A New Jersey court ruled that judges can raise rents if a landlord is blocked from setting increases due to government inaction but a lawyer in the case called it a success for tenants because property owners can’t impose unconscionable rent hikes.
In a landmark decision, a New Jersey appeals court has ruled that judges can raise tenants’ rents if a landlord is blocked from setting increases due to government inaction.
The decision stems from a case in Perth Amboy, where the local government failed to appoint members to the rent control review board for over a decade.
This left landlords without the ability to increase rents, even when their properties were below market value.
The appeals court ruled that, in such cases, trial courts have the authority to determine an appropriate rent considering all relevant factors, including “rate shock.” This means that judges can now set rents above local ordinances caps if local officials fail to do their jobs.
“The absence of such a board creates a void in the rent control framework established by the Legislature to protect the interests of both tenants and landlords,” the Superior Court of New Jersey said in an unauthored opinion. “In these circumstances, we conclude the trial court has the authority to determine an appropriate rent considering all relevant factors, including ‘rate shock.’”
“Doing so would not intrude upon the authority reserved for a rent leveling board because no such entity is functioning in Perth Amboy,” the court said. There’s also some backing for the idea, the court said, because “this alternative process for resolving hardship applications” satisfies a provision in state rent-control law under which a landlord “complies with any and all other laws or municipal ordinances governing rent increases.”
The tenant’s lawyer, Joseph B. Vas, said the case was an example of “what happens when government fails its people.”
A landlord who represented Perth Amboy tenants in his capacity as a lawyer, Vas said he advocated for years to have members appointed to the rent leveling board but the local mayor was unmoved.
As a candidate for mayor who campaigned on the issue in 2020, Vas said the board was defunct for nearly 12 years due to local political inaction.
He saw Tuesday’s decision as the court affirming that landlords simply can’t seek court approval for vast rent increases—a hike in rents must be accompanied by some material reason, such as improvement to the properties or big expenses the landlord takes on for upkeep and safety.
“Ultimately it was a success for tenants,” Vas said. “The court stated no matter what the city does you can’t raise rent in an unconscionable way.”
The decision is a major victory for landlords across New Jersey, who have long been frustrated by the inability to raise rents in accordance with market conditions.
However, it is also a grim indictment of the hardship imposed on residents when local governments fail to function properly.
When elected officials fail to fulfill their duties, it can have a significant impact on the lives of their constituents.
In this case, the failure of the Perth Amboy government to appoint members to the rent control review board left thousands of tenants in limbo, unable to secure affordable housing.
The appeals court’s decision will help to ensure that landlords are able to receive fair compensation for their properties, while also protecting tenants from unconscionable rent increases.