Articles Posted in Real Estate

Our 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.

In 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.

The 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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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.

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.