Occupancy Control Under NJ Law

Learn About the Continuing Evolution of Occupancy Control

New Jersey Supreme Court Weighs in on the Issue

A recent New Jersey Supreme Court Opinion (Robert Maglies v. Estate of Bertha Guy) offers landlords additional guidance when dealing with tenants.

This case involved a Section 8 tenancy, but the decision will be used by tenant advocates to attempt to extend the rights of persons approved for “occupancy,” but who are not approved for tenancy (yes, there is a difference between a tenant and an occupancy), to provide the occupants with all the protection afforded by the Anti-Eviction Act without additional screening on the part of management.

The Maglies case involved a landlord who had entered into a landlord-tenant relationship with Bertha Guy thirty years ago.  During her tenancy, she became a Section 8 Voucher Holder participant.  The landlord participated in the Section 8 Program (in order to comply with his legal obligations).

During the latter part of her residency, she approached the landlord and asked if her daughter could move in.  The landlord agreed that she could move in as an occupant.  The daughter was disabled and receiving disability benefits.  Those benefits could have altered the amount of the subsidy (the landlord had no say over this).

Section 8 Rules make it clear that the landlord retains the right to choose who becomes a tenant on the property.  The Supreme Court acknowledged this.  The Supreme Court also acknowledged that family members do succeed to the rights to a tenant’s Section 8 Housing Choice Voucher, but, absent the requirements of State law, would not succeed to his or her tenancy rights.  As framed by the Supreme Court, the issue is “. . .whether a consented to, financially contributing family member occupant of a Section 8 household has any right to the continued possession of the leased premises after the death of the named tenant.”

The Court ruled against the landlord in this case indicating that in fact “. . . a defacto co-tenant (notice a modification of the status of occupancy to co-tenant) – one who can show that she has been continuously in residence; that she has been a substantial contributor toward satisfaction of the tenancy’s financial obligations, and that her contribution has been acknowledged and acquiesced to by her landlord – is entitled to invoke the protections of the Anti-Eviction Act. . .”.

This analysis seems to call for a fact-sensitive case-by-case application of the law.  From the language quoted it would seem that not every occupant allowed to reside on the premises by a landlord automatically becomes a tenant – there must be a continuous residency.  There must be “a substantial contribution toward satisfaction of the tenancy’s obligations.”  That contribution has to be acknowledged and acquiesced to by the landlord.

In the typical “occupancy” situation, a landlord has already entered into a tenancy with an applicant.  Presumably, the landlord has screened the tenant for financial wherewithal, creditworthiness, income, and criminal background, and approved that tenant, so that a tenancy can be entered into.  Subsequently, in that tenancy, that tenant seeks to have someone else live with them.

Does a landlord screen that person for tenancy?  Many do not.  Many choose to be flexible (which benefits the tenant) and allow the tenant to bring in other occupants, assuming the landlord approves those persons for occupancy.  A landlord may choose to screen any proposed additional occupant for criminal history.

Creditworthiness would normally not be a logical option for the landlord in screening a new occupant – it would be if the landlord wants to screen the new occupant for tenancy rights – but as indicated above this would be a more restrictive test and less favorable to existing tenants.  Assuming a landlord allows the occupant in (without the creditworthiness or income analysis) the risk the landlord then takes under this Maglies decision is that subsequently if that occupant makes the “substantial contribution” toward satisfaction of the tenancy’s financial obligation the occupant will evolve into a tenant.

The Court seems to protect the landlord by indicating that one of the criteria of the tenant’s burden of proof is that the landlord acknowledges that contribution and acquiesces in it.  This protection may prove elusive in tenancy court, if the tenancy judge has a broad standard for “acquiescence.”

In the Maglies case, the presumption of the Court (which will be tested by further fact findings) is that the landlord knew that when the additional occupant moved in, she would somehow financially benefit the subsidized rent payment, thereby creating the so-called “substantial contribution” to the obligations of the tenancy by the occupant.  The landlord then acquiesced in it.  (This is ironic – since, the landlord has no choice but to accept the Section 8 tenancy, so there is no true “acquiescence” on the part of the landlord).

In a non-Section 8 case, how does a landlord know that the occupant is making the “substantial contribution”?  One way would be accepting checks from this new person.  Obviously, a diligent landlord who does not have a lot of rental units may not be able to monitor who pays the rent.  This then becomes an impractical or impossible reality concerning who pays the rent.

To avoid the risk, landlords can deny other occupants who do not meet tenancy qualifications.  The good news in this Opinion is that the Supreme Court made that clear.  The Supreme Court said two things about landlords’ screening rights in this case.  First, they said: “Our decision addresses not all occupants, but the specific factual circumstances of this Section 8 household in which the daughter apparently brought substantial resources to the family’s finances and whose continuous presence in the leasehold was acknowledged and acquiesced in for years by this landlord.”

The Court also indicated that it acknowledged prior precedent allowing landlords’ screening (Pasquince).  It acknowledged that lease contracts which do specifically inform tenants that their lease will terminate upon the tenant’s death are enforceable.  (Citing Riverview Realty).  (“Our holding today is not intended to undermine the enforceability of such clauses”, said the court).  Furthermore, the Court made it clear that landlords can screen persons who are requested to be acknowledged as additional occupants to existing tenancies, creating the implication that landlords still have the right to reject the occupancy of those persons, especially since their residency may create a tenancy:

“Our decision does not force a landlord to retain someone who otherwise is disqualified from a residence in the unit based on, for example, a past conviction or other illegal or impermissible activities (Megan’s Law restriction based on prior sexual offense or drug dealing).  Indeed, in this instance, Maglies was “responsible for screening and selection of the family to occupy his unit.  The family he chose included all persons or groups of persons. . .approved to reside in the unit with the assistance under the Program.”

All landlords, and most particularly landlords involved with a Section 8 Housing Choice Voucher, have to be wary concerning the addition of other occupants who existing tenants seek to add to existing tenancies or have resided in their rented dwelling.  Under this decision, those occupants can evolve into tenants under the test of “substantial financial contribution and landlord acquiescence.”  Since that might be a vague circumstance which could be taken advantage of by these succeeding occupants to avoid tenancy screening, landlords must be very wary of allowing or tolerating additional “occupants” who they otherwise think will not become tenants upon a tenant’s death or an approved tenant otherwise leaving the premises.

By Christopher J. Hanlon, Esq., a NJ Landlord Attorney

Should you have the need for legal counsel in this area, 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.