Articles Posted in Landlord Tenant

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.

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.

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.

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.

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.

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.

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.

One 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.

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.
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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?