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McQueen v. Brown

2002 WL 31261175 (N.J. Supr. Ct. 2002)

LANDLORD-TENANT; EVICTION —Having a certificate of occupancy is not required before rent can be collected and the owner-occupied exception to the Anti-Eviction statute does not require that the owner maintain his or her principal residence at the house.

The owner of a three-floor apartment building had her primary residence outside of New Jersey “but, for the past twenty years, she and her mother [] used the second-floor unit of the apartment building on weekends, holidays, and vacations.” Her apartment was fully furnished and she received certain bills there. Her cousin, who did not pay rent, occupied the third-floor apartment. She also leased the first-floor apartment to a tenant that had been withholding rent for six months. The building owner sought to remove the tenant for non-payment of rent. The tenant claimed that the rent was illegal and therefore unenforceable because the building owner “had not obtained a municipal occupancy permit” as required by the municipal ordinance. The lower court agreed, “concluding that no rent was due and owing because [the landlord] had failed to obtain an occupancy permit before renting the apartment” or at any subsequent time. As a result, the property owner brought a different action seeking to remove the tenant under the Anti-Eviction Act, “claiming the unit was exempt from the Act’s good cause grounds for eviction because the premises were owner-occupied with not more than two rental units.” The lower court dismissed the complaint, concluding that the owner’s limited occupancy of the second-floor apartment, “consisting of eight or nine days per month, did not qualify the unit as ‘owner occupied’ under the statutory exemption; therefore, she could not evict the tenant[] without good cause.” On appeal, the Appellate Division reversed both of the judgments. It “concluded that the lease was not automatically void simply because the landlord failed to obtain [an] occupancy permit as other equitable factors must be considered, including: consideration of the public policy underlying the ordinance violated, whether voiding the lease will further that policy, the burden or detriment to the parties of the lease is voided, and the benefit which the party seeking to avoid the bargain has enjoyed.” After applying those factors, the Appellate Division found that the lower court erred by declaring the lease void and unenforceable. In doing so, it “noted that the policy behind the ordinance – a process to ensure that rental housing would be safe and habitable prior to the tenant moving in – is not advanced by a rule that would declare the lease void because the landlord did not obtain an occupancy permit where the tenants have been living in the unit for almost five years, receiving the benefits of occupancy, without demonstrating that the unit was uninhabitable.” According to the Appellate Division, “it would have been better for the trial court to adjourn the matter and allow the landlord the opportunity to apply for the appropriate permit and then conduct a hearing to determine if the tenants [could] prove that the premises were uninhabitable.” Declaring the lease void after such a long period was felt to be “an unjustifiable burden on the landlord, and an undeserved benefit to the tenant… .” As to the question of “part-time occupancy,” and whether that was enough to “enable her to be considered an ‘owner-occupier’ was held by the Appellate Division to be one of first impression.” The Appellate Division concluded that, “based on the legislative history of the Anti-Eviction statute and the Act’s plain language, the ‘owner-occupied premises’ exception should be construed as not requiring the owner-occupier to permanently occupy or use the unit as the owner’s principal residence to qualify for the exception. The amount of time that is required for [an] owner to live in the residence is fact-sensitive,” and the Court was satisfied that, in this case, “eight or nine days a month was sufficient to qualify [the owner] as an owner-occupier.” On further appeal to the New Jersey Supreme Court, the landlord’s position was upheld and the judgment of the Appellate Division was affirmed.

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