New Jersey Real Estate Attorney Blog
Nearly 200,000 landlord tenant disputes are filed each year in New Jersey Landlord Tenant Courts. The majority of Landlord Tenant matters are filed by attorneys on behalf of landlords. Some landlords would rather not appear at Court for a trial, and they will request that their attorneys enter into settlement agreements on their behalf in the event that the tenants show up. This ordinarily does not present a problem for the landlord’s attorney, as long as the landlord’s ledger of the amounts due is accurate, and as long as the amounts of rent sought in the complaint mirror the information from the ledger. However, there are many cases where the landlord’s ledger is not accurate and mediating these matters to arrive at a settlement is therefore quite difficult. In order to resolve these types of matters, we have developed the following paradigm.
Arrive at the Amount Due
Before an eviction matter can be settled, the parties must first arrive at the amount due. While in most cases, the tenant agrees with the amount set forth on the complaint, we do see a lot of cases where the tenant simply does not agree with the ledger and further discussion is required. When these disputes arise, we recommend starting the mediation by just discussing rents. Other items like legal fees, late charges and utility fees can be conversation killers, especially in cases where the tenant thinks the balance is paid in full and does not understand why an action was filed. Therefore, any discussion regarding these “additional rent” charges are best saved for the end of the conversation, after the tenant already agrees with the amount of rent that is owed.
In order to discuss a discrepancy in rents, we suggest that the Landlord’s attorney and the tenant review the Landlord’s ledger and determine the last point in time when the parties agree that the amount due was $0.00 (or close to it). The parties can then add up all the rents that became due after that point in time to arrive at an amount that “should have been paid.” Once that amount is established, the parties should then review the tenant’s receipts and add up all the payments that actually were made. The difference between the amount that should have been paid and the amount that was paid is the balance owed.
In some cases, the tenant will show a receipt for money order, which the landlord has no record of receiving. These types of issues are easily handled by way of stipulation, wherein the tenant will agree to trace and replace the missing money order within a period of time (usually 30 days is sufficient). But there are other cases where the disputed balance originates in a very old charge, which cannot be verified. In the rare cases where the parties cannot reach an agreement as to whether a specific month of rent was paid, and the landlord is unable or unwilling to come to Court for a trial, we find that the most effective way of resolving the disparity is to leave the disputed portion of the balance out of the calculation of the total amount due, and then stipulate that the agreement is “without prejudice” as to any disputed balances in excess of the agreed upon amount.
Once the amount of rent that is due is established to the satisfaction of both parties, the Landlord’s attorney and the tenant can re-visit the issue of late charges and legal fees. It is crucial that the Landlord’s attorney bring a copy of the lease to Court to show the tenant the provision that sets forth that late fees or legal fees shall be considered “additional rent.” Without that provision, these charges cannot be included in the amount that the tenant would have to pay in order to avoid eviction.
The Payment Plan
Once the parties agree on the total amount that is due, the parties will need to arrive at a payment plan. Many landlords are willing to accept a payment plan to allow the tenant time to become current with rents. In addition to avoiding a trial, there are many other advantages of entering into a settlement agreement with a tenant. But one of the best reasons to settle is the fact that the settlement agreement usually gives the landlord the best chance of getting paid rents that are due. Absent a settlement agreement, the best a landlord can hope for is a Judgment for Possession and a slim possibility of collecting the balance due in a civil suit.
Notwithstanding the advantages of settling a landlord tenant matter, the Landlord should not agree to any settlement offer unless its terms are practical for the Landlord. The payment plan certainly should not leave the Landlord in a worse position than he or she would have been in absent the settlement agreement. Accordingly, we recommend that the first payment in the Stipulation of Settlement be due on (or very close to) the day of Court. The amount of the initial payment and each payment thereafter must also be greater than the amount of pro-rated rent that the tenant would have incurred before the next payment due date.
For example, if the monthly rent is $1200, and the payment plan requires an initial payment on the day of Court, and weekly payments every week thereafter, we would expect that each payment would need to be at least $300 just in order to keep the tenant current with his or her rent obligation. However, since the object is to reduce the tenant’s arrearage during the course of the agreement, a much larger installment payment should be made. Additionally, since we know that the Court will usually take about 2 weeks to execute the Warrant of Removal in the event of a breach, the initial payment should probably be large enough that, in the event of an immediate breach, the landlord will be compensated for pro-rated rents incurred while waiting for a lockout.
For more information regarding evictions, please feel free to contact our office.