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Overcharging Rent-Controlled Tenants Could Lead to Penalties

April 9, 2019 Posted in Landlord/Tenant Law

Rent control ordinances are handled at the municipal level in New Jersey, and this leads to significant variance from city-to-city.  It’s important to understand, however, that violations of rent control ordinances are handled by state law.

Rent control is a frequent source of conflict in the landlord-tenant context, as rent increases are tightly regulated and rent overcharging can lead to substantial civil penalties.  If you find yourself embroiled in a rent control dispute with your tenant, or if you’re just interested in having an attorney evaluate whether you are in compliance with applicable laws, contact Griffin Alexander, P.C., for guidance.

Dual Penalties for Overcharging in New Jersey

In the state of New Jersey, overcharging for a rent-controlled property could give rise to two penalties: the first under the local rent control board, and the second under the New Jersey Consumer Fraud Act.

If the tenant successfully petitions the local rent control board, they will award credit that can be used to reduce the tenant’s rent until their payments balance are leveled off with the amount they were overcharged.

For example, if you overcharged the tenant $100 for half a year ($600), then the local rent control board might give the tenant a $200 credit to reduce their rent until the amount owed is balanced at zero.

If the tenant brings a lawsuit against their landlord for overcharging under the Consumer Fraud Act, then the penalties are much more significant — under the Act, the landlord could be forced to pay treble damages (equivalent to three times the loss) as well as attorneys’ fees and costs.

For example, if you overcharged the tenant $10,000 rent over the course of a year, then under the Consumer Fraud Act you might be required to pay $30,000 in treble damages, in addition to attorneys’ fees and costs.

Pleading the “Ignorance” Defense

As a landlord, to avoid liability under the Consumer Fraud Act you can argue that you were not aware of the fact that they were overcharging rent (as you did not realize that the rent control ordinance applied to the property at issue).

This is a complete defense, and could shield you from damages altogether, but it isn’t an easy defense to successfully assert.  Whether the defense will stand depends on the overall circumstances — if you are a casual landlord (i.e., this is your one rental property), then the court is likely to believe that you were reasonably ignorant of the application of the rent control ordinance.  If you are a professional landlord (i.e., you operate multiple rental properties, and it is your only job), then the court is much less likely to accept the ignorance defense.

Contact an Attorney Experienced in Handling Landlord-Tenant Law in NJ

At Griffin Alexander, P.C., our attorneys have decades of combined experience representing the interests of residential landlords in disputes centering around the application of landlord tenant law in NJ, including those that involve a violation of local rent control ordinances.

We understand how administratively and psychologically burdensome being a landlord can be (all things considered), and how much pressure is imposed on a landlord for charging rent that he or she believes is reasonable under the circumstances.  We’re here to help you navigate the complexities of such a dispute.

Ready to learn more about your rights and how you can protect yourself from a rent-controlled tenant’s lawsuit?  Call 973-366-1188 or request an appointment through our website to get in touch with one of our attorneys today.

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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