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December 15, 2014

Monmouth County Tax Assessment Demonstration Program: Understanding the Basics

check book.jpgOur office previously reported on the changes in how Monmouth County's tax appeals are scheduled. In order to ensure that all County Tax Appeals are heard and resolved prior to the finalization of municipal budgets, Monmouth County had implemented a new calendar that requires tax appeals to be filed by January 15. In this week's article, we will highlight an additional change in Monmouth County's approach to tax assessments.

During the past few weeks, our office has fielded hundreds of phone calls from taxpayers who are concerned that their assessments have been dramatically raised. Their first question is "why is my assessment being raised, when the property has not increased in value?" I need to explain that, in some cases, the town previously had all of the properties assessed at a percentage of true value and now that the town is being re-assessed, all properties are (ostensibly) going to be re-assessed at 100% of true value.

In other cases, where the town was already assessed at full market value, there are still several properties, which for variety of reasons, under-assessed. Therefore, the fact that your assessment has increased substantially is not in itself a reason for appeal. Rather, we need to look at the new assessment and determine whether it exceeds the fair market value.

The next question taxpayers have is "why is this re-assessment happening in every town?" To answer this question, we need to review the "Annual Assessment Revision" clause of the new program. The program provides the tax assessor with both the authority and the requirement for the annual review and revision of all properties within the municipality. The intention in this case is to create increased accuracy of assessments and to reduce exposure for revenue losses due to appeals.

Since Monmouth County is the first to implement this program, it is uncertain whether the program will be a success. It is, however, certain, that in these initial few years, there will be an inordinate number of tax appeals filed by taxpayers who are dissatisfied with their "starting point." We need to caution potential clients, however, that their new assessments should only be appealed if they exceed the market value of the property.

Finally, for taxpayers who recently won a tax appeal within the last 2 years and are wondering why the "freeze act" does not protect their old assessments, the answer is that the freeze act does not apply to any town that has undergone a municipal-wide revaluation or re-assessment. Put simply, the Freeze Act does not protect any prior assessments in Monmouth County. Furthermore, we note that a wholesale increase in municipal assessments generally will not cause a substantial increase in taxes, since the tax rates would also be adjusted accordingly.

While the new program is designed to standardize and create a unilateral result throughout Monmouth County, the unfortunate fact is that not all assessors have equal ability to accurately and reliably determine property values. So far this year, the majority of our tax appeals have come from the towns of Marlboro, Middletown and Holmdel. For more information on tax assessments and tax appeals, please feel free to contact our office.

November 30, 2014

New Jersey Real Estate Tax Appeals - Frequently Asked Questions pt. 1

Nickel.jpgAs we enter the 2015 tax appeal season, we have fielded hundreds of phone calls from property owners who are interested in filing appeals. Since the determination of whether a property has been over-assessed is not always apparent without an appraisal, we have taken the time to discuss the questions presented by each caller before determining whether we would accept the matter, or reject the matter, or whether we would immediately assign the matter to one of our appraisers for a more definitive opinion as to whether the tax appeal is worthwhile for both our office and the taxpayer. During this process, the taxpayers have asked us many recurring questions. The following is a list of three frequently asked questions, along with our answers:

1. What is a revaluation or re-assessment?
Sometimes, due to changes in real estate values, the assessments in a town may be significantly lower than the actual values of real estate in the town. Alternatively, in the recent deflationary real estate market from 2007 through 2013, some towns actually had assessments that greatly exceeded the values of their real estate. Historically, towns did not often conduct revaluations due to the time and expense of doing so. Instead, the assessors left old assessments in place, and compensated by adjusting tax rates to make the budgets work. However, Monmouth County recently ordered all municipalities to conduct annual revaluations or re-assessments to ensure that each town remains assessed at 100% of true value. Notwithstanding the fact that a town may conduct a revaluation, assessments are still excessive on occasion, and that is when the taxpayer should file a tax appeal.

2. What causes errors in assessments?
When conducting a re-assessment, municipal tax assessors cannot individually appraise every house, since that process would take too long and cost too much money. Instead, the assessors rely on a "model" to predict real estate values within the framework of the location of the property and quality of the improvement (i.e.; the house) on the property. However, the models are often flawed and sometimes fail to take into account internal and external factors that may de-value one particular property in a neighborhood. Additionally, it should be noted that appraising is not an exact science. While it is an appraiser's job to predict what a "ready, willing and able" purchaser might pay for a property, there are a myriad of factors for an appraiser to consider, and it is very possible that two appraisers could reach an entirely different conclusion as to value, especially in cases where there is a shortage of comparable sales upon which the appraiser can base his or her findings.

3. Why is my assessment higher than my neighbor's assessment, when his house is nicer than mine?
Answer -You can only appeal if your assessment (or equalized assessment) exceeds the actual value of your property. This is generally determined by sales of comparable homes. It is not determined based upon the assessments of other homes. Furthermore, you may not appeal your assessment based on the assessments of other homes. If you believe that other homes in your neighborhood are under-assessed, you have the right to file a tax appeal on the other homes to request that their assessments are raised; however, that action will not affect your assessment, and it probably will not make you very popular among your neighbors.

In our next installment, we address three additional questions regarding Tax Appeals. As always, if you feel that your property has been over-assessed, please feel free to contact our office for a consultation.

October 22, 2014

New Jersey Court Filing Fees Scheduled to Increase

dollar-sign-1317230-m.jpgBetween the 21 vicinages of the New Jersey Superior Court, thousands of employees are on staff, performing a variety of functions. Despite streamlining and reductions in workforce, the operation of the Courts remains a very expensive process, and the filing fees, which have not been increased in more than 10 years, are not sufficient to cover the expense of running the Courts. Under the circumstances, an increase in filing fees seems rather necessary to ensure that the Courts will remain properly funded. Accordingly, on August 11, 2014, the State of New Jersey Supreme Court received authorization from the legislature to enact a comprehensive set of fee increases, affecting all divisions of the Superior Courts. The proposed increases, which are projected to be enacted into law on November 17 are currently in a review process and the New Jersey Supreme Court was accepting comments from the State Bar until October 15.

Since our practice focuses mostly on the Special Civil Part, we will look at how the fee increases affect that practice. There is currently a $25 fee for filing an eviction complaint. That fee does not include the "mileage" fee, which is generally between $2 and $20, depending on the location of the property. Under the proposed plan, the filing fee would be increased to $50.00 (not including the mileage fee). To further complicate matters, the fee for additional defendants on a complaint will increase from $2 to $5. This means that a single eviction complaint for 3 adults residing in a rental may cost as much as $80 in court costs alone. For landlords who are looking to sue a prior tenant to collect unpaid rents, the fees will also increase. The prior filing fee of $50 for Special Civil Part Complaints (under $15,000) will be increased to $100.

For our Tax Appeal clients, the fee increases will not be as onerous. The filing fee for Tax Court Small Claims Division matters, which includes all residential properties, as well as any other properties where the annual tax liability is less than $25,000, the filing fee will increase from $35 to $50. For Standard Track cases, the filing fee will increase from $200 to $250. There are no fee increases contemplated for matters filed with the County Boards of Taxation.

Ostensibly, the proposed legislation appears to be necessary to subsidize an underfunded Court system. However, we have learned that only a small portion of the funds obtained from the fee increases will actually be allocated toward the Court's operation. Instead, most of the additional funds will be used for other purposes, including the development and administration of a "Statewide pretrial services program," as well as the development of a "Statewide digital e-court system," Additionally, the proposal includes increased financial assistance to Legal Services of New Jersey, the entity that provides low cost legal services to indigent litigants.

Once the proposal is approved, the fee increases will take effect on November 17. Our office will send a more formal announcement to our clients once the filing fee increase takes effect.

October 1, 2014

New Jersey Tax Appeal Season is Ready to Begin

dollar-sign-1317230-m.jpgAs the 2014 tax appeal season nears its conclusion, and as the 2015 tax appeal season is ready to begin, we look back at another great year. In 2014, while we reduced the number of tax appeal clients we agreed to represent, we still saved our clients over $3,000,000 in assessments, including a $700,000 reduction in the assessment of one commercial property.

In Monmouth and Ocean Counties, the Hurricane Sandy related tax appeals will soon be dwindling, due to the long-awaited restoration of most of the storm affected properties. Excessive equalization ratios, which were once a major problem for assessors have been mostly cured. Only Allenhurst, Brielle, Keyport, Englishtown, and Farmingdale remained in 2014 with equalization ratios that were substantially over 100%. For the 2015 tax year, Allenhurst is no longer on that list. In Ocean County, Beachwood, Lacey, Little Egg Harbor and South Toms River will continue to have disproportionately high equalization ratios in 2015.

While all municipalities have some properties that are over-assessed, the massive quantities of appeals that were necessitated by an entire town being over-assessed are no longer a major concern in most Monmouth and Ocean County towns. Perhaps part of the reason for the drop in equalization ratios can be correlated to the gradual upturn in the real estate market. According to Zillow, New Jersey real estate values have increased this year (August of 2013 through July of 2014) by 5.5%. Nevertheless, there are still several over-assessed properties and the owners of those properties are paying substantially more than their fair share of real estate taxes. During the past tax year, we obtained property tax reductions for more than 75% of our tax appeal clients.

While equalization ratios are no longer an issue in Monmouth and Ocean Counties, they remain the source of a major problem in Cape May County. Out of all the counties in New Jersey, Cape May remains the only county where nearly all of the towns are over-assessed. Lower Township, Dennis Township, Wildwood, Sea Isle City, Stone Harbor, Upper Township and Woodbine all have equalization ratios that are far in excess of 100%.

As a reminder for our clients with over-assessed properties, the date of valuation that the assessor must rely upon is October 1. This means that for the 2015 tax year, your property will be assessed at what the assessor believes that it is worth today. The deadline to file a tax appeal remains April 1 of 2015 in all counties except in Monmouth County, where the deadline to file has been changed to January 15, 2015. Monmouth County tax appeals may be filed at any time between November 15 and January 15. In the remainder of counties, tax appeals may be filed between February 1 and April 1. In order to ensure that our appraisers will have adequate time to handle all of our appeals, our office is accepting tax appeals for the 2015 tax year starting October 1 and we will continue to accept appeals until one week before the filing deadline.

August 22, 2014

Tenant Screening

dollar-sign-1317230-m.jpgOur clients frequently ask us about Tenant Screening. For Landlords who want to minimize their risk of renting to problematic tenants, a variety of methods can be used to predict whether the tenant may present a problem in the future. Most Landlords are already familiar with the variety of online services that can be used to screen the applicant based on credit score and other financial criteria. Although credit score can be a valuable indicator of a tenant's ability to pay his or her rent, most landlords would prefer to know whether their prospective tenants had any prior eviction or criminal history. Since there tends to be a high recidivism rate amongst tenants who have been evicted, having the applicant's eviction history may be a valuable tool in indicating a potential problem with the applicant. Similarly, the prior criminal history of an applicant may be of cause for concern for a landlord.

Information regarding an applicant's eviction or criminal history can be obtained free of charge from the State of New Jersey's Judiciary web site. To access this information, go to www.judiciary.state.nj.us. On that website, users may click the tab marked "online resources." Under that tab, you will be provided with several options, including "civil case public access," and "criminal conviction information." Using the applicant's name, the user can then find out whether any civil or criminal cases have occurred. More detailed information can also be obtained using the public access computer workstations located inside the County Courthouses.

Another effective screening method is a surprise visit to the apartment where the applicant currently lives. Very often, these visits yield astonishing findings regarding the cleanliness of the potential applicant. In some cases, an applicant who appears to be otherwise qualified will prove to be a hoarder or have a substantial sanitation issue. We do not recommend giving too much weight to a recommendation from the prior landlord.
Very often, the prior landlord is highly motivated to remove the unwanted tenant and may therefore provide a prospective landlord with an overly complimentary report about a bad tenant.

While the screening of tenants is part of the responsibility of being a landlord, it is also the responsibility of the landlord to ensure that he or she complies with Federal and State laws. Specifically, a landlord may not engage in any illegal form of discrimination. The laws regarding discrimination are infinitely complex and extend to the screening of applicants as well as the method of advertising. If you are unsure of the laws regarding discrimination, you should speak with a lawyer who specializes in that field of law. Landlords should also be aware that searches might sometimes lead to false results, especially in cases where the applicant has a common name. Landlords must take extra caution to make sure that their screening practices are consistent for all applicants and do not violate any laws regarding discrimination. Finally, landlords should be cautioned that not all applicants with negative indicators in their credit, eviction or criminal histories are going to difficult tenants.

June 9, 2014

New Jersey's Summary Dispossess Act - No Protection for Tenants of Owner-Occupied Premises

GAVEL.jpgIn New Jersey, most residential tenants are protected by the Anti-Eviction Act, which provides protection to residential tenants against evictions without cause. The fundamental principal of the Anti-Eviction Act is that the expiration of a residential lease does not terminate the tenancy. Recognizing the unfairness of forcing resident landlords to live with tenants whom they found to be unfavorable, the legislators added the "owner-occupied premises' exception to the act." See Fresco v. Policastro, 186 N.J.Super. 204 (D. Ct. Essex Cty 1982).

Residential tenants whose leases who are renting owner occupied properties with 2 or fewer rental units are not protected by the Anti-Eviction Act. Additionally, seasonal tenants (defined as tenancies of 125 days or less) are also not protected. Consequently, these 2 categories of residential tenants, as well as all commercial tenants are only protected by the Summary Dispossess Act. Under the Summary Dispossess Act, tenants can be evicted on one-month's written notice once the lease expires. In three recent cases that we handled, the Court was asked to determine whether the tenants were protected by the Anti-Eviction Act or whether the Summary Dispossess Act would apply.

In one matter we recently handled, the Court's decision hinged upon the definition of the term "owner-occupied premises." It was not disputed that the tenant and the landlord both occupied houses on the same property. However, the houses were not attached. In the matter of Fresco v. Policastro, 186 N.J. Super 204 (1982), the Court examined an identical issue involving a nearly identical set of facts. The Plaintiff in that matter also contended that "good cause" was not necessary to evict because the property was owner-occupied. The Defendant argued that "owner-occupied premises" applies only to cases in which the Landlord and Tenant occupy the same building. The Court ultimately determined in Fresco, that the "owner-occupied premises" exception in the Anti-Eviction Act was included to prevent injustice to resident landlords and "owner-occupied premises" includes not only properties in which the landlord and tenant share the same building, but all properties in which the landlord and tenant share the same property, regardless of whether the "[landlord] lives above, below, in front of or behind, or alongside an unfavorable tenant." While the Anti-Eviction Act does not define the word "premises," the Fresco Court considered other Acts in which the Legislature defined "premises" broadly as house, buildings, lands or tenements." Furthermore, In Ford Motor Company v. Labor ad Industry Department, 5 NJ 494 (1950), the Supreme Court Defined premises as "the property conveyed in a deed." Additionally, in the matter of McQueen v. Brown, 342 N.J. Super 120, 775 A.2D, 748 (2001), the Court remarked that even if the Landlord were only occupying the property for eight or nine days per month, the property would still be considered to be owner-occupied for the purposes of satisfying the exception to the Anti-Eviction Act.

Finally, while the Anti-Eviction Act does not define owner-occupied premises, the Rent Security Deposit Act does provide us with guidance. In the Rent Security Deposit Act, "owner-occupied premises" was defined as "rental premises that may consist of one or more buildings containing more than one residential unit, at least one unit of which is legally occupied by a landlord as the landlord's place of residence."

May 15, 2014

New Jersey Evictions: Habitual Late Payment

Calendar.jpgThe vast majority of eviction complaints are based upon non-payment of rent. However, New Jersey law, which is focused on affording tenants an opportunity to cure any default, sets forth that complaints based upon non-payment of rent will be dismissed in the event that the tenant pays the rent that is due and owing prior to the day of Court. N.J.S.A. 2A:18-55, N.J.S.A. 2A:42-9. While the rent balance that is included in the eviction complaint may, in certain circumstances, include late charges and attorney's fees associated with the filing of the complaint, the New Jersey Courts have established that these "additional rent" charges are prohibited on eviction complaints filed against tenants who are receiving Federal Housing Assistance. Since there tends to be a high recidivism rate amongst tenants who pay their rent late, landlords often ask us if there are any provisions under New Jersey law that would entitle them the right to refuse rents from a "habitually late" tenant and file the eviction solely based upon the habitual late payments.

Under N.J.S.A. 2A:18-61.1(j), a tenant may be evicted for habitual late payment. Unfortunately, an eviction based upon Habitual Late Payment is a lengthy process. It will require a minimum of two pre-suit notices, which are generally delivered at one month intervals, since rent is usually due monthly. In cases when two late rent payments are interceded by an on-time payment, then additional notice becomes required. In all cases, the final notice is the Notice to Quit. Because the law requires Notices to Quit to provide the tenant with a full calendar month's notice of termination, before a complaint may be filed, and because the allegation of Habitual Late Payment necessitates the landlord to wait until after the start of the month before serving the notice, evicting for this ground requires an additional month that very often would not be required for other causes for eviction. As a practical matter, evictions based upon habitual late payment of rent are a 5-month process.

While our firm has filed several evictions based upon Habitual Late Payment, we have found that most of these types of cases are settled prior to trial. Those matters that are not settled are easy to win provided that the landlord keeps good records of when rent payments were received and provided that the landlord's attorney properly served, worded and timed all notices. For more information on Habitual Late Payment of Rent, please contact our office.

February 8, 2014

New Jersey Landlord Tenant Law: A Revision for the Collection of Legal Fees by Tenants

Apt4.jpgOne central principle of the American legal system is that each party generally pays his or her own legal fees. There are, however, exceptions to this rule. One exception exists in cases in which there is a "fee shifting" statute that requires a particular party to pay the other party's legal fees. Another common exception exists in cases in which the parties had previously entered into a contract in which one party explicitly agreed to pay the other's legal fees.

The provision requiring a tenant to pay a landlord's legal fees is often found in residential real estate leases. However, it is generally agreed that, in a very competitive housing market, the bargaining position of the parties is somewhat unbalanced, and that residential leases are akin to "contracts of adhesion." Other than the amount of rent paid by the tenant, there is very little room that a tenant has to actually negotiate. Consequently, the idea that a residential tenant is responsible for the landlord's legal fees, while the landlord is not responsible for the tenant's legal fees, seemed unfair to some New Jersey Lawmakers.

Starting this year, new legislation, marked as Senate Bill 2018, will seek to balance the equities by forcing landlord's to pay the tenant's legal expenses in some cases in which the landlord is not successful in the action. The caveat to this new rule is that it shall only apply in cases in which the landlord has reserved the same right for himself within the lease. Put simply, if the written lease does not require the tenant to pay the landlord's legal expenses, the tenant also has no right to collect legal fees under the statute. Additionally, all residential leases that require a tenant to pay the landlord's legal fees must contain an additional statement setting forth the tenant's rights under the Statute.

The new law shall take effect immediately. Notwithstanding the legislative intent, there may be some difficulty in enforcing this Act. One of the unique aspects of Landlord Tenant Court is that it cannot award money Judgments. Rather, it can only award a Judgment for Possession. Therefore, the Landlord Tenant Court cannot actually compel a tenant to pay rent, legal fees, or other costs. The Landlord Tenant Court can only instruct that if the tenant does not pay the rent, plus any legal fees and costs that are due, that a Judgment for Possession would issue against the tenant. Similarly, in prior cases in which the tenant could legitimately argue that he or she was entitled to compensation for legal fees due to the wrongful conduct of the landlord, the Landlord Tenant Court could not award those fees.

In the matter of King Plaza v. Sanchez, the tenant was seeking sanctions against the landlord's attorney due to multiple filings of what the tenant argued was essentially the same complaint. However, the Appellate Division had ruled that Landlord Tenant Court was without jurisdiction to award any sanctions, and that the tenant would need to file that claim under a separate docket number. Therefore, despite the tenant-friendly wording of S-2018, it seems that any fees to which the tenant is entitled must be pursued outside of Landlord Tenant Court.

Finally, as a cautionary note, landlords who pursue their actions should bear in mind that unlike actions filed on behalf of a landlord, which are generally handled in bulk at very affordable rates, attorneys who represent tenants are not counting on repeat business, and will very often charge the tenant exorbitant fees for the representation. Consequently, under the new Statute, it is clear that Landlords may be responsible for the reimbursement of those fees. Therefore, in cases in which the tenant is represented, it is sometimes prudent to dismiss a matter and refile if there is a potential defect in the case.

November 25, 2013

New Jersey Tenant Problem: What to do when a tenant who owes rent claims Constructive Eviction

A few weeks ago, one of our clients encountered a common problem. The problem was that her tenant had attempted to cancel the lease several months before its expiration, claiming that his reason for doing so was that there was mold in the dwelling, rendering it uninhabitable. The claim by the tenant is referred to as Constructive Eviction. In this month's article, we will discuss that claim as well as what the landlord may expect in Court.

There are certain circumstances in which a tenant with a substantial habitability defect can declare a "constructive eviction" and cancel the lease. In all cases, the tenant must show that the habitability defect is substantial enough so as to render the premises utterly unsuitable for the purpose for which it has been rented. The tenant must generally also give the landlord a reasonable opportunity to cure the defect, except in extreme and very unique circumstances. The tenant's reasons for the claim are usually made in writing to the landlord and then again in Court when the landlord attempts to sue the tenant for rents remaining under the lease. If the Court is persuaded by the tenant's arguments, the landlord's claim for unpaid rent would be denied, and likewise, the tenant's claim for return of security deposit and any other incidental damages would be granted.

Very often, the tenant has no legitimate argument and the alleged habitability defect is merely a pretext for attempting to cancel the lease. However, the issues in these types of cases always involve a thorough factual inquiry. Please also remember that once the tenant moves out, the landlord still has a duty to attempt to mitigate his or her damages by trying to find a new renter. Absent a successful claim of construction eviction, the existing tenant is responsible for any rents the landlord loses until the lease expires.

Continue reading "New Jersey Tenant Problem: What to do when a tenant who owes rent claims Constructive Eviction" »

October 4, 2013

New Jersey Rent Control Epidemic Spreads to Neptune Township

dollar-sign-1317230-m.jpgOur office previously reported on the law concerning New Jersey Rent increases. For landlords in towns that have not instituted rent control, the only requirement is that the landlord must prove that the rent increase being sought is not unconscionable. There would, therefore, be no preset percentage of allowable increase. Rather, the Court would consider a variety of factors, and very often the most persuasive factor is the fair market rent of similar units. For landlords of properties in rent controlled towns, the restrictions are usually far more onerous, and oppressive. They have resulted in lower property values, and a general blight upon all rental properties in town. For this reason, very few towns have resorted to rent control. As recently as 2011, Blogfinder has reported that only 98 out 565 New Jersey municipalities had rent control.

Notwithstanding the economic arguments to the contrary, Neptune Township, New Jersey, has recently become the third town in Monmouth County to institute rent control. The new ordinance will apply to all residential structures of five units or more, and will limit the rent increases to the percentage set by the consumer price index (CPI).

What is a CPI Increase?
The Consumer Price Index is a published statistic that is determined based upon a variety of periodically changing factors. For the New York metropolitan area, CPI has hovered around 2% for much of the past 18 months. Traditionally, CPI increases have been used in commercial leases to enable the landlord to achieve a "cost of living" increase each year as the value of the dollar diminishes. However, in the commercial leases, the tenant is usually paying the utilities, taxes, and insurance, and therefore the amount paid for rent only encompasses the use of the rental space and not the expenses associated with that space. To employ the concept of a CPI increase to a lease in which the landlord is paying the taxes, insurance, and some utilities, would result in many landlords being driven out of business, which would further reduce the number of available rental units, and ultimately increase the initial rents of the remaining inventory. Put simply, the landlord will never be able to recover increased costs.

In prior decisions, New Jersey Courts have routinely held that a rent increase in excess of the limits set forth under a municipality's rent control ordinance constitutes Consumer Fraud Therefore, achieving fair increases is limited to the landlord's ability to persuade the rent leveling board that the rent increase is fair and necessary. Our office previously challenged the rent control ordinance in Trenton, to obtain fair market rents for a multiple dwelling building. In that matter, the Rent Leveling Board considered the landlord's expenses, as well as the rents for similar units.

Finally, we note that income properties are generally appraised and assessed based upon the income stream that is derived from that property. Appraisers speak in terms of internal and external factors that affect value. When the value of a property is negatively impacted by an external factor that is outside of the control of the property owner, the property is said to suffer from external obsolescence. Since rent control ordinances will ultimately result in reduced income from the properties, we anticipate that several tax appeals will be filed as the net operating incomes continue to drop for these properties. Please keep in mind that the filing deadline for Monmouth County Appeals has been changed to January 15. Please contact our office to discuss filing your tax appeals.

September 9, 2013

Monmouth County Tax Appeals - Changes to Filing Deadline

Calendar.jpgIn 2011, our office reported about a new proposed law that would change the tax appeal filing deadline from April 1 to January 15. The legislation was spurred by a concern that New Jersey municipalities had suffered substantial budget shortfalls as the result of Real Estate Tax Appeals being filed after the municipal budgets had been adopted.

Under the old law, each municipality was required adopt its budget by March 31, which was one day prior to the Tax Appeal filing deadline. Since Tax appeals often do not get heard until several months after they are filed, the judgments resulting from those Tax Appeals resulted in major budget shortfalls.

In light of the current issues, a bill was enacted 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.

The new filing deadline will become effective for the 2014 Tax Year. All Monmouth County Tax Appeals for 2014 must be filed by January 15, 2014. Our office will accept Monmouth County Tax Appeal intakes until January 6, 2014. Consequently, if you feel your property has been over-assessed, we encourage you to have us file your appeal as early as possible in order to ensure that one of our appraisers will have adequate opportunity to inspect and prepare a report prior to the hearing date. As always, the date of valuation will remain October 1.

There will be no extensions to this deadline. Taxpayers who attempt to file after the January 15 deadline will find their applications rejected. Our office will accept Monmouth County Tax Appeal intakes until January 6, 2014. Taxpayers whose properties are over-assessed may e-mail or call us for our 2014 Tax Appeal Intake.

Continue reading "Monmouth County Tax Appeals - Changes to Filing Deadline" »

August 20, 2013

New Jersey: Collection Practice and Procedure for Claims Against Past Tenants (part 2)

Last month, our office released Part One of our two-part blog on collection actions. We had examined the steps involved in filing the suit for collection and what to expect on the day of Court. Our article ended with the entry of a Judgment against the Defendant, along with the obligatory cliffhanger of how the Plaintiff can finally get paid. Today, in Part two of our blog, we will discuss methods used in collecting the Judgment.

Since both our practice and this article are primarily focused on collections against tenants, we need to point out that a rather large percentage of collection actions against Defendants result in Defaults This means that the Defendant either failed to show up to Court, or failed to submit an answer to the Complaint. After the Complaint is filed, the Defendant must submit an Answer to the Court within 35 days (Note: This rule does not apply to actions in Small Claims Court). If no Answer is submitted or, even if an Answer is submitted and the Defendant fails to appear in Court, a Default will be entered.

After the entry of a Default, or after the Defendant has breached a Settlement Agreement, the Plaintiff may apply to the Court for a Judgment. The Court, however, will not simply enter a Judgment based solely on the Complaint. The Plaintiff must submit proofs of the claim to the Court. In cases where the claim is based upon non-payment of rent, the proofs may be as simple as providing the Court with a Lease and a Ledger, along with an Certification by the client that the amounts due under the lease and ledger are truthful and accurate.

If, on the other hand, the claim is based upon physical damages to the property, the Court may conduct a Proof Hearing to determine the actual amount of damages to which the Plaintiff is entitled. A Proof Hearing is similar to a trial. The Plaintiff will testify to the claim, and in most cases, the Judge will ask some additional questions of the Plaintiff to clarify the testimony. The Defendant, however, does not present a case. In the rare instance the defaulting Defendant actually shows up to the proof hearing, he or she may be entitled to cross-examine the Plaintiff, but ideally, the Defendant should not be allowed to testify. Finally, the Plaintiff will need to submit an Affidavit of Non-Military Service, setting forth that the Defendant is not an active member of the United States Military. Affidavits of non-military service can be based either on personal knowledge of the Plaintiff, or preferably, based upon a certification from the Defense Manpower Data Center, which is available online. Finally, we note that, in some cases, the Defendant will apply to set aside the Default and have the matter relisted for trial. We will discuss those circumstances in a later article.

Upon entry of a Judgment, the Plaintiff will need to decide how to get paid. The Judgment can generally paid by one of three methods. The first method we will examine is a Wage Execution. The Wage Execution will generally allow the Plaintiff to collect up to 10% of the Defendant's Wages until the Judgment is satisfied. For more specific rules as to how the Wage Execution is calculated please see the enclosed link to Appendix XI-J of the Court Rules. In the instance in which the Defendant already has an active wage garnishment, the Court must wait until that amount is satisfied before moving onto the next execution. Therefore, Plaintiffs may have to wait their turn in order to get paid.

The second method, commonly employed is a levy against the Defendant's bank account or assets. This method is seldom effective for collections against residential tenants, who rarely carry any significant balance in their bank accounts. Typically, a landlord seeking to execute against a bank account will be successful in obtaining a nominal sum of money that the Defendant has in his or her account, and is then forced to resort to another method of collection afterward.

Finally, if all else fails, the Plaintiff can have the Judgment against the Defendant "Docketing the Judgment in Trenton. The effect of the Docketing of the Judgment is that the Judgment will become a statewide lien that may be collectable in the event that the Defendant attempts to purchase or sell real estate in New Jersey. The Judgment will remain active for 20 years. Thereafter the Plaintiff can apply to have it renewed if it has not been satisfied by then.

July 16, 2013

New Jersey: Collection Practice and Procedure for Claims against Past Tenants (part 1)

In this multi-part article, we will discuss various aspects of collection practice for Landlords who are owed rents from prior tenants.

The vast majority of New Jersey eviction actions are filed for non-payment of rent. Evictions based upon other causes comprise less than 10% of all filings. Our office is frequently asked questions about collecting unpaid balances from prior tenants after they are evicted. Very often, landlords who are unfamiliar with the process begin with a mistaken belief that the result they obtained in Landlord Tenant Court will entitle them to "money judgments" against their tenants. Unfortunately, judgments issued by the New Jersey Landlord Tenant Courts are for "possession" only. This Judgment is the order giving the landlord the right to have the tenant locked out with the aid of a Special Civil Part Officer. While the Landlord Tenant Court will generally require that the tenant pay all past due rent in order to avoid eviction, the Landlord Tenant Court cannot compel a tenant, who is vacating the premises, to pay any money. Therefore, landlords who choose to seek outstanding balances from their prior tenants are therefore forced to file a separate action for the collection.

Most claims for rent against prior tenants are filed in the Special Civil Part of the Law Division. The Special Civil Part allows Plaintiffs to assert a claim for up to $15,000. Complaints initiated in the Special Civil Part begin with a complaint, setting forth the amount that is claimed to be due and owing. The Defendant is then served with a copy of the Complaint and afforded 35 days to respond or file a counterclaim. The parties should then be provided with a "discovery" period, in which documents and information will be exchanged prior to trial. Under New Jersey Court Rule 6:4-5, the parties should be provided 90 days to complete the discovery process, before the trial should be scheduled. Notwithstanding this rule, it is common for Courts to cut short this time period and schedule the trial much sooner than the Court rule would seemingly permit.

On the day set for trial, the parties will generally be told to report to the Courtroom at 9:00 in the morning. The parties will then be surprised to see that they are not the only litigants in the Courtroom. In fact, there may several dozen cases scheduled for trial that same day. The Judge will call the names of the cases and instruct the parties to try their best to settle their matters. Since most counties only have one Judge trying all the Special Civil Part cases, some Special Civil Part Judges will even give a stern warning to any parties who think they will be able to bypass the mediation process and proceed directly to trial. Depending on the caseload of the county, cases that do not settle in mediation may not even be reached for trial that same day.

The benefits of mediation are numerous. Mediation enables parties to avoid the uncertainty of a trial. It saves the time and expense of a trial, which is especially important when one or more of the parties is paying for legal representation. Mediation will also allow the parties to agree on a result that would not be possible at trial. These results can include the agreement of payment plans for a party whose only objection to the action is the fact that he or she does not have the funds to pay the other party. Since Special Civil Part matters, especially with landlords and their former tenants can be very personal and contentious to both of the parties, the mediation process may afford the parties an opportunity to come to an understanding that extends beyond the monetary damages sought in the action. Finally, the agreement reached in mediation will usually contain a strict default provision, which will enable the Plaintiff to receive a Judgment, without a trial, in the event that the Defendant fails to comply with the terms of the settlement agreement.

Notwithstanding the benefits of mediation, it should be noted that an offer made in mediation should a compromise of a potential claim, in which each party foregoes some rights in order to avoid the time, expense and uncertainty of trial. A common question is whether the landlord is entitled to collect legal fees and expenses associated with the collection action and the prior eviction. While most residential leases contain a provision setting forth that the tenant is responsible for legal fees, those charges are usually part of the balance that the Plaintiff is willing to waive in mediation.

After a Judgment is entered, the Plaintiff's first question is how he or she is going to get paid the amount due to him or her. Unfortunately, the answer to this question is not always easy. Whether the Judgment against the Defendant has resulted from a trial, a breached settlement agreement, or a default against the Defendant, the difficult part of the collection action is often the collection. In part 2 of this blog, which will be released shortly, we will discuss methods that are used to collect amounts due from Judgments.gavel.jpg

May 12, 2013

Landlord Tenant Law: Legislating Protection for Victims of Domestic Violence

Our office previously reported on New Jersey's Safe Housing Act, a 2008 statute that allows victims of domestic violence to terminate their residential leases on 30 days notice to the landlord. Since the time we published that article, we received an overwhelming amount of comments, and the general consensus has been that the inconvenience that the Act has caused to some landlords has been substantially outweighed by the public purpose served by the Act.

While the Safe Housing Act affords protection to tenants, we were recently informed of an ordinance that actually penalizes tenants for reporting incidents of domestic violence. Under Section 245-3 of the Norristown, Pennsylvania municipal code, residents who rent their homes were only allowed a maximum of two calls to the police for each four-month period. In the event that a third call was placed to the police during that period, the landlord's license to rent that property would be revoked. As a result of that revocation, the town would then be forced to evict the tenants. While the town stated that the intention of the act was to minimize disorderly conduct, the legislation has resulted in domestic violence victims either losing their homes, or alternatively, being hindered from making a report out of concern for the possible repercussion.

The matter of Briggs v. Norristown (2013) , concerned a challenge to a law, which the Defendant, municipality, had enforced an ordinance against the Plaintiff, renter and her landlord by revoking the landlord's rental license and subsequently attempting to remove Plaintiff and her infant daughter from their home, based solely on the fact that the police were called upon one too many times to protect her and her daughter from incidents of domestic violence. Following a discussion with the Plaintiff's attorney regarding the constitutionality of the ordinance, the Defendant municipality rescinded the ordinance. However, shortly thereafter, the Defendant municipality enacted another ordinance, which was similar to the old ordinance, except that it placed most of the penalties upon the landlord, rather than upon the tenant.

The Plaintiff challenged the new ordinance based upon numerous constitutional grounds. While this matter has not yet reached a trial date, we were surprised to learn that the Norristown ordinance is not unique, and in fact, other towns around the country have implemented similar ordinances. Our office will continue to keep you updated as this matter continues to develop.

April 1, 2013

New Jersey Tax Appeals: Ocean County Update

Thumbnail image for Sandy Rolllercoaster.jpgOn October 29, 2012, Hurricane Sandy brought storm surges in excess of 9 feet. This was bad news for Ocean County, in which 29 of 33 municipalities border the ocean. Our office previously reported on statutory relief available to owners of properties that sustained damage during the hurricane. While the 2013 relief will be limited to loss of value to structures and not loss of value to land, we are surprised by the number of taxpayers in Ocean County whose assessments still do not accurately reflect the diminution of value sustained by the properties.

Some of the more severely affected towns in Ocean County have conducted revaluations or re-assessments this year in order to re-examine the properties and fairly determine their new true values. The towns of Plumsted, Stafford, Manchester, Seaside Heights, Pine Beach, Point Pleasant Beach and Toms River have all been designated for re-assessments this year. While the filing deadline for New Jersey tax appeals is generally April 1, towns in which a revaluation or re-assessment has taken place are usually assigned a tax appeal filing deadline of May 1. All of the aforementioned towns will observe a May 1 filing deadline, except for Point Pleasant Beach and Toms River, in which the deadline has been extended to June 1.

The municipal-wide revaluations of storm affected towns presents two major logistical problems. First, for towns in which all or most properties (line items) have been substantially affected, the lowering of all assessments will provide little relief to taxpayers, who will most likely be forced to begin paying a higher tax rate in order to ensure that the municipal budgets are maintained, without the need for bonding. Second, for towns in which only a few line items were affected, the lowering of assessments of the coastal properties will result in a higher tax rate for all residents, especially the residents of the lower priced inland properties. Very often, these are the residents who can least afford to pay a higher tax rate.

According to one estimate, at least 13,000 storm damaged Ocean County properties will have their assessed value reduced by a total of $4.6 billion. In order to avoid the inevitable result of a higher tax rate for all New Jersey residents, towns have begun seeking State and Federal relief to make up the budget shortfalls. However, if your property has been affected by Hurricane Sandy, and your assessment was not sufficiently reduced to account for the amount of damage sustained, please contact our office for a consultation. We will accept new Toms River and Point Pleasant Beach appeals until May 16. For the remainder of re-assessed towns, we will accept new appeals until April 19.