February 14, 2012:

Community Associations and Tenants
Part 4 – Evicting Tenants
by Dean L. Semer, Esq.

This is the fourth of 4 blog posts concerning tenant issues within community associations. In Part 1, I explained why Associations cannot prohibit tenants. In Part 2, I explained that it is not a good policy for an association to require credit checks or background checks of potential tenants. In Part 3, I explained about leasing resolutions and lease riders.

Here in Part 4, I will provide an overview about evicting tenants. This assumes that the Association’s governing documents contain an “eviction provision” and an “attorney-in-fact provision.”

In accordance with New Jersey’s Anti-Eviction Act of N.J.S.A. 2A:18-61.1, et seq., tenants may only be evicted for “cause” upon certain grounds specified within the Act. Assuming that “cause” is found, a complaint will be filed in Landlord-Tenant Court in the county where the home located.

If there is a lease provision about adhering to the Association’s rules or the Association’s lease rider was signed, then the provision of the Anti-Eviction Act that is most relevant to the Association will be N.J.S.A. 2A:18-61.1(d). This section provides that the tenant may be evicted if

[t]he person has continued, after written notice to cease, to substantially violate or breach any of the landlord's rules and regulations governing said premises, provided such rules and regulations are reasonable and have been accepted in writing by the tenant or made a part of the lease at the beginning of the lease term.

In addition, or if there is no lease provision about adhering to the Association’s rules or if the Association’s lease rider was not signed, then a second relevant provision is N.J.S.A. 2A:18-61.1(b), which provides that the tenant may be evicted if

[t]he person has continued to be, after written notice to cease, so disorderly as to destroy the peace and quiet of the occupants or other tenants living in said house or neighborhood.

Whether subsection (d) or (b) is utilized, or both, there must be a witness or witnesses documenting the dates and times of the occurrences. Then a written Notice to Cease must be sent to the tenant, providing for a one month opportunity to cure. If the violation is not cured, then a Notice to Quit must be sent. Only after the Notice to Quit is sent, can an eviction complaint be filed. The witness or witnesses must also be prepared to testify to the dates and times that were documented at trial.

If all of the above were followed, then the Court may grant a Judgment for Possession. This means that the owner (or the Association as attorney-in-fact) has the right to regain possession of the home from the tenant.

Following the judgment, a Warrant of Removal would have to be filed. The Warrant instructs a court officer to “lock” the tenant out of the home, if the tenant does not move within three days following the service of a Warrant of Removal. The earliest that a Warrant of Removal may be served by law is eight days following the entry of the Judgment for Possession. The reality is that it is served usually after two to three weeks.

A tenant still has post-Judgment for Possession Rights. One right is to appeal the Judgment for Possession. It is rare that a tenant appeals a Judgment for Possession. This is because it is very costly and time consuming to file an appeal and have a case heard in the Appellate Division. Also, the filing of an appeal does not stop a lock-out.

More common is that a tenant files an application with the Court seeking one of the following:

  • Order for Orderly Removal – A judge may grant up to an additional seven (7) days for the tenant to move;
  • Order for Hardship Stay – A judge may allow a tenant to stay if it can be shown as to why eviction would cause a hardship. The judge may grant a Stay for up to six months, so long as the tenant pays the rent in full due at the time, pays the rent going forward, and does not damage the premises.

    • The judge may grant either with or without additional conditions.

    It must be clearly understood that it is very difficult to evict tenants in cases that are not based on the non-payment of rent. Strict adherence to the Anti-Eviction Act and the court rules is critical. Otherwise, the case will be dismissed.

    Also, any eviction proceeding must be filed by an attorney, and not the Board or the management company. All community associations are not-for-profit corporations and in Landlord-Tenant Court, a corporation must be represented by an attorney.

    This posting is intended to provide general information and is not intended as specific legal advice or to establish an attorney-client relationship. Please contact Griffin Alexander, P.C. at (973) 366-1188 to assist you with both your Community Association law and Landlord-Tenant law needs.

    February 08, 2012:

    Community Associations and Tenants
    Tenant Issues – Prohibition of Tenants Revisited
    by Dean L. Semer, Esq.

    In Part 1 of a 4 part series of blog entries concerning tenant issues, I discussed the difficulty of a blanket prohibition of tenants. Upon an initial glance, a recent Appellate Court decision would seem to say otherwise. In Cape May Harbor Village v. Sbraga, 412 N.J. Super 56 (App. Div. July 14, 2011) an Association sued an owner for injunctive relief. The owner was leasing her home in violation of an amendment to the Declaration that prohibited the leasing of homes. The owner filed a counterclaim seeking to have the amendment declared void. This Appellate Court upheld the amendment.

    In Part 1 of the 4 part series, I wrote, “[T]here is probably a section in the governing documents for the benefit of mortgage holders that provides that an amendment that changes the right of an owner to lease the unit or home would also require approval of a very high percentage of the mortgage holders. This would be a Herculean task.”

    I looked, therefore, for mention of the provision benefiting mortgage holders. It was found in Footnote 4 which indicates, “The Declaration required as a prerequisite to a vote by the members, the written approval of at least 51% of ‘eligible mortgage holders.’ To be ‘eligible,’ mortgage holders were required to request that the Association furnish them with notice of any proposed action by the Association or its members. No mortgage holders availed themselves of this provision, thus rendering it inoperative in this case.”

    In other words, this Appellate Court placed the burden of having knowledge of the Association’s action on the mortgage companies. Footnote 4 did not reference any section of the Declaration, statute, or case law for that supposition.

    A community association should be wary of relying on this case if they intend to seek an amendment to prohibit tenants.

    This posting is intended to provide general information and is not intended as specific legal advice or to establish an attorney-client relationship. Please contact Griffin Alexander, P.C. at (973) 366-1188 to assist you with both your Community Association law and Landlord-Tenant law needs

    October 24, 2011:

    Community Associations and Tenants
    Part 3 – Leasing Resolutions and Lease Riders
    by Dean L. Semer, Esq.

    This is the third of 4 blog posts concerning tenant issues within community associations. In Part 1, I explained why a prohibition on tenants is either impermissible or highly unlikely. In Part 2, I explained that it is not a good policy for an association to require credit checks or background checks of potential tenants. Here in Part 3, I will explain about leasing resolutions and lease riders.

    Many times, owners will lease their homes without the Association’s knowledge. While this may already be a violation of the governing documents, there are even more every day practical problems this could cause. Therefore, a leasing resolution should require, at a minimum, the following:

  • Leases must be written and for a minimum term (as specified in the governing documents);
  • Copies must be provided to the Association;
  • Contact information for the owner/landlord and tenant must be provided to the Association;
  • The incorporation of and the signing of the Association’s lease rider - The lease rider will provide that the lease is subject to the Association’s governing documents and Rules and Regulations, and any amendments that may be made from time to time. Failure by the tenant to comply with the terms and conditions of such documents shall be deemed a material default under the lease and may be grounds for termination of the lease and a possible eviction proceeding.
  • Assignment of rents – Agreement that if the owner/landlord is delinquent in the payment of maintenance fees and charges, the Association may contact the tenant for the delinquent amounts. A signed agreement by the owner/landlord complies with the Fair Debt Collection Practices Act.

    • The timing of obtaining the lease rider is critical. The optimal time is to have it signed at the commencement of the “tenancy,” the time when the tenant moves in. This is different than the commencement of the “lease” or any renewal period, where the tenant may already be living in the home, hopefully with a lease.

    If, therefore, after passage of a leasing resolution, a new tenant moves in and resides in the home (a new “tenancy”) without signing the Association’s rider, the Association could only penalize the owner for failing to comply with the resolution. Depending on the terms of the lease, and hopefully there is one, it may be harder to argue that the Association’s governing documents and rules and regulations are a material part of the lease.

    For existing tenancies, the matter becomes more complicated because it touches on aspects of New Jersey’s Anti-Eviction Act of N.J.S.A. 2A:18-61.1, et seq. The owner would have the burden of either obtaining the tenant’s voluntary consent to sign lease rider as part of a renewal or the owner must be required to serve the tenant a Notice to Quit and prosecute an eviction in accordance with N.J.S.A. 2A:18-61.1i. N.J.S.A. 2A:18-61.1i provides, in part, that a tenant may be evicted when, “[t]he landlord or owner proposes, at the termination of a lease, reasonable changes of substance in the terms and conditions of the lease, including specifically any change in the term thereof, which the tenant, after written notice, refuses to accept[.]”

    For more information, please contact Griffin Alexander, P.C. at (973) 366-1188.

    DISCLAIMER - This posting is intended to provide general information and is not intended as specific legal advice or to establish an attorney-client relationship.

    July, 31 2011:

    Community Associations and Tenants
    Part 2 – Background Checks of Tenants
    by Dean L. Semer, Esq.

    This is the second of 4 posts concerning tenant issues within community associations. In Part 1, I explained why a prohibition on tenants is either impermissible or highly unlikely. Here in Part 2, I will explain the next common question after prohibition: May an association require credit checks or background checks of potential tenants?

    It is certainly understandable for a Board to want to ensure that tenants who come to a community are of good quality. Many responsible landlords utilize background and credit checks for their tenants. But an association requiring background and credit checks by owners who rent their unit or home or requiring a certain level of creditworthiness is a departure from community association industry standards.

    Simply put, an association’s legitimate interests do not extend to a landlord’s relationship with its tenant. The exception is to make sure that the tenant abides by the rules and restrictions of the Association. Anything beyond ensuring that the association’s restrictions and rules are complied with could be deemed invasive to both the owners and tenants.

    From the owner’s point of view, the association does not have an interest in the creditworthiness of tenants. Thus, if an association required a higher level of creditworthiness than the owner would have required, the association could create liability for itself for the loss of income to the owner. There is no known statistical correlation between people who do not pay their rent with people who do not follow the rules. And people who do not follow the association’s rules may very well be paying their rent.

    From the tenant’s perspective, if the association required an extraordinary level of creditworthiness or certain background requirements, then the association could find itself with equal protection and/or fair housing liability issues.

    Establishing rules outside an association’s legitimate interests causes speculation and concern as to whether the association is actually trying to prevent protected groups from moving to the community, such as the poor or certain ethnic or religious groups. Courts and the legislature would be wary of associations taking too great an interest in the private affairs of its owners. If the association were challenged, a court could deem the requirement of a credit or background check as beyond the scope of the Board’s authority, or as “not reasonable” with the “business judgment rule” that generally protects Board decisions, and strike it down.

    Moreover, if the association collected credit and background information, a responsibility would be created and liability assumed for the association to protect this private information.

    For more information, please contact Griffin Alexander, P.C. at (973) 366-1188.

    DISCLAIMER - This posting is intended to provide general information and is not intended as specific legal advice or to establish an attorney-client relationship.

    May 22, 2011:

    Community Associations and Tenants
    Part 1 – Why Associations Cannot Prohibit Tenants
    by Dean L. Semer, Esq.

    With the decreasing housing prices over the last couple of years, there has been the two-fold effect. First, there are owners who would like to sell their units or homes but cannot sustain the loss if the mortgage is higher than the market price, or “underwater.” As these owners wait for home values to increase, some rent their units or homes to tenants. At the same time, as some homeowners were foreclosed upon or needed downsizing from their units or homes, there has been a tremendous increase in the demand for rentals. A community association, especially ones near major transportation stations, near popular cities, in towns with schools held in high regard, or with amenities such as pools, tennis courts, or playgrounds, would certainly be in demand.

    Over the next 4 posts, I will address issues concerning tenants.

    There is a perception among some resident owners that tenants do not care as much about the community and that tenants frequently violate the rules and regulations of the community. The evidence of this is anecdotal and not quantified. Nevertheless, the question emerges as to whether an Association may enact an outright prohibition against the leasing of units or homes.

    Generally, an Association’s governing documents usually provide that owners have a right to lease their units or homes. Then, depending on the particular community, the governing documents usually contain some restrictions. Some common restrictions include:

  • Minimum lease terms - Some communities have restrictions that require leases to be for a minimum of 6 months. In other communities, it is 12 months. Often, the restriction indicates that the unit or home cannot be used for “transient or hotel purposes;”
  • Lease requirements - The lease must be for the entire home; copies of all leases must be furnished to the community association; leases must be in writing; and, leases must be subject to the community association’s governing documents and must provide that any failure to fully comply with the terms and conditions of any of the documents shall constitute a default under the lease;
  • Eviction provision - If the tenant fails to comply with any of the governing documents or rules and regulations, then the Association is permitted to notify the owner and demand remediation of the violation within a certain time frame. If the violation is not remediated, then the owner, at the owner’s cost and expense, must seek to evict the tenant. The matter may not be compromised or settled without the prior written consent of the Association;
  • Attorney-in-fact provision - If the owner fails to fulfill its obligations to in having the tenant comply with the governing documents and rules and regulations, and, the owner does not evict the tenant, then the Association would have the right to seek the eviction and recover the costs from the owner.

    • These types of restrictions are minimum requirements. Using what is generally broad rule-making authority, an Association has the right to impose stricter obligations that supplement, but not replace, the restrictions set forth in the governing documents. Stricter obligations cannot, however, include a prohibition on leasing because, as stated above, owners usually have the explicit right to lease their homes.

    Theoretically, a prohibition on tenants may be enacted if there was an amendment of the governing document provisions. However, as those of you who live in community associations know, amending documents is often a difficult undertaking.

    Moreover, there is probably a section in the governing documents for the benefit of mortgage holders that provides that an amendment that changes the right of an owner to lease the unit or home would also require approval of a very high percentage of the mortgage holders. This would be a Herculean task.

    For more information, please contact Griffin Alexander, P.C. at (973) 366-1188.

    DISCLAIMER - This posting is intended to provide general information and is not intended as specific legal advice or to establish an attorney-client relationship.