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Gina Marie, L.L.C. v. City of Hoboken

A-0051-10T3 (N.J. Super. App. Div. 2011) (Unpublished)

RENT CONTROL — Where a rent control ordinance requires both a registration statement and vacancy decontrol certificate to be filed before a vacancy decontrol rent increase can be granted, it doesn’t matter if, over prior years, the rent control board did not strictly enforce that requirement.

A property owner bought a multi-unit apartment building. At the time of purchase, it was aware that the building was subject to provisions of the municipality’s rent control ordinance. The property owner notified one of the tenants that the rent would be substantially increased. The tenant requested the municipality’s rent control administrator to calculate the maximum allowable legal rent. Under the ordinance, whenever a tenant vacated a residential apartment, the ordinance allowed a “vacancy decontrol,” which results in a 25% increase in rent. The benefit of the vacancy decontrol is only available if certain required certificates are present in the municipality’s file. Here, the administrator found no vacancy decontrol certificates in the file and did not allow the property owner to provide extrinsic evidence to show that the prior tenants had voluntarily moved out. Therefore, the administrator ruled that the property owner could not increase the rent by the requested amount.

The property owner sought a hearing before the municipality’s Rent Stabilization Board. The Board upheld the administrator’s determination. The property owner then filed a complaint challenging the board’s decision. It argued that over the twenty-five years preceding the tenant’s request for a calculation of legal rent, the board had always accepted extrinsic evidence of vacancy decontrols without insisting that the vacancy decontrol certificates be present in the file. The lower court concluded that the ordinance served a public purpose by preventing excessive rent increases, the filing of vacancy decontrol certificates was required by the ordinance, and the board correctly interpreted the ordinance. Therefore, the board was not arbitrary, capricious or unreasonable.

On appeal, the Appellate Division affirmed the lower court’s finding, agreeing that the language of the ordinance was clear in stating that both a registration statement and a vacancy decontrol certificate was required before the granting of a vacancy decontrol rent increase. The board had to exercise its powers in strict conformance with the governing ordinance. The board lacked the authority to do anything but deny the property owner’s request because the owner did not have the proper certificates in the file.

The property owner also sought to enjoin the board from applying the ordinance as written. However, to claim equitable estoppel, the property owner had to show that the board engaged in conduct, either intentionally or under circumstances that induced reliance, and that the property owner relied on the board’s conduct to its detriment. Here, the Court found no evidence of any detrimental reliance. Lastly, the ordinance served a valid public purpose because it allowed the administrator to accurately determine the base rent. For all these reasons, the Court found that the board did not act arbitrarily and capriciously when it refused to approve the property owner’s request.

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