In last month’s article, we discussed applications filed by tenants to have Judgments for Possession set aside. This month, we will discuss one other type of post-judgment applications that tenants may make in order to delay their lockouts. Specifically, in this article, we will discuss Hardship Stays.

On the day of Landlord Tenant Court, some cases are settled, and some cases result in the immediate entry of a Judgment for Possession, very often due to the non-appearance of the tenant. Following the entry of a Judgment for Possession, whether it is by way of a default, or a breach of a settlement agreement, the landlord may order a Warrant of Removal.   Sometimes, following the Judgment for Possession, the tenant will attempt to pay the Landlord the rent that is due. However, after the Court date (or after the date that a settlement agreement is breached), the Landlord is under no obligation to accept the rent.   The Landlord has the right to proceed with a Warrant of Removal and a lockout. When this occurs, if the tenant has the rent that is due and owing, the tenant may post that rent with the Court, pursuant to N.J.S.A. 2A:42-10.1 or N.J.S.A. 2A:42-10.6 and request a Hardship Stay. In cases where the past due rent is posted with the Court and a Hardship Stay is deemed appropriate, the Judge will issue an order delaying the lockout and compelling the parties to appear in Court for a “return date,” during which the parties can argue about the duration of the Hardship Stay.

The Hardship Stay can last for a maximum duration of six months. However, the Court will not necessarily grant a full 6-month Hardship Stay all at once. In most instances, the Court will grant a Hardship Stay for a shorter period of time and afford the tenant the opportunity to come back to Court at a later date if additional time is needed for the tenant to find alternate housing. In all Hardship Stay matters, the tenant must continue to stay current with rent throughout the entire duration of the Hardship Stay. In the event the tenant fails to pay rent during any month of the Hardship Stay, the Landlord may request that the Hardship Stay be immediately set aside and that the Warrant of Removal be executed.

For the past 15 years, our office has been reporting on issues regarding New Jersey Landlord Tenant law. In today’s article, we will discuss the application for an Order to set aside the Judgment for Possession based on fraud or other good cause, pursuant to New Jersey Court Rule 4:50-1. These applications are generally made during the 3-business day “window” between the posting of the Warrant of Removal and the Execution of the Warrant of Removal (i.e.; the lockout). Tenants making these applications will allege a variety of perceived issues, which are generally not valid reasons for setting aside a verdict.

One common attempted defense is the tenant’s statement that he or she was never served with the Complaint. However, since a copy of the Complaint is served to the tenant via regular mail and another copy of the complaint is served to the tenant via hand-delivery to the dwelling, and the Special Civil Part Officer signs an affidavit, stating that he served the tenant, the argument that the tenant was not served is generally not credible, and are summarily dismissed by the Judge hearing the application.

Sometimes the tenant will state that he or she was in the hospital on the day of the Landlord Tenant Court date (a surprisingly common occurrence with tenants facing eviction). Provided that the tenant can show proper documentation of the hospitalization, the Court will be satisfied that there was excusable neglect in the tenant failing to appear in Court. However, a thorough Judge will then also attempt to determine whether there is a meritorious defense to the claim (i.e.; does the tenant still owe rent?). After all, it is not enough for the tenant to merely prove that he or she was unavailable on the day of Court. The tenant must prove that as of the day of Court, there really was no valid claim that should have existed.

dollar-sign-1317230-mOur 2016 Monmouth County Tax Board hearings are now completed. As we prepare for another batch of hearings in the remainder of the County Tax Boards, we will discuss four of the more common errors that taxpayers make that have resulted in dismissals of their matters.

  1. Refusal to Allow Access to Premises

When conducting re-assessments or revaluations, tax assessors or employees of the revaluation company may request access inspect houses. Sometimes, even in non-revaluation years, a taxpayer may receive such a request if a tax appeal is pending and the assessor needs to verify his or her information. While you certainly have the right, under the Fourth Amendment to the United States Constitution, to refuse access to government employees, you should expect that the refusal to grant access to the assessor will likely be construed as your affirmation that the assessor’s predetermined information is correct. In other words, if you want to tell the Tax Board that the property information provided by the assessor is not accurate, you should not expect too much sympathy from the Commissioners, once the assessor mentions that you refused access. Notwithstanding the Fourth Amendment, it would not be reasonable to refuse access and then show up at a tax appeal hearing to contest the findings of the assessor.

NickelDuring the past five months, our office has responded to several hundred inquiries regarding real estate tax appeals for the 2016 tax year.   The initial inquiries mostly concerned Monmouth County properties, where the filing deadline was January 15. A single exception exists for Wall Township properties, where the filing deadline has been extended to April 1, due to the municipal-wide revaluation. Wall Township is the only town in Monmouth County that had not previously undertaken a revaluation since the pilot program was instituted in Monmouth County in 2013.

The revaluation in Wall Township has, however, caused a great deal of confusion among taxpayers, many of whom have the erroneous belief that the drastic increase in their assessments would result in a significant increase in their tax bills. Fortunately, this is not the case. The tax rate for each town is calculated by dividing the municipal budget by total of all assessments. The former assessments, which had been equalized at about 60% of true value, necessitated a very high tax rate. Put simply, when all the properties in town were under-assessed, a higher tax rate was required to ensure that the tax revenue still matched the municipal budget.

Now that Wall Township has undertaken the task of bringing all the assessments back to 100% of true value, the tax rate would need to drop commensurately in order to make the arithmetic work. Of course, any time there is a municipal revaluation, there will be a few property owners who will become over-assessed. While a drastic increase in assessment is not sufficient cause to file a tax appeal, an over-assessment is a very good cause to file a tax appeal. During the next few weeks, our office will continue to field phone calls and emails to answer any questions that taxpayers may have regarding their assessments.

gavelMost American businesses keep track of their charges and receivables using a “first in, first out” method. The central principle of this method, referred to as “FIFO,” is to apply customers’ payments toward their earliest balances first, and then toward their later balances. New Jersey landlords had also accepted the FIFO method of accounting until relatively recently, when the State Supreme Court ordered that eviction complaints follow a specific format, in which tenants’ unpaid charges are specifically set forth in detail.

Using the FIFO method, for example, if a tenant failed to pay rent January and February, the next payments that the tenant did remit would be applied to January and February. That application would certainly create a gap in later months in which the payments were made. In the event that the eviction complaint followed the same methodology, it might appear that the tenant owed rents from March and April (or whatever the most recent months were), when the two missed payments were really from January and February. This method is unfortunately confusing for tenants who may show up to Court with receipts to prove that they paid certain rents, only to find that the receipts that they produced do not refer to the missing payments in question.

Prior to the institution of the revised eviction complaint format, we had found that the best method of proving the balance owed in a trial involves going back to the ledger to determine the last date when the balance owed was $0.00. Then the landlord should add up all the rents that became charged since that date (i.e.; the monthly rent multiplied by number of months). Then the landlord should add up all the receipts that were paid during that same time period, and subtract that number from the amount of rents charged to determine how much was still owed.

NickelA few years ago, I was attending a conference for the New Jersey Chapter of the International Association of Assessing Officers. The moderator introduced the Monmouth County Tax Administrator, Matthew Clark, to discuss a new program he was implementing.  Mr. Clark discussed his new website to enable the electronic filing of all tax appeals.  He also spoke about changes to the tax appeal calendar to ensure that tax appeals were filed and decided before the date that the municipalities were required to finalize their budgets.  These all seemed like good ideas.  Then Mr. Clark spoke about making data more available to assessors to create a group of “super-assessors,” who could annually perform revaluations.  Since one of the exceptions to the Freeze Act is a revaluation, it is clear that the process of annual revaluations would substantially vitiate the benefits of a tax appeal.  Later that day, I approached Mr. Clark with a request that he reconsider his position on annual revaluations.  That request did not draw much response other than an acknowledgement that the plan was already a fait accompli.

Annual revaluations are commonplace in many towns in Somerset County, although they are not specifically legislated like they are in Monmouth County. Since revaluations are time consuming and expensive, New Jersey towns have historically avoided performing them until they have been compelled to do so by the County Tax Board.  Instead, towns have opted to make adjustments only to the tax rates, which are not appealable.  The arithmetic works out the same, of course.  Either way, the town satisfies its budget, although avoiding revaluations can produce some unfair results in cases where there is a substantial deviation in the changes in real estate values in different parts of the town.

A recent series of newspaper articles heavily insinuated that the annual revaluation program was a ploy to line the pockets of one of the former Tax Board Commissioners, who is now employed by the company that does many of the revaluations. The articles are certainly eye-catching, but they unfortunately lack merit, and they fail to produce any evidence of any actual misfeasance.  Other than a common link between the Tax Board and the revaluation company, there is no substance to support the allegations.

Several months ago, we discussed the Abandoned Property Act. Under N.J.S.A. 2A:18-72, et. seq., a landlord cannot dispose of a tenant’s property until the following two conditions occur:

  1. The Landlord must have regained possession from the tenant, either by way of eviction action, or by way of other conclusive proof that the tenant has voluntarily surrendered possession of the premises (e.g.; the tenant turned in the keys or indicated in writing that he or she has surrendered possession); and
  2. The landlord shall also serve the tenant with a written notice, advising the tenant that he or she must claim all belongings in the apartment within 33 days, or they will be presumed to be abandoned, and may be disposed of.

gavel.jpgFor taxpayers in Mercer, Middlesex and Monmouth Counties, who have matters pending before the New Jersey Tax Court, our job just got even easier (and faster). Historically, a property tax matter filed in the New Jersey Tax Court would require the two attorneys to make several appearances in Court before the matter would finally be scheduled for trial. The first appearance, which would be scheduled anywhere between 8 and 18 months after the original filing, would usually not yield much in the way of productive results. The second appearance, which may have been scheduled about two months later, would generally lead to the parties being instructed by the Court to complete discovery and discuss settlement. On the third appearance, the Judge would tell the parties to go get appraisals and continue discussing settlement. If the matter did not settle by the fifth appearance, we could usually ask the Court to schedule a trial. While each case was unique, we never got to a trial without at least 4 prior Court appearances.

With 60,000 property tax cases pending before the Tax Court and only 6 Judges to hear all of them, the case management process has not only been burdensome for the attorneys, but it has also exhausted the Court’s limited resources. For those of you who have not had the pleasure of showing up to Tax Court on a Wednesday morning, when there are 400 cases scheduled for case management, you have unfortunately missed out on a miraculous event, that has apparently been phased out of the process, at least by one out of the six Judges who hear Real Estate Tax Appeals.

Judge Sundar, who presides over Tax Appeals for Mercer, Middlesex and Monmouth County properties, has implemented a new plan to speed up the Tax Appeal process. The plan involves having the two attorneys work out the details of the case management process on their own and reporting the status to the Judge via email. This will eventually lead to the Court being able to increase the number of cases it can clear, rather than dealing with an issue that can usually be resolved by the two attorneys on a case. As much as I enjoyed spending my Wednesday mornings in downtown Trenton chatting with my colleagues about capitalization rates, equalization ratios and external obsolescence, while waiting for my cases to be called, it will be nice to be able to devote the 3 hours to more productive pursuits.

dollar-sign-1317230-m.jpgOur firm’s County Tax Appeals for the 2015 Tax Year have concluded. We are pleased to report that this year, we have reduced the assessments for our tax appeal clients by more than $5.1 Million. In more than 70% of our concluded matters, we were able to reduce the assessments for our clients. In Monmouth County, our appeals in Sea Girt had the largest margin of savings, averaging more than $150,000 per property. In Asbury Park, where a revaluation was recently conducted, assessments did not vary substantially from true market values. In Middlesex County, our concluded matters yielded an average assessment reduction of 24% of assessed value.

As always, much of the credit goes to our experienced team of real estate appraisers, who have done an excellent job in not only preparing the appraisal reports, but also testifying at the tax appeal hearings. In all, we used a total of 9 appraisers for our 2015 matters, and they have all done an exceptional job in helping us overcome the burden of proof in out matters.

Finally, we note that a property does not need to be assessed for more than it is worth in order to be considered “over-assessed.” In many towns, an “equalization ratio” is used to determine the percentage of value at which properties should be assessed. If your property is assessed at a higher percentage of value than the rest of your town, you may also have a good case for a tax appeal. However, for Monmouth County residents, we note that due to the new “Assessment Demonstration Program” being in effect in Monmouth County, nearly all towns in this County have attempted to assess their properties at or near 100% of “True Market Value.” In cases where the assessments have exceeded true market value, we encourage taxpayers to file appeals.

Keys.jpgFor the last 12 years, our firm has been writing articles about the eviction process. We have discussed pre-suit notices, habitability hearings, security deposit defenses, and a variety of other topics, focused on the eviction process. However, we have never provided any articles regarding Warrants of Removal. The Warrant of Removal is generally the last stage in the eviction process. While post-judgment applications sometimes add an extra step to the process, it is important for landlords to have a full and complete understanding of the Warrant of Removal process, in order to minimize the risk of unnecessarily delaying the lockout of a tenant of even causing the involuntary dismissal of an eviction.

Following nearly all eviction matters that are based on nonpayment of rent, we will leave the Courthouse with either a settlement that the landlord has agreed upon, or a default against the tenant. The defaults can be the result of a tenant not showing up to court to contest the eviction, or in some cases, they can be the result of the tenant showing up, but without the enough funds to persuade the landlord to enter into a settlement agreement. Since the Court cannot make the landlord wait for rents or force the landlord to accept the rent in installments, the Court will change the marking for these cases from “Ready” to “Voluntary Default,” or “Judgment by Consent.”

Whether the Default is the result of the tenant not showing up, or the result of the tenant showing up with no money, a Judgment for Possession will enter. Barring the very unlikely possibility that of the tenant posting the full amount due with the Court later on the day set for the hearing, the Landlord should immediately apply for a Warrant of Removal.