Articles Tagged with lawyer

During the past several weeks, our office has fielded hundreds of phone calls and emails from anxious clients (and concerned attorneys), who have all been wondering when we will resume having landlord tenant trials in New Jersey.  Unfortunately, as of now, there is still no plan as to when (and how) the Courts plan on scheduling landlord tenant trials, amidst the COVID-19 pandemic.  At this point, the decision is in the hands of the State Judiciary, which obviously has some very serious and legitimate concerns about ensuring the safety of their staff and the guests of the courthouses throughout New Jersey.  Consequently, on June 12, the Judiciary posted their Fourth Omnibus Order Fourth Omnibus Order, which establishes a schedule for resuming some Court operations, but with regard to Landlord Tenant matters, the Order sets forth that “trials continue to be suspended until further notice.”

Clearing the Backlog

Since the New Jersey Courts halted eviction hearings on March 16, they have accumulated more than 30,000 landlord tenant cases that are still waiting to be heard.  Clearing this backlog will be essential to the Court’s plan moving forward.  A few weeks ago, I participated in a conference call with the Judge and the staff of one vicinage, and the Court staff proposed that tenants would be given a survey to determine whether they would be available to appear in Court via an Internet conference.  By using this method, it has been the hope of the judiciary that a large percentage of their matters could avoid in person appearances.  Other courts have also proposed their own ideas, which have included staggering the role call times so that only a litigants would appear at a time.  In either case, it is clear that the prior method of conducting landlord tenant court, which has always involved several hundred people crowding into a room and waiting for their names to be called, will no longer work.

During the past few weeks, our office has been reporting on New Jersey’s restrictions on evictions during the COVID-19 pandemic.  At the core of these temporary measures is Executive Order 106, which generally prohibits lockouts from taking place until two full months after the State of Emergency has ended.  The State of New Jersey law does not, however, prohibit the landlord from filing eviction actions and it does not prohibit the Court from entering Judgments for Possession against tenants who cannot pay their rent.  Rather, New Jersey’s Executive Order only temporarily delays the lockouts of tenants.  In the meantime, many of our clients have asked us about a new Federal Law that prohibits evictions and whether it is similar to the New Jersey law.  The Federal Law, titled H.R. 748 (also known as the “Cares Act”) imposes several restrictions that are seemingly more onerous than the New Jersey law; however, the Federal Law is really much more limited in the scope of the people who will be affected by it.

In the Cares Act, Section No. 4023, entitled “Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally Backed Loans,” the Statute reads “a multifamily borrower that receives a forbearance under this section may not, for the duration of the forbearance, evict or initiate the eviction of a tenant from a dwelling unit located in or on the applicable property solely for nonpayment of rent or other fees or charges; or charge any late fees, penalties, or other charges to a tenant…”  The Statute further states that “a multifamily borrower that receives a forbearance under this section may not require a tenant to vacate a dwelling unit located in or on the applicable property before the date that is 30 days after the date on which the borrower provides the tenant with a notice to vacate and may not issue a notice to vacate… until after the expiration of the forbearance.”    While Section 4023 appears, at first glance, to indicate that landlords should not charge late fees or file evictions at this time, it is important to note that Section 4023 only applies to landlords of multifamily properties with Federally backed loans, in cases where the landlord has asked for a forbearance of the loan.

Similar to Section 4023 of the Cares Act, Section 4024 of the Cares Act also generally applies to landlords of multifamily properties with Federally backed loans.  However, Section 4024 contains no statement limiting its scope to just properties in which the landlord has asked for a forbearance on the loan.  The text of Section 4024 further reads that “During the 120-day period beginning on the date of enactment of this Act, the lessor… may not… initiate a legal action to recover possession… from the tenant for nonpayment of rent or other fees or charges…”  Put simply, under Section 4024 of the Cares Act, if you are a landlord a multifamily building and you have a Federally backed loan, you cannot file an eviction prior to July 29, 2020!

We are in a difficult and uncertain time and I hope everyone is staying safely at home.  In the meantime, our office has been receiving daily updates from the New Jersey Supreme Court and the Legislature, concerning delays in Court dates and filing deadlines.  We have been trying to forward this information to our clients as it becomes available.  On March 19, 2020, Chief Justice Rabner signed an Order delaying the filing deadline for local property tax appeals from April 1 to a new date, which will be scheduled for 30 days following the determination that the state of emergency declared by Governor Murphy has ended.

Accordingly, if you believe your property is substantially over-assessed, and you are concerned that you may miss the April 1 filing deadline, you may still have plenty of time to file your appeal.  However, please note that the delay of the filing deadline will only apply to Tax Appeal filings where the filing deadline would have been April 1 or later.  It will not apply to those matters in which the due date for the filing was before the signing of the Court’s Order.   For instance, if your property is in Monmouth County, where the County Tax Board’s filing deadline was changed to January 15, you will not be able to file an appeal with the County Tax Board at that time.  However, if your property’s assessment exceeds $1 Million, we can still appeal the assessment directly to the Tax Court.

 
Coronavirus Related Valuation Arguments Will Not Be Successful In 2020 Tax Appeals

Our office remains open and we are closely monitoring the quickly developing effects of the Coronavirus (COVID-19) pandemic.  During the past few days, we have received several calls from our clients, who concerned about the effects of the moratorium on evictions.  As resources become available and new information is released, we will keep you up to date.  In the meantime, we are aware that there is a lot of seemingly conflicting information regarding delays in evictions.  In this article, we will explain the details of some of the new temporary laws that may affect our clients during the next few months. 

Filing and Scheduling Eviction Hearings

During this time, we can still file eviction actions and enter into payment agreements with tenants.  While eviction hearing dates have been slightly delayed during this emergency, these delays are precautionary due to social distancing requirements, and is not related to economic factors.  Therefore, we expect that the New Jersey Courts will resume conducting eviction hearings as soon as it is deemed safe to resume public gatherings.

On Sunday, March 15, 2020, our office published an urgent update regarding some of the recent emergency measures that had been instituted by the New Jersey Judiciary in order to limit the spread of the coronavirus.  Our article specifically focused on landlord tenant proceedings, which are usually grouped together by the Court in high volume, with as many as 300 cases being heard on a single date.  In light of the recent health risks associated with large groupings of people, the Judiciary had decided, in the interests of caution, to delay all eviction actions, scheduled for dates between March 16 through March 27.  As of this time, we have removed that update since we believe there will be more updates coming shortly, with new legislation currently pending.  Please check often for more updates, and most importantly, please stay safe.

For nearly 50 years, most of New Jersey’s residential tenants have been protected by the vast set of Statutes, known simply as The Anti-Eviction Act (“The Act”).   Throughout the years the Act has undergone various, but generally minor, revisions.  However, amidst these changes, eviction complaints based on non-payment of rent have remained relatively straightforward.  Most landlords are aware of the following two rules with regard to nonpayment of rent cases:

  1. If the tenant pays the rent that is due by the day of the eviction hearing, the eviction action must be dismissed.
  2. If the tenant does not pay the rent that is due by the day of the eviction hearing, the landlord shall be awarded a Judgment for Possession, and may file the appropriate application to schedule a lockout of the tenant.

Our clients often ask us about the benefits of transferring their rental properties into a Limited Liability Company (L.L.C.).  While LLCs and other corporate entities offer some degree of protection from the personal liability, there are a myriad of factors that must be considered in making the decision to transfer your properties into one of those entities.

Due on Sale Clause

We will start our discussion with a familiar concept that owners often overlook when deciding to transfer their properties to an LLC.  In cases where the property is encumbered by a mortgage or loan, it is extremely likely that the loan document contains a “Due on Sale” clause.  This provision, contained in nearly all loan agreements, sets forth that, upon the sale of the property, the lender may require the borrower to pay the full balance of the loan.  While this clause is clearly intended to protect the lender in the vast majority of sales, where the property is sold to a completely unrelated party, it can also be invoked in cases where the owner is merely trying to deed the property to corporate entity in which the owner remains a member or shareholder.   Accordingly, in all cases where the owner intends to deed a mortgaged property to an L.L.C., the owner should first consult with the lender to get a decision in writing whether the deed transfer would trigger the due on sale clause.

Tenants who smoke in their apartments and in the common areas of their apartment buildings presents a major problem for landlords of multiple dwelling buildings. Inevitably, the smoke from one apartment will leak into neighboring apartments, leading to complaints and possible move-outs from non-smoking tenants, who generally find the smell of cigarette smoke to be abhorrent.  This problem has been largely vitiated, however, as the use of cigarettes has declined substantially during last 30 years.  Unfortunately, the New Jersey legislature will soon create a new problem since it has introduced new legislation to legalize marijuana.  Unlike the other states that have enacted the similarly misguided legislation to legalize marijuana during the last five years, New Jersey has the unique problem of having a significant portion of its population living in multiple dwellings.  Marijuana smoke, like tobacco smoke, causes a substantial annoyance to those who do not choose to use these harmful products.

Historically, the legislature has allowed for the eviction of a tenant for the mere use of marijuana or any illicit drugs in the residential dwelling.  N.J.S.A. 2A:18-61.1(n) provides for the eviction of a tenant who “hasbeenconvictedoforpleadedguiltyto… anactwhich… wouldconstituteanoffenseundertheComprehensive DrugReformActof1987…involvingtheuse,possession,manufacture,dispensingor distributionofacontrolleddangeroussubstance.”  Similarly, N.J.S.A. 2A:18-61.1(p) allows for evictions for the same offense, even without a conviction, provided that the offense can be proven by the preponderance of evidence in the landlord tenant action.

However, when marijuana becomes legal, the curative provisions of N.J.S.A 2A:18-61.1, which have been designed, in part, to avoid the problem caused by tenants who use marijuana, will no longer be actionable.  Put simply, a landlord cannot evict a tenant for using a drug, which is no longer illegal.  Therefore, landlords must immediately consider writing new lease provisions in order to avoid these problems before they happen.

justice_srb_2In last month’s blog, our office presented Part One of our discussion on our recommendations to an arbitration board with regard a commercial landlord tenant matter, in which the tenant withheld rent in due to alleged habitability defects.   In this month’s blog, we continue our discussion of our analysis of that matter.

In most cases, the Court is loath to construe the Tenant’s good faith actions to enforce a contract as a default of the contract.   Like most default provisions found in commercial leases, the default in the lease in this matter was not curable. Therefore, in the event that the Tribunal were to declare a default in this matter, it is clear that the Tenant would not only forfeit the tenancy, but would also forfeit the benefit from the substantial investment he made in preparing the premises for the current use. Under the matter of Mandia v. Applegate, 310 N.J. Super 435, 447 (App. Div. 1998), “[l]anguage which may defeat an estate must be strictly construed and always against… a forfeiture.” In the matter of Vineland Shopping Center, Inc. v. DeMarco, 35 N.J. 459, 465 (1961), the Court held that “[i]n a proper case, equity will relieve a Tenant from forfeiture of a lease by reason of non-payment of money where performance has been made.

In the pendent matter, the Tenant defaulted in the lease by failing to pay rent. While the Tenant probably had other mechanisms of compelling the Landlord to make the requested repairs, the Tenant in this matter did not have a lot of good alternatives. Notwithstanding the clear statement contained in the written lease, we were required to determine whether it would be equitable for us to terminate the tenancy of someone who was only trying to compel the Landlord to make repairs that the Landlord was responsible to make. In the matter of Urdang v. Muse, 114 N.J. Super 372 (Cty. Dist. Ct. 1971), the Court held that “the Court may under its equitable powers, as enunciated in Vineland Shopping Center, relieve against forfeiture. This it may do despite the fact that defaults have taken place … The essence of the power to relieve against forfeiture is that equity may intervene to mitigate the inequitable consequences of a breach.”

Our firm was recently retained to provide an amicus brief to an Arbitration Board, for purposes of helping the arbitrator to resolve a commercial landlord tenant dispute, in which the Tenant had stopped paying rent, ostensibly due to habitability defects, affecting both the leased premises and the common area. The Landlord responded by declaring a default in the commercial justice_srb_2lease and promptly sought eviction based on that default. The questions before the arbitrator were the following:

  1. Who bears responsibility for curing habitability defects to the roof and the common area?
  2. Does the Tenant’s failure to pay rent constitute a Default that would result in termination of the tenancy?