Gov. Murphy signed S3691 (now PL 2021, c. 188). It significantly limits eviction remedies for certain outstanding residential rent accounts, and for some defaults that may occur during what remains of 2021. The good news is that in recognition of the huge debt to society that landlords have paid during the pandemic (involuntarily – but, thank you), a significant amount of additional rental aid will be made available through a new Eviction Prevention Program to be administered by the State.
The legislation recognizes that as a result of the pandemic, significant unemployment has resulted among tenants and furthermore a significant number of families or households adversely impacted by this are in minority populations “victimized by systemic and structural racism”. They all need and deserve help. It is the intention of the legislature to make this help available by doing several things.
This first is to limit evictions against four classes of households: “very low income households”; low-income households”; “middle income households”; and “moderate income households”. The last category of households consists of those with current gross annual income in excess of 80% but less than 120% of the area (typically county) median income (AMI) for a household of the same size and composition. (See chart – enclosed). No one above that category (i.e., households making more than 120%) gets any relief. Therefore, “Rent Cases” (non-payment of rent, non-payment of rent increases and habitual late payment of rent) against those households earning more than 120% of AMI should be prosecuted and proceed to lock-out as before the pandemic. (As an example for a family of three in Monmouth County median income for a “household” (2.53 people) in 2020 was $82,265.00. 120% of that is $98,718.00. Household’s earning more than that get no relief under this law.) Your County’s median income data is referenced in the enclosed chart.
In order for a household to have the court acknowledge that they belong in one of these categories, and therefore are deserving of protection, they must sign a certification made available to them on the internet (by iPhone, for example) by D.C.A. website portal containing details required by the statute to confirm their entitled status.
The protection that persons in all of these qualifying categories get from the law varies. It includes a ban on eviction (dismissal of a tenancy complaint) if the eviction could be based on a Rent Case involving rent due during the “covered period”, i.e., March 1, 2020 through August 31, 2021. The eviction prohibition remedy is only applicable to evictions based upon failure to pay rent, habitual late payment of rent, or failure to pay rent increase during the “covered period”. It is not applicable to any other cause for eviction (e.g. disturbing behavior). It is the intent of the legislature that immediately upon the effective date of the law, all other types of evictions can proceed. This dovetails with the Supreme Court’s recent Directive 21-21 reopening the Courts. All cases other than the covered period Rent Cases can now proceed, as can the lockouts in these cases.
That means many types of lease enforcement cases which were not considered “emergent” under Directive 20-20 limiting trials to be conducted during the pandemic, can proceed immediately without regard to any aspect of this new law. On the other hand, no cases will continue to get expedited treatment as an “emergent case”, facilitated by an Order to Show Cause process, other than Rent Cases where the tenant has died. Those can still be expedited with the Order to Show Cause process created by Directive 20-20.
As it relates to cases other than rent cases, even though they can (and should) proceed, it is unclear whether they will ever proceed as quickly as the Summary Dispossess procedure allowed before the pandemic. First, there is a huge backlog in the courts and it will take some time for the cases to get reached under the new processing protocols. In addition, there will be new processing protocols. Additional paperwork has to be filed with each complaint. Each case will be scheduled for a case management\settlement conference. Paperwork has to be filed for those. If the case is not resolved at that initial conference, then it will be rescheduled for a trial date. For the foreseeable future most proceedings will continue to be “virtual”, facilitated by Zoom or Microsoft Teams. Despite anticipated delays, it is my opinion that those cases should be prosecuted expeditiously now if are no other reason than to “get in line”.
As it relates to Rent cases, no one in any of these protected groups can be evicted for any Rent Case that accrued during the “covered period”. That protection against eviction will is extended to December 31. 2021 for all households earning less than 80% of AMI. Therefore, if a qualifying certification is filed with the DCA, it will file it with the court and in any tenancy case that is pending or any tenancy case that was filed gets filed before the end of the year, then the case will be dismissed. It will not be dismissed if they cannot certify that they belong in one of the protected groups, or if the claim is for rent that became due prior to March 1, 2020 (provided, however, if the case is not dismissed because of a rent debt that is that old, you still cannot pursue a judgment for the rent attributable to the “covered period” (or the extended covered period for the “less than 80% group” in that case.)
One of the expressed purposes of the legislation is to limit the ability of the governor to continue the eviction lockout beyond that provided for under this new statute. As indicated, all persons who can fit into any of the four groups cannot be evicted for rent accruing during the “covered period” and cannot otherwise be locked out based upon a Rent Case prior to August 31, 2021.
The law specifically acknowledges that any and all rent that is due and owing (without exception) can be considered a “civil debt”. There is no limitation on a landlord’s ability to sue their tenant to obtain a money judgment against them based upon this unpaid rent and to proceed with whatever collection remedies are available to you. You still have a valid claim, it’s just that you cannot use pandemic related rent arrearages accrued during the covered period (as extended) “as a mechanism for eviction” for those in the defined household income categories.
As indicated the state intends to make available a significant amount of additional rental subsidies. The statute provides that should you participate in such a program by accepting payments for rent, you must waive late fees. (This and the prohibition of late fees being imposed by the CARES Act, for the time period of March 28, 2020 through July 25, 2020 are the only pandemic related late fee limitations imposed by law in New Jersey). Otherwise they are collectable under normal rules. Furthermore, you must accept such rent payments from any assistance program if payment is tendered. You cannot refuse.
The law limits your ability to use or deal with certain information related to unpaid “covered period rent”. As it relates to any debt that you are owed that you can sue to collect-you cannot assign the right to collect this debt to a third-party. In addition, there is a clause indicating that it cannot be “reported” to a collection agency. (while there is no precise ban on using a collection agency one has to wonder how a landlord does that without “reporting” the information). You cannot report any unpaid “covered period rent” to a third party. You cannot use information related to a tenant’s failure to pay “covered period rent” should that be reflected in a credit worthiness analysis you use to consider for the approval of any applicant. (You cannot deny housing on the basis of unpaid covered period rent) Don’t forget, for mobile home park landlords, if you wrongfully disapprove someone you should have two concerns-whatever claim that that person may assert against you and, any application rejection which can be argued to be “unreasonable” interferes with statutory resale rights of your existing – selling tenants.
The law increases the jurisdictional dollar amount of the lower court (special civil part) to allow suit for any amount of unpaid “covered period rent”, in order to give landlord’s access to a faster court for this purpose.
The law requires the establishment of an “Eviction Prevention Program” to administer the additional rental aid which is simultaneously being made available as part of this law. The bill contains a lot of information regarding qualification for participation in this program which will not be set forth here. Please contact me with questions.
As part of that Eviction Prevention Program, tenant applicants for aid can make an application to the Department of Community Affairs, which is administering the program, to make alleged habitability breach award deductions from payments due to you if they make related complaints which will then be adjudicated by the DCA. There is contradictory language set forth in the law related to the obligation of tenants to actually apply for rental assistance in order to take advantage of the protection against eviction. In one section of the Lord suggests that any certification they file with the DCA should include a certification that they have applied for assistance (in the DCA certification form does provide for this information) the strict reading of the bill does not justify a clear argument that dismissal should be a remedy which is withheld from them unless they are making a good-faith attempt to apply for state rental assistance. This area of the law may evolve. I will keep you informed.
Despite this failure in the law, as indicated, under the new eviction process protocol all tenancy cases are going to be sent to mandatory settlement conferences. If tenants don’t appear, you can obtain a default judgment. (The law prohibits eviction of “protected tenants” but without a certification there is no protection). Furthermore, court staff is being trained to push tenants hard to make applications for rental assistance and quite often this has happened. Therefore, despite the fact that there may be a risk of dismissal, there is still some utility in filing these complaints to attempt to get the tenants involved with the court process as it may convince them to apply for rental assistance and increase your odds of getting paid.
The DCA will be implementing forms which must be used by the courts and by landlords to address information related to this law. One such form is attached. We must attach it to any new complaint we file. You must post it in the rented premises in a common area.
In order to participate in the Eviction Prevention Program successfully, your tenants have to demonstrate a “risk of experiencing homelessness or housing instability”. Therefore, the filing of eviction complaints may assist them in qualifying for obtaining aid, if the case will not otherwise be dismissed as a result of the other provisions of this law.
If you obtain rental payments after August 31, 2021, the statute provides how those payments are to be “applied” with preference being given to post “covered period rent” debt.
Based on all of the foregoing my advice is for landlord’s to continue to file rent evictions where you have reason to believe that the affected households will not qualify for protection. Unemployment benefits do qualify as income. When in doubt, there is no reason not to communicate with the tenant before you file to try to avoid wasting money on legal fee. Or, if you cannot get adequate cooperation, file the complaint to force the certification process.
By Christopher J. Hanlon, Esq., a NJ Landlord Attorney
If you would like to schedule and appointment to discuss you landlord matter, please contact Christopher J. Hanlon, Esq. at chanlon@hnlawfirm.com or Fredrick P. Niemann, Esq. at fniemann@hnlawfirm.com. They can also be reached toll-free at (855) 376-5291.