenant claimed that she was forced to move from her residential dwelling due to mold. The landlord refused to return the tenant's security deposit, claiming that it was being withheld due to unpaid rent for the time period after the Defendant vacated the premises. The tenant brought suit against the landlord claiming that she was constructively evicted, thus terminating her duty to pay rent, and further requiring the landlord to return the security deposit back to her. The Court agreed with the tenant and awarded her with the return of her security as well as damages under the Rent Security Deposit Act.

A tenant who intends to rely on the theory of constructive eviction and vacate a dwelling prior to the end of the lease should be cautioned that there is no guarantee that a Court will rule in his or her favor. The Law Office of Michael D. Mirne, L.L.C., which routinely represents landlords in collection matters against former tenants, has observed that tenants who are being sued for past due rent often claim some element of constructive eviction, but are rarely successful. While the facts of each case are unique, a claim of constructive eviction is most likely to be successful when the following factors are present:

1. A defect that renders the premises completely unusable for the purpose for which it was intended;
2. And one of the two following factors:
a. An inability or unwillingness of the landlord to cure the defect despite being given ample opportunity to do so; or
b. A defect that poses such an immediate hazard to the tenant that it would be impractical to afford the landlord any time to cure the defect.