Case Law Summaries

United Property Owners Association of Belmar v. Borough of Belmar

• Opinion Date: July 16, 2001
• Real Property Law
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LEASES; REGULATIONS—A shore community with proven problems arising out of short term seasonal rentals has wide latitude in regulating such rentals and such regulation need not apply equally to year-round rentals.

A shore community adopted an ordinance regulating summer rentals. A group of property owners and some of its constituent members sought to invalidate the ordinance. The lower court determined that the ordinance was constitutional, was not selectively enforced, did not impose liability on all tenants for occupancy violations, did not constitute a taking, and did not impose punitive fees. It did invalidate certain provisions of the ordinance and found that the some parts of the ordinance violated the Federal Fair Housing Act. Neither the municipality nor the owners’ association was pleased with the lower court’s determination and each appealed to the Appellate Division.

One issue was the manner in which the occupancy limitation was calculated under the ordinance. The ordinance relied on the BOCA Code, which required rooms occupied for sleeping purposes to be of a minimum size and required that each occupant within such rooms be allocated a minimum floor area. The BOCA Code prohibited occupancy of kitchens, “nonhabitable spaces and interior public areas.” The municipality interpreted the phrase “interior public areas” as including living rooms, but the property owners argued that the reference to rooms “occupied for sleeping purposes,” rather than to bedrooms, implied that non-bedrooms could be used for sleeping purposes. The Court rejected the owners’ interpretation that all “‘habitable space’ except kitchens could be used for sleeping.” Instead, it concluded that the municipality’s interpretation that “interior public areas” included living rooms was reasonable and consistent with a logical reading of the ordinance.

The owners also contended that the ordinance recited a legislative purpose of specifically addressing summer rentals and therefore the occupancy requirements were drafted to apply only to such summer rentals. Their argument was that the ordinance should be applied to all properties and that to do otherwise was a violation of “equal protection” rights. The Court dismissed those arguments for two reasons. First, it found that the municipality was applying the ordinance to all occupancies, not just summer rentals. Second, it afforded the presumption of validity to the ordinance, finding a rational basis in the municipality’s approach to “abating the overcrowding and resulting unacceptable conduct and conditions that occur in summer rentals.” Essentially, in accordance with prior New Jersey Supreme Court rulings, the Court held that municipalities may address overcrowding directly and because such overcrowding problems occurred predominantly in summer rentals, it is appropriate to direct enforcement of the ordinance’s occupancy restrictions solely to summer rentals.

The ordinance prohibited locks on bedroom doors that could be locked from outside the rooms, required smoke detectors, and required that “beds, mattresses, futons or sleeping bags” be located only within bedrooms. It further prohibited the use of “curtains, sheets, cardboard or any other material of any kind” as “temporary partitions between beds or sleeping areas.” The owners association argued that the state Uniform Fire Code preempted these restrictive requirements. The Court rejected this argument because the Uniform Fire Code and the administrative regulations thereunder do not bar more stringent standards than those set forth in the Code. According to the Court, such regulations were “rationally related to the legitimate government interest in containing the fire hazard caused by summer overcrowding.” As to the property owners’ complaint that the municipality more stringently enforced these regulations against summer rentals than against non-summer rentals, the Court did not agree that such activities on the part of the municipality violated either the equal protection principles or the Uniform Fire Code.

The property owners also argued that the municipality selectively enforced the ordinance by focusing on summer rentals as opposed to year-round residents. The Appellate Division found “no merit” in the claims that the municipality’s officials demonstrated favoritism or arbitrariness. It did not feel that directing enforcement of the ordinance to the problems created during the summer season was arbitrary or unjustifiable. Instead, “it was reasonably related to the legitimate government objective of abating the unsafe and undesirable conditions caused by overcrowding.”

The property owners also objected to a portion of the ordinance that made all tenants of a property strictly liable for violations of the occupancy limitations. “Generally, unless fundamental rights are involved, ‘a state statute does not violate substantive due process if the statute reasonably relates to a legitimate legislative purpose and is not arbitrary or discriminatory.’” Also, “strict liability is a permissible tool for a municipal ordinance that is attempting to deal with a serious health and safety problem.” In essence, the Court was looking at the “realities of the tenancies.” As such, it felt that “imposing liability for the misdeeds of fellow tenants is an acceptable burden to be assumed by all.

The property owners also challenged the ordinance, asserting that it “so severely restricted a use of and ability to rent their properties that its enforcement constituted a taking of private property for public use… .” The Court rejected that complaint, essentially on the grounds that the regulation did not deprive the owners of “virtually all economically viable uses of [their] property.”

The ordinance also restricted the number of occupants in a summer rental during certain evening hours. The lower court upheld that provision, believing that it did not constitute a curfew. The Appellate Division, while agreeing that no curfew was created, found that the ordinance interfered with a summer resident’s right to have visitors in his or her home. As such, it violated a right to privacy and was overbroad in accomplishing what was otherwise a legitimate municipal goal.

The ordinance also required that rentals to families with children, “for any time from September 15 to May 15, not be occupied for the summer until the third day after the last day of the school year.” The lower court invalidated this portion of the ordinance as unconstitutional under the Commerce Clause and as discriminating on the basis of family status. As a result, it granted counsel fees under the Federal Fair Housing Act. That Act provides, in relevant part, that “it shall be unlawful ... [t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling ... because of ... familial status.” The Appellate Division held that the property owners had standing even though they were not members of a protected class. That was because they would suffer actual injuries as a result of the ordinance. Further, the purchase or rental of residential housing is a commercial economic activity that affects interstate commerce. The ordinance on seasonal rentals following the tenancy of a family with school-aged children affects the housing rental industry. Therefore, the Appellate Division held that the lower court was correct in considering the Commerce Clause when rejecting this particular provision of the ordinance. Further, the Court held that the ordinance authorized “discriminatory treatment of dwellings rented to families with school-aged children,” and that although this may have been well-intentioned, “such treatment constitutes discrimination on the basis of familial status in violation of” the Federal Fair Housing Act.

The lower court also invalidated provisions of the ordinance that required that a written lease for summer rental be “executed by all adult persons who will be tenants,” and be accompanied by affidavits of each tenant regarding other residences, including a copy of a driver’s license or alternative proof of identification, and listing the names of all minors who would occupy the dwelling unit. The application was also required to include a signed acknowledgment regarding the maximum permitted occupancy for summer rental and an acknowledgment of the limitation for the number of persons that may occupy a building during evening hours. The lower court struck down this provision of the ordinance because it implicated privacy interests and could “provide details of familial relationships and other intimate living arrangements.” In essence, the lower court believed that the ordinance was not properly tailored to the end that it sought to be achieved and that the municipality did not need to know the names of the tenants or their addresses or other personal information to enforce an occupancy limit. The Appellate Division upheld the lower court, except that it believed that it was acceptable to require tenants to submit affidavits acknowledging their rentals’ occupancy limits.

The Appellate Division then reversed the lower court’s finding of unconstitutionality with respect to a provision of the ordinance that prohibited temporary certificates for summer rentals. Essentially, various property owners “complained that minor violations such as dirty windows, dirty carpets, a window sill requiring painting, two different colors of paint on soffits, untrimmed hedges, a crack in the sidewalk, a crack in the corner of a window, or rust on a can of shaving cream in the medicine cabinet prompted license denials.” The lower court found that there was no rational basis for the municipality’s position that, because of past violations of some summer landlords, no temporary or conditional licenses would be issued to summer rentals. Instead, the lower court held that the municipality could cite landlords for non-compliance with conditional licenses if violations were not corrected by the expiration of the license. In contrast, the Appellate Division found no statutory or other right to temporary certificates. It accepted the municipality’s argument that the temporary certificates could not be monitored because the relatively short term leases and the inspection and reinspection cycle would mean that summer rentals would take place while property deficiencies remained uncured. Essentially, the Court agreed with the municipality that property owners could arrange for inspections at an earlier date and eliminate the need for temporary certificates.

Based on a similar analysis, the Appellate Division analyzed several other minor provisions of the ordinance, including regulations with respect to signs and exterior decorative lighting.

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