S2436

An Act concerning rent increases for senior citizen tenants in certain dwelling units and supplementing chapter 14K of Title 55 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. Many senior citizens age 55 or older are on fixed incomes comprised principally of small pensions and Social Security income, while other senior citizens, due to the costs and provision of medical care or other services, are forced to live in significantly more costly rental units;

b. Senior citizens who live in rental housing are often faced with rent payments that increase faster than their Social Security cost of living adjustments or exceed their fixed incomes;

c. The cost of housing in New Jersey, including rental housing, constitutes one of the most substantial financial challenges faced by residents, particularly senior citizen tenants, of this State;

d. A substantial number of New Jersey renters pay more than 35 percent of their household income on rent, a percentage of income that is commonly viewed as the limit of what constitutes affordable rent;

e. In addition, senior citizens who have lived in a dwelling for many years are less able than younger tenants to perform the physical exertions necessary for a move and to adapt to a new location, including different stores, doctors and healthcare providers, and support systems; and

f. Therefore, to protect the health and well-being of senior citizens, it is in the public interest, and the public policy of this State, to guarantee those senior citizens affordable rental housing in order to avoid displacement due to rent that increases faster than their income, and to establish a reasonable limitation on annual rent increases for senior citizen tenants in rental housing funded by the New Jersey Housing and Mortgage Finance Agency.

2. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

"Covered dwelling unit" means a structure, or a room or a group of rooms within a structure:

(1) offered for rent by a landlord for residential purposes, other than a dwelling unit in an owner-occupied premises of not more than three dwelling units;

(2) that is rented to a senior citizen for their principal place of residence; and

(3) that has been, presently is, or is to be funded by a loan, bond, trust fund, subsidy, or any other program or financial assistance from the New Jersey Housing and Mortgage Finance Agency.

"Duplex" means a building or structure of one or more stories and any land appurtenant thereto, and any portion thereof, in which exactly two units of residential dwelling space are occupied, or are intended to be occupied by two or more persons who live independently of each other.

"Landlord" means any person or entity who rents or leases or offers to rent or lease, for a term of at least one month, dwelling units, except dwelling units in owner-occupied premises of not more than three dwelling units, or in hotels, motels or other guest houses serving transient or seasonal guests.

"Percentage change in the cost of living" means: (1) the percentage change from February 1 of the prior year to February 1 of the current year in the regional Consumer Price Index for the region where the dwelling unit is located, as published by the United States Bureau of Labor Statistics; or (2) any alternative source for determining the percentage change in the cost of living that the Executive Director of the New Jersey Housing and Mortgage Finance Agency deems necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Senior citizen" means a person 62 years of age or older and shall include a surviving spouse if that surviving spouse is 55 years of age or over.

"Tenancy" means the lawful occupation of a dwelling unit and includes a lease or sublease, oral or written.

3. a. Except as provided in subsections c. and d. of this section, and section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), a residential landlord shall not, over the course of a 12-month period, increase the rent on a covered dwelling unit by more than two percent, or by more than the percentage change in the cost of living, whichever is greater.

b. A tenant of a covered dwelling unit shall not enter into a sublease that results in a rental rate for the covered dwelling unit that exceeds the allowable rental rate authorized by subsection a. of this section. Nothing in this subsection shall be construed to authorize a tenant to sublet or assign the tenant’s interest where otherwise prohibited.

c. The landlord may, notwithstanding subsection a. of this section, establish the initial rental rate for a new tenancy in which no tenant from the prior tenancy remains in lawful possession of the covered dwelling unit. Subsection a. of this section shall only apply to subsequent increases after that initial rental rate has been established with respect to the new tenancy.

d. This section shall not apply to the following:

(1) non-residential real property;

(2) a covered dwelling unit restricted by deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income;

(3) a covered dwelling unit subject to a "Notice of Rent Protection Emergency," established pursuant to P.L.2002, c.133 (C.2A:18-61.62 et seq.), the application of which results in a lower permitted rent increase for the specified year than that permitted pursuant to subsection a. of this section; or

(4) a duplex in which the landlord occupies one of the units as the landlord’s principal place of residence at the beginning of the tenancy.

e. If the landlord of a covered dwelling unit requests or accepts an increase in rent exceeding the amount permitted pursuant to subsection a. of this section, the applicable rent for the duration of the present lease term, or subsequent lease term if the present term is month-to-month, shall be the rent for the rental term preceding the rent increase in violation of this section.

f. This section shall function in addition to, and not in place of, the existing prohibition on unconscionable rent increases pursuant to subsection f. of section 2 of P.L.1974, c.49 (C.2A:18-61.1).

g. (1) A violation of P.L. , c. (C. ) (pending before the Legislature as this bill) shall constitute an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.), and a landlord who violates P.L. , c. (C. ) (pending before the Legislature as this bill) shall be subject to all remedies and penalties available pursuant to P.L.1960, c.39 (C.56:8-1 et seq.).

(2) Notwithstanding the provisions of paragraph (1) of this subsection, a tenant shall have the right to petition a court of competent jurisdiction to terminate a lease containing a provision in violation of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall be permitted to recover reasonable attorney’s fees or expenses.

(3) A landlord who violates P.L. , c. (C. ) (pending before the Legislature as this bill) shall also, at the discretion of the tenant, be subject to a separate cause of action by the tenant in the Superior Court, Law Division, Special Civil Part in the county in which the rental premises are located. The tenant may recover $500 for a first offense by the landlord, and $1,000 for a second and any subsequent offense by the landlord, in addition to reasonable attorney’s fees or expenses.

h. Pursuant to subsection f. of section 2 of P.L.1974, c.49 (C.2A:18-61.1), a tenant may assert a violation of this section as a defense to an eviction action as an unconscionable rent increase.

4. The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not preempt an ordinance, rule, or regulation, or other law regarding rent control, rent leveling, or rent stabilization adopted by the governing body of a municipality that would result in a lower permitted rent increase on a covered dwelling unit over the course of a 12-month period. The provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall preempt an ordinance, rule, regulation, or other law regarding rent control, rent leveling, or rent stabilization adopted by the governing body of a municipality that would result in a higher permitted rent increase on a covered dwelling unit over the course of a 12-month period.

5. The Executive Director of the New Jersey Housing and Mortgage Finance Agency shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

6. This act shall take effect on the first day of the third month next following the date of enactment, and shall apply to tenancies commencing on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), except that the Executive Director of the New Jersey Housing and Mortgage Finance Agency may take anticipatory action necessary to effectuate the provisions of this act.

STATEMENT

This bill would establish a limitation on rent increases for certain units leased to senior citizen tenants and financed by the New Jersey Housing and Mortgage Finance Agency (HMFA).

The bill prohibits a landlord—as defined in the bill, including a sublessor—of a covered dwelling unit, from increasing the rent over the course of a 12-month period by more than two percent, or by more than the percent change in the cost of living, whichever is greater. The bill defines a "covered dwelling unit" as a structure, or a room or a group of rooms within a structure that:

(1) is offered for rent by a landlord for residential purposes;

(2) is rented to a senior citizen for their principal place of residence; and

(3) has been, presently is, or is to be funded by a loan, bond, trust fund, subsidy, or any other program or financial assistance from the HMFA.

The bill provides that if the landlord increases the rent in excess of the bill’s limitation, the applicable rent for the duration of the present lease term, or subsequent lease term if the present term is month-to-month, is to be the rent for the year or term preceding the violation. The bill’s limitations would also function in addition to the existing prohibition on unconscionable rent increases pursuant the Anti-Eviction Act, P.L.1974, c.49 (C.2A:18-61.1 et seq.).

A violation of the bill would:

(1) constitute an unlawful practice pursuant to the New Jersey Consumer Fraud Act, P.L.1960, c.39 (C.56:8-1 et seq.) (CFA);

(2) subject a landlord to all applicable penalties prescribed pursuant to the CFA;

(3) permit a tenant to petition the court to terminate a lease in violation of the bill, and to recover reasonable attorney’s fees or expenses;

(4) subject a landlord to a penalty of $500 for a first offense by the landlord, and $1,000 for a second and any subsequent offense, in a separate cause of action brought by the tenant, in addition to reasonable attorney’s fees or expenses; and

(5) permit a tenant to assert the violation as a defense to an eviction as an unconscionable rent increase.

The bill would only preempt other laws regarding rent control, as prescribed in the bill, that result in a higher permitted rent increase over the course of a 12-month period.

Further, the bill would take effect on the first day of the third month following the date of enactment, and apply to tenancies commencing on or after the effective date of the bill, except that the Executive Director of the HMFA would be permitted to take anticipatory action necessary to effectuate the provisions of this bill.