New Jersey Real Estate Attorney Blog

In a previous blog, we discussed some of the potential consequences for landlords who have acquired title from their tenants. The main issue at hand, was the fact that landlords who have acquired title from their tenants may lose the advantage of having their eviction actions heard in Landlord Tenant Court. The consequences, however, may have just gotten worse. In a recent decision, in Bergen County Superior Court, decided by Judge Ellen Koblitz, landlords who acquire title from their tenants, with the promise of eventually selling the property back to the tenants, may be exposed to the harsh penalties of New Jersey's Consumer Fraud Act. Under New Jersey's Consumer Fraud Act, the alleged victim may be entitled to treble damages as well as attorney fees and other sanctions in the event that the Court finds a violation.
In the pendent matter, Ricardo Maldonado, a self proclaimed business man, with a ninth grade education rode around with a sign on his car that said, "I buy houses." One such house that Maldonado purchased was owned by a Garfield couple. Maldonado promised to hold the home for the couple for one year and then allow the couple to purchase it back. After one year, Maldonado refused to allow the couple to purchase back their home. A Court action ensued in Bergen County Chancery Division. In ruling on this case, Judge Koblitz was not convinced by Maldonado's argument that he was not covered by the Consumer Fraud Act.

As a result of unsound real estate purchasing and borrowing decisions, coupled with the recent epidemic of losses of income, many property owners have found themselves in severe risk of foreclosure. Some owners have looked for creative ways to avoid the possibility of losing the home, which they cannot afford to pay for. This has led to an influx of landlords who have seized upon the opportunity to purchase these distressed properties and "save the owners from foreclosure." However, landlords who have acquired title to their properties from their tenants should be forewarned that their right to evict those tenants is in jeopardy.

Under ordinary circumstances, a New Jersey landlord can expect that an action filed for non-payment of rent will result in a Judgment for Possession within about 4 weeks of the time the action is filed. The expediency of this process is attractive to most landlords who are often struggling to pay their own bills, and cannot afford to subsidize a tenant who is not paying rent. At an eviction trial, the Judge reads a preliminary set of instructions, which includes the statements that (1) he or she may not force the landlord to wait for rents, and (2) all outstanding rents must paid by the day of Court or the tenant will be evicted. However, Landlords who have acquired title to the property from the tenant, and Landlords who have given the tenant an Option to Purchase may not have the right to have their case heard in New Jersey Landlord Tenant Court.

The body of the Tenancy Complaint has been recently amended to include an inquiry as to whether the Landlord acquired title to the property from the Tenant, or alternatively, if the Landlord gave the tenant an Option to Purchase the Property. Since both of these conditions would substantially affect the equitable property rights of the tenant, the cases brought under these conditions are not easily resolved on a summary basis. To put it simply, Judges in Tenancy Division, who are often swamped with a heavy caseload of relatively simple matters, are reluctant to make the factual inquiries necessary to resolve a dispute when the ultimate issue affects the ownership of the property. Under New Jersey Statute 2A:18-52, the Tenancy Court is simply not permitted to make decisions affecting title to property.

The unfortunate result is that these matters are routinely transferred out of Tenancy Division into the Law Division (or even worse, the Chancery Division), where the parties can spend the next 12 months exchanging discovery, attending Court Ordered mediations, and waiting for trial. More importantly, the Tenancy Judge very often orders that the tenant does not need to pay rents to the Landlord until the Law Division has an opportunity to rule of the issues of the case. Under the Rules of Court, the Transfer out of Tenancy Division can be requested by the Judge, sua sponte (on his own initiative), or by one of the parties (usually the tenant).

Continue reading "New Jersey Eviction Courts Reluctant to Try Cases Involving Options" »

The Section 8 Program was designed to enable the government to assist low income families with their rent by paying a subsidy directly to the landlord. There are currently about 60 Public Housing Authorities in New Jersey administering Section 8 Housing Vouchers and Certificates for approximately 60,000 households. The rules and regulations of the Program are vast and often complex. In this month's newsletter, we will discuss some of these rules, as well as the consequences for landlords who participate in the program.

To Accept or Not to Accept
We are still surprised at the number of landlords who claim that they do not accept Section 8 tenants. In 1999, the State Supreme Court ruled that a Landlord may not discriminate against a prospective applicant based on source of income. Under this ruling, Section 8 assistance is deemed to be a source of income. In September 5, 2002, Governor McGreevey signed the Section 8 Anti-Discrimination Bill, which imposes substantial penalties for landlords who refuse to rent to tenants based upon their Section 8 status. Under the law, a landlord who discriminates can be fined up to $10,000 for a first offense and up to $25,000 for a second offense. Notwithstanding this edict, many landlords are not comfortable with the constraints of the Section 8 program, some of which are detailed in this newsletter.

Selection of a Section 8 Tenant
We encourage all landlords to adopt uniform standards for the selection of all prospective tenants. Generally, these standards typically include a credit check and a minimum income requirement. For purposes of screening Section 8 tenants, the latter is very often inappropriate. However, credit-worthiness still remains a valid reason to reject tenants whether they receive a Section 8 subsidy or not. The important thing to remember is that a landlord should not have different standards for accepting a Section 8 tenant than it has for accepting a non-Section 8 tenant.

Late Fees and Legal Fees
Historically, the Section 8 Certificate Program limited a family's rent to 30% of its annual income. In Atlantic City Housing Authority v. Taylor, the State Supreme Court decided that in light of the apparent restriction on rents, a landlord should not be entitled to evict based on non-payment of other charges such as late fees or legal fees. Following the Taylor decision, the Certificate Program was replaced by the Housing Choice Voucher Program, which limits rents to 40% during the initial year of tenancy, but without restriction thereafter. Despite the change in circumstances, Taylor remains unchallenged. Essentially, this means that a Section 8 tenant can continuously wait until the day of Court to pay all rent arrearages, leaving the landlord no recourse. It should be noted, however, that the landlord may still, sue the Section 8 tenant for unpaid late fees and legal fees in another venue, such as Small Claims Court, but not in Tenancy Court.

Continue reading "New Jersey Section 8 Leases: Rules and Consequences" »

As real estate taxes skyrocket, many taxpayers have begun to look for ways to reduce their tax payments. One common method of accomplishing this is filing a tax appeal. However, since tax appeal procedure affords relief to very few taxpayers, the decision of whether to file an appeal will require a cursory understanding of how the process works.

Real Estate Taxes are calculated by multiplying your municipality's tax rate by your property's assessment. Your tax rate cannot be appealed; however, your assessment can be. Your tax appeal must, therefore, be based upon proofs that the municipality has over-assessed your property. In most cases, the taxpayer's opinion should be supported by an independent appraisal. For appeals filed in 2011, the date of valuation should be October 1, 2010. In most cases, your appraiser's report should be restricted to comparable sales that occurred in your municipality during the year 2010.

With property values decreasing over the past few years, over-assessment is most likely to occur in a municipality that conducted its last revaluation of its properties at or near the height of the real estate market. According to some experts, the New Jersey Real Estate Market reached its peak during September of 2006. Since then, property values have plummeted. Over-assessment of your property will result in higher real taxes. In these cases, a tax appeal is crucial.

In many municipalities, however, the assessments are still much lower than the actual property values. This is in part due to the fact that some municipalities infrequently conduct revaluations. 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.

However, there are cases when a property is assessed at a much higher ratio than the other properties in town. When this occurs, the aggrieved taxpayer can also file an appeal, but the rules are slightly different. When a taxpayer argues that his property is assessed at a higher ratio than the rest of the municipality, the rules require that the property owner furnish evidence that his or her assessment exceeds the average ratio by at least 15%.

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. While property owners may represent themselves in the tax appeal proceeding, the applicant must have an appraiser at the hearing in all cases where an appraisal will be offered as evidence.

Continue reading "New Jersey Tax Appeals - Procedure and Practicality" »