New Jersey Real Estate Attorney Blog

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.

Notice
New Jersey's Abandoned Property Act sets forth guidelines for landlords and tenants in handling the issue of Abandoned Belongings. Under the Act, before discarding any of the tenant's belongings, a landlord must provide a former tenant with 30 days written notice of the tenant's right to claim the belongings. The Notice should be sent via certified mail to the tenant's last known address, which is sometimes the address that the tenant just vacated. It is important to note that the landlord does not need to prove that the tenant actually received the Notice. Since the tenant has the option of having his mail forwarded, the law does not place the burden upon the landlord to try to figure out the tenant's new address.

Storage
After providing the tenant with notice of his or her right to claim any belongings, the landlord must not discard the belongings until after the 30 day notice period has lapsed. In some cases, landlords may choose to leave the belongings in the rented premises. In other cases, where leaving the belongings in the dwelling is not practical, the landlord may, at his discretion, transport the belongings to another location. If the landlord is charged a fee for storage, the landlord has the right to ask the tenant to pay that fee, provided it is reasonable.

Consequences of Failing to Comply
As much as the Abandoned Property Act protects tenants from having their belongings discarded, the Act also protects landlords from tenants who may try to make a claim for their belongings after the 30 day reclamation period has lapsed. Landlords who choose to not comply with this Act, and either fail to serve a Notice, or discard their tenants belongings in sooner than 30 days are taking a calculated risk that may backfire, if the tenant later decides to sue for the value of his discarded belongings.

Consequences of Orderly Removal
Under the New Jersey Court Rules, a tenant who is facing a lockout following an eviction action may apply to the Court for an extra week to remain in the premises and remove his belongings. This procedure is commonly known as an "Application for Orderly Removal." Under the law, a tenant who applies for and is awarded an Orderly Removal cannot assert a claim upon belongings left in the rented premises after he or she vacates. Accordingly, there is no requirement that the landlord give any advance notice to a tenant before disposing of his or her belongings in cases where the tenant has received an Orderly Removal.

Continue reading "New Jersey Landlords Must Abide by Abandoned Property Act" »

As the expenses associated with property ownership continue to escalate, many landlords have begun to pass their expenses onto their tenants through the use of rent increases. Since tenants very often cannot afford to pay the requested increases, New Jersey tenancy Courts are trying an alarming number of contested rent increase cases. In this week's article, we will discuss some of the guidelines that may be employed by a Judge in determining the fairness of a proposed rent increase.

What Constitutes an Unconscionable Rent Increase?
Under New Jersey law, the burden of proof is then upon the landlord to demonstrate that a proposed rent increase is not unconscionable. The question then becomes how to define the word "unconscionable." In the matter of Fromet Properties Inc. v. Buel, et. al., 294 N.J. Super 601 (App. Div. 1996), the Court set forth the following 5 factors in determining the unconscionability of a rent increase:

1. The amount of the proposed rent increase;
2. The landlord's expenses and profitability;
3. How the existing and proposed rents compare to rents charged in similar rental properties in the area;
4. The relative bargaining position of the parties
5. Based on the Judge's knowledge, whether the rent increase would shock the conscience of a reasonable person

The first factor, which looks at the amount of the proposed rent increase, is no longer given as much weight as it previously was, primarily because it would essentially force a landlord, who had given a "sweetheart deal" to a tenant in the past, to continue to subsidize the tenant into perpetuity. While it has been widely believed by many tenants that rent increases are limited to a certain percentage per year, the New Jersey legislature has not enacted any such statute. However, some municipalities do have rent control ordinances, and landlords owning property in those towns should familiarize themselves with the ordinances before sending any proposed rent increase notifications to their tenants.

With regard to the third criterion, which is given an overwhelming amount of deference at the rent increase trials I have been a part of, it is clear that the best evidence of comparable rents is other rents from within the same building or complex. The apartments within a complex tend to be similar in quality, amenities and certainly in location. But very often, the rent increase trial involves a stand alone unit such as a house, or an apartment over a store. In these cases, landlords should be prepared to present testimony of rents from comparable rental units within the same general geographic location. Sometimes, it may be cost effective to hire a real estate appraiser to prepare a market analysis and testify at trial.