LANDLORDS ASSEMBLE… TO BATTLE RENT CONTROL ORDINANCES!

by: Allan Zhang
18 May 2020

union city rent control

This week’s COVID-19 related hot topic: landlord’s assembling to fight rent control measures in New Jersey. Montclair Township and Union City both recently passed ordinances to implement rent control measures leading to the pending matters.

Montclair Rent Control Ordinance

In Montclair, a number of landlords joined together as the Montclair Property Owner’s Association (“Montclair Assoc.” ).  In an effort to curb rent hikes, Montclair passed an ordinance on April 5 to limit annual rent increases to 4.25% or 2.5% for seniors. The ordinance applies to most apartment buildings that contain more than four residential units. There are several exemptions, including those units in buildings with less than four residential units. On April 16, 2020 the Montclair Assoc. filed its complaint with the Essex County Superior Court requesting an injunction to toll the effective date of the ordinance and citing the ordinance was a violation of due process, invalid exercise of police power, violation of Governor Murphy’s Executive Order 108, and a violation of the New Jersey Civil Rights Act. On April 17, Judge Jeffrey Beacham entered a temporary stay tolling the effective date of the ordinance until 20 days after the State of Emergency has been lifted. The Township of Montclair filed a Motion to Vacate the temporary stay on May 1, 2020 which is scheduled to be heard on May 22, 2020.

Union City Rent Control Ordinance

On May 6, 2020, a different group of landlords joined together by filing a complaint as the Union City Property Housing (“Union Housing”) to combat two of Union City’s recently passed ordinances. The complaint alleges constitutional challenges and also seeks temporary injunctive relief while the matter is pending. On May 13, Judge Joseph Turula entered an order scheduling both parties to appear on June 23, 2020 to argue their sides. No temporary injunctive relief was provided. The first ordinance adopts a rent freeze specifically targeting properties that are already subject to Union City’s rent control ordinance. The ordinance applies retroactively to March 1, 2020. Union Housing contends that the freeze, by depriving the landlords of their vested contractual and property rights constitutes an unconstitutional regulatory taking without just compensation. The second ordinance places a freeze on evictions of tenants due to the COVID-19 pandemic. This ordinance only allows a landlord seeking to collect unpaid rent to file an action in the Law Division, but does not allow for eviction based on the unpaid rent.

It will be interesting to see howthe courts rule on their respective matters. For more information on the Union Housing matter please see the blog post from our Owners Counsel of America colleague, Robert Thomas in inversecondemnation.com.

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