NEW BILL THREATENS TO AFFECT LANDLORDS’ ABILITY TO COLLECT RENTS AND OTHER CHARGES
The New Jersey Legislature is meeting Monday, April 12th to consider more bills to provide relief to those impacted by the COVID-19 pandemic. The current bills being considered are varied, but there is one bill in particular which may substantially impact landlords.
S2330 is titled “COVID-19 Financial Security for Consumers Act.” It is a bill that amends N.J.S.A. 2A:17-19 in an effort to provide financial security to New Jersey Residents. Section 3 of the Act prevents the initiating, filing or threatening to file a collection lawsuit, garnishment, seizure, attachment or withholding of wages, earnings, property, or funds for the payment of debt to a creditor. In addition, it covers collection actions with respect to repossession of property and reporting debt.
This Bill is disconcerting because it prevents collection activity for 120 days after the date that a State of Emergency and Public Health Emergency has ended. This means that after the Governor decides that periods are over, a landlord may not even threaten to collect against an individual for another 120 days.
There are several issues that could result from the passage of this Bill that impact landlords.
- The Bill does not differentiate between those who have been impacted by Covid-19 and those who have not. It paints with a broad brush, and prohibits all suits, and threats to sue.
- The Bill may halt all non-payment eviction actions.
- The Bill could impact the extra money currently being spent to sanitize buildings to keep them extra clean during this pandemic.
- Access to the Courts are already restricted, and Landlords are already losing substantial sums of money necessary to run their buildings, much less obtain a profit. To add an additional 120 days of restriction to whenever the Courts open again could have devastating effects.
A landlord who owns a private building, is incentivized to keep residents of its community pleased. Landlords are already hard at work setting up payment plans and keeping their communities safe at all costs. The landlord, however, owns a business too. It is not viable to pass a Bill that could have the effect of depriving a landlord of up to all rental payments during the period of this statute. In an environment in which the Courts are already closed, and the period of time before they reopen being unknown, adding an additional four (4) months of collection forbearance, not only to those who have, for example, lost their jobs, but for everyone, is unduly punitive and could have devastating effects. Landlords need, at a minimum, to cover their costs, and then to make a profit. During this unprecedented time, those who are not suffering a financial hardship are the ones who will allow buildings to remain open and allow proper maintenance to be performed.
If this bill passes, it will remove any motivation a tenant may have to pay rent until the Courts reopen and 120 days thereafter. Even after that period, while many will remain tenants in the buildings they currently occupy, many others will leave rather than face the 6 or more months of rent payments, and leave the Landlords with a perhaps useless collection action.
Also, in a time, when the economy is crashing, this action will take away many more jobs, as landlords are forced to lay off maintenance staff, stop ordering supplies, terminate management companies, halt deliveries from vendors and postpose needed maintenance. The quality of life of residents could be impacted, just when they are forced to stay in their homes to insure social distancing.
Landlords across the state, with the guidance of the New Jersey Apartment Association and others, are already (1) working out payment plans with residents who have advised that they are having financial hardships; (2) increasing cleaning and sanitation in common areas in order to combat the Coronavirus; and (3) halting unnecessary maintenance. These are financial burdens that landlords are facing, and are preparing to face. To add an additional four-month potential rent forgiveness for everyone, paints with too broad a brush, and it is obvious that the impacts of such an action have not been assessed.
Several aspects of the Proposed Bill, in particular those prohibiting threatening to visit the household of a debtor, threatening to visit a debtor’s place of employment, or confronting the debtor in a harassing manner, are unnecessary, as they are already prohibited by the Federal Fair Debt Collection Practices Act.
To require this 120-day waiting period before even advising someone, especially someone who has experienced no hardship, of the possibility of a Court action, will cause landlords to file suits without warning and an opportunity to cure, or put landlords at the end of a long line of litigants who already filed lawsuits, greatly extending the time over which a landlord can recover its lost income.
We understand that times are tough and that Legislators are hard at work to alleviate the hardships that many have suffered. In this instance, however, painting with a broad brush could cause entire communities to suffer.
We are calling upon the Legislature to exempt landlords from this bill. If, for some reason, the Legislature feels compelled to provide this style of relief, the Bill should, at a minimum, be tailored only to those who can establish that they have been substantially impacted by Covid-19, by losing their jobs and not having enough money to pay their rent. Because the 120-day period relevant to this Bill does not commence until the State of Emergency is over, there is adequate time to consider the drawbacks to this Bill and correct them. We recommend that the Legislature confer with the New Jersey Apartment Association and similar trade groups to assure that the interest of all concerned are considered.
The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based upon particular circumstances. Each legal matter is unique, and prior results do not guarantee a similar outcome.
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