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Brandt v. Diego

A-5445-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

LANDLORD-TENANT; RENT CONTROL—A rent control exemption for “dwelling with four or less housing spaces” refers to the number of apartments owned by a particular landlord within a building, not the total number of apartments within that building.

A landlord sough to evict tenants based on the tenants refusing “to pay a reasonable rent increase.” The lower court determined that the condominium unit that the landlord rented to her tenant was subject to the municipality’s rent control ordinance. Based on that presumption, it held that the increase in rent was invalid and that the landlord was required to seek approval for any rent increase from the municipality’s rent leveling board. The landlord appealed, and the Appellate Division concluded that the ordinance did not apply to the landlord in question who only owned a single condominium unit. Under the rent control ordinance, a dwelling was defined as “[a]ny building or structures rented or offered for rent to one or more tenants or family units.” But, “[d]wellings with four or less housing spaces” were “[e]xempt from this definition.” The lower court construed the ordinance’s provisions “to apply based on a number of condominium units in the building.”

The Appellate Division, disagreeing, concluded that the “ordinance [could not] be read to apply to the rent for a condominium unit unless the landlord has five or more rental units in the ‘dwelling.’” In reaching this interpretation, the Court looked at the critical definition of “housing space.” It emphasized that a housing space was a portion of the dwelling that was “rented or offered for rent for living and dwelling purposes.” Accordingly, the Court believed that “[i]f the governing body had intended to control rent on the basis of the total number of ‘units for living and dwelling’ in the ‘dwelling’ it would have done so, but instead the governing body carefully limited rent control based on the number of units in the ‘dwelling’ that are ‘rented or offered for rent.’” In its mind, the Court believed that the “drafters of this ordinance focused on the number of rental units. [Further] [t]hat focus [could not] be reasonable unless the reference [was] to the number of units held by each landlord. This [was] so because the relationship addressed by rent control ordinances is the one between landlord and tenant; the ill sought to be cured by rent control is a landlord’s exploitation of a tenant.” Further, the New Jersey Supreme Court had previously “identified the rationale for excluding landlords who offer a small number of units for rent from the scope of rent control regulations.” Specifically, the Supreme Court had held that “[p]rofessional landlords of large apartment complexes were perceived as being less caring or responsive to tenants’ demands than landlords of single-family or two-family rental units. ... Further, it was recognized that municipalities are reluctant to subject landlords of single-family or two-family rental units to the burden of complying with the complicated and burdensome provisions existing in most rent control ordinances.”

The Court gave a number of examples illustrating what it felt to be “the irrationality of an exemption” based on the individual landlord rentals. One example it gave was as follows: “Five individuals who each own one unit in a condominium building with separate living units would each be subject to the rent control ordinance regardless of the number of units in the building. In contrast, one individual who owns four rental units in an identical building would not be subject to rent control unless another owner also rented a unit and five individuals who own single-family, detached dwellings located on the same city street also would be exempt.” The Court felt that such distinctions did “nothing to further the purpose of rent control,” and declined to construe the ordinance otherwise.

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