A3507

An Act concerning alleged unconscionable rent increases and supplementing chapter 18 of Title 2A of the New Jersey Statutes.

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

1. a. In determining whether a rent increase is unconscionable, the court shall consider:

(1) the amount of the proposed rent increase;

(2) the landlord’s expenses and profitability, including, but not limited to, the consideration of: new ownership or refinancing of the rental unit; new or preexisting financing on the property; improvements and maintenance to the rental unit or rental building or buildings; and changes in expenses related to the property, such as utilities, provided the utilities are paid for by the landlord, and insurance rate increases, which are approved by the relevant rate setter over the previous 12 months;

(3) how the existing and proposed rents compare to rents charged at comparable rental properties in the geographic area, including the federal Department of Housing and Urban Development Fair Market Rents and Small Area Market Rents;

(4) the relative bargaining position of the parties, including but not limited to, consideration of the availability of rental housing in the geographic area;

(5) based on the judge’s general knowledge, whether the rent increase would shock the conscience of a reasonable person;

(6) the length of time since the last rent increase by the current owner against the residential tenant, the length of tenancy, and the length of property ownership; and

(7) the condition of the property, including but not limited to, claims related to the habitability of the premises and outstanding code violations affecting health and safety, which remain unaddressed following written notice to the landlord and an opportunity to cure.

b. No one factor considered by a court of competent jurisdiction, pursuant to subsection a. of this section, shall be the sole factor in the court’s decision concerning whether a rent increase is unconscionable. The factors enumerated in paragraphs (1) through (7) of subsection a. of this section shall not be deemed exhaustive. A court may consider other factors which, on a case-by-case basis, the court determines to be relevant in determining whether an increase in rent is unconscionable.

c. The landlord shall bear the burden of proof to demonstrate that a rent increase is not unconscionable.

d. Court records concerning an eviction action brought by a residential landlord against a residential tenant pursuant to section 2 of P.L.1974, c.49 (C.2A:18-61.1), which were adjudicated or otherwise disposed of and for which no judgment for possession has ever been entered, or an eviction action brought by a residential landlord against a residential tenant, pursuant to N.J.S.2A:18-53 et seq. or section 2 of P.L.1974, c.49 (C.2A:18-61.1), in which a judgment for possession was entered seven years ago or longer, shall be excluded from public access.

e. The provisions of this section shall not apply to a rent increase that is subject to and compliant with a local rent control ordinance or approved variance, or subject to regulation by a local, State, or federal affordable housing program.

2. This act shall take effect immediately, except that subsection e. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall take effect on the first day of the sixth month next following the date of enactment.

STATEMENT

This bill codifies the test, provided in State case law, for determining whether a rent increase is unconscionable.

To determine whether a rent increase is unconscionable, a court would consider:

• the amount of the proposed rent increase;

• the landlord’s expenses and profitability, including the considerations provided in the bill;

• how the existing and proposed rents compare to rents charged at comparable rental properties in the geographic area, including the federal Department of Housing and Urban Development Fair Market Rents and Small Area Market Rents;

• the relative bargaining position of the parties, including consideration of the availability of rental housing in the geographic area;

• whether the rent increase would shock the conscience of a reasonable person;

• the length of time since the last rent increase by the current owner against the residential tenant, the length of tenancy, and the length of property ownership; and

• the condition of the property, including whether there are claims related to the habitability of the premises and certain outstanding code violations affecting health and safety.

The bill specifies that no one factor enumerated in the bill and considered by a court is to be the sole factor in the court’s decision concerning whether a rent increase is unconscionable, and that the factors enumerated in the bill are not to be deemed an exhaustive list. The bill permits a court to consider other factors which, on a case-by-case basis, the court determines to be relevant in determining whether an increase in rent is unconscionable.

The bill also codifies paragraph (11) of subsection f. of R.1:38-3 of the Rules of Court, to provide that the following court records are to be excluded from public access:

(1) records concerning an eviction action against a residential tenant pursuant to section 2 of P.L.1974, c.49 (C.2A:18-61.1), which was adjudicated or otherwise disposed of and for which no judgment for possession has ever been entered; and

(2) records concerning any residential eviction action, whether pursuant to N.J.S.2A:18-53 et seq. or section 2 of P.L.1974, c.49 (C.2A:18-61.1), in which a judgment for possession was entered seven years ago or longer.

The bill specifies that its provisions would not be applicable to rent increases that are subject to and compliant with a local rent control ordinance or approved variance, or subject to regulation by a local, State, or federal affordable housing program.

The bill would take effect immediately, except that the provisions of the bill establishing the confidentiality of certain court records related to an eviction, would take effect on the first day of the sixth month following the date of enactment.