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Osoria v. West New York Rent Control Board

401 N.J. Super. 437, 982 A.2d 1185 (App. Div. 2009)

RENT CONTROL —Where a rent control ordinance applies only to dwellings with more than four residential units, a building can be brought out from under the rent control ordinance by conversion to a building with four or fewer residential units.

In 1997, a mother moved into her son’s apartment in a five-apartment mixed-use building. In 2007, the landlord’s general partner moved into one of the apartments and claimed that the building became owner-occupied. The landlord also renovated the building and removed one of the units, making the building a four-family dwelling. As a result of the building’s “owner-occupied, four-family dwelling” status, the landlord believed that the municipality’s rent leveling ordinance no longer applied to the woman. The tenant refused to pay the rent increase and tendered the lower amount she had previously paid each month to the landlord. She also filed a complaint with the rent control board. The board determined that the building was exempt from the rent leveling ordinance. The tenant challenged the board’s decision.

The lower court dismissed the tenant’s complaint, agreeing with the board that the tenant was not protected by the rent leveling ordinance because the rent leveling ordinance did not apply to owner-occupied, four-family dwellings where a tenant began occupancy after 1994, as was the case here. The ordinance was silent as to a building conversion from one that is subject to rent control to one that is exempt and did not define either a “four-family dwelling” or a “commercial business building.” Nevertheless, the Court concluded that the conversion of the building to make it exempt was irrelevant to whether the tenant was protected under the ordinance because she began her occupancy after 1994. Although she did not challenge the board’s factual findings that the building was an owner-occupied, four-family building, the tenant appealed. She asserted that the board and lower court erred in their interpretation of the ordinance and in their conclusion that her building was exempt from the ordinance.

The Appellate Division affirmed. In doing so, it rejected the tenant’s contention that she had pre-conversion vested rights in the rent control protections when she began occupancy in a five-unit building that was covered by the ordinance. Although the tenant cited several cases in favor of her position, she failed to contradict a conflicting precedent that tenants do not have vested rights in Anti-Eviction Act (Act) protections when the landlord converts the structure to one that is exempt from the Act. The Court, in the prior case, reasoned that giving a tenant a vested right based on the building’s pre-conversion status would be “inappropriate judicial legislature” and inconsistent with the Act as it would countervail the purpose of the exemption assuring owners of a small building that they can reside in the building and have control over the persons with whom they live. The Court acknowledged that within four months of reaching that earlier decision, which rejected the tenant’s contentions, it made a contrary holding supporting the tenant’s position. The Court addressed the conflicting holdings in reaching its conclusion in this case. First, it restated a previous holding that all pre-conversion tenants during the period in which they are protected from eviction are also protected by a rent control ordinance. It then noted that neither the Act nor the rent control ordinance addressed circumstances where structural conversion reduced the number of units in a building so that it becomes exempt. At the same time, it stated that the Act did not address vesting of a tenant’s rights when an ordinance sets a cut-off date for continuing protection of tenants occupying four-family dwellings.

Because the Court had held that protections under rent control ordinances must be at least coextensive with rights under the Act, it determined that the vesting provisions of the municipality’s ordinance only for pre-1994 tenancies did not control the relative rights of the landlord and tenant. It held this was because the municipality did not have power to abrogate a statutory right of tenants who began occupancy after 1994 by enacting a rent leveling ordinance that was inconsistent with the protections of the Act. Next, it held that several provisions of the Act were in “derogation” of tenants’ right against eviction. These provisions addressed both structural changes in the building and changes in the ownership or occupancy of the rental units without any structural changes. The Act only provides temporary protection for tenants whose rights are affected by such provisions, i.e. three months notice prior to eviction, under one section mentioned. It observed that “read literally, the []Act does not support the view that tenants have vested rights to continue their tenancy despite conversion,” except where the Act itself or another statute explicitly establishes such rights. Nevertheless, it recognized such implicit rights based on its perception of the “legislative design” and “purpose” of the Act to protect tenants.

It concluded that if the Legislature intended to establish vested rights for tenants whose rental units were subject to the Act at the time of initial occupancy but later became exempt, there would be little need to enact specific provisions providing rights of limited duration after changes in the status and structure of the rental premises. It held that if this was the Legislature’s intent, vested rights of tenants would apply across the spectrum of conversions and changes in rental buildings, including for demolition and repairs and owner occupancy. Further, there would be no time limitation if the Act created vested rights of remaining tenants where an owner moves into a converted building. It noted that such vested rights were neither addressed in the words nor consistent with the overall scheme of the Act.

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