COMMON (AND NOT SO COMMON) DEFENSES TO EVICTION. All leases of residential real property include an implied warranty of

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1 COMMON (AND NOT SO COMMON) DEFENSES TO EVICTION (1) HABITABILITY All leases of residential real property include an implied warranty of habitability. The seminal New Jersey Supreme Court decision is Marini v. Ireland, 56 N.J. 130 (1970) which involved the right to repair and deduct. In Marini, a tenant's toilet broke. Two days later she called a plumber who repaired the toilet. She then deducted from her rent the cost of the repair. The landlord subsequently sought to evict her for non-payment of rent. The court dismissed the Complaint and expanded the implied warranty of habitability by allowing the tenant the right to make repairs and deduct the cost from tenant's rent. Portions of the case read as follows: In a modern setting, the landlord should in a residential letting be held to an implied covenant against latent defects which is another manner of saying habitability and livability fitness. Actually it is a covenant that at the inception of the lease, there are no latent defects in facilities vital to the use of the premises for residential purposes because of faulty original construction or deterioration from age or normal usage. And further it is a covenant that these facilities will remain in usable condition during the entire term of the lease. In performance of this covenant the landlord is required to maintain those facilities in a condition which renders the property livable. In limiting the scope of the warranty, the court stated, "The nature of vital facilities and the extent and type of maintenance and repair required is limited and governed by the type of property rented and the amount of rent reserved." The tenant's right to repair and deduct was stated clearly:

2 If, therefore, after appropriate notice a landlord fails to make the repairs and replacements of vital facilities necessary to maintain the premises in a livable condition for a period of time adequate to accomplish such repair and replacements, the tenant may cause the same to be done and deduct the cost thereof from future rents. The tenant's recourse to such self-help must be preceded by timely and adequate notice to the landlord of the faulty condition in order to accord him the opportunity to make the necessary replacement or repair. If the tenant is unable to give such notice after a reasonable attempt, he may nonetheless proceed to repair or replace. If, on the return date of a non-payment of rent case, a tenant raises a "Marini" defense and has not effectuated the repairs, they must be prepared to deposit with the court all of the base rent which is due. The court will not require the tenant to pay late charges, legal charges, or the like if the court agrees to entertain the tenant's position. If the tenant is unable to "post" the base rent that is due, the court will generally not allow a Marini defense to proceed. If the tenant is prepared to post the rent, various things can happen. Generally, the court strives to have litigants resolve their differences between themselves. Towards that end, the court may direct the tenant to provide the landlord with a written list of items which the tenant claims are in need of repair. The tenant will then be required to deposit the rent that is due with the clerk of the court pending the repairs. If the repairs are made to the satisfaction of the tenant, (i) it can be agreed between the parties that the money on deposit be released to the landlord; or (ii) the tenant may request a Marini hearing to try to obtain an abatement in their rent for the period of time they claim the unit was uninhabitable. An abatement may be granted based upon a

3 judge's appraisal of the diminution in the value of the use of the premises for the period the defect existed. The tenant's Marini defense must directly affect the habitability of the premises. Potholes in the driveway or peeling paint on the outside of a house would not likely qualify. Failure to provide heat, hot water, plumbing or sewerage disposal renders the premises unsuitable for human habitation and clearly meets the Marini criteria. Some factors to be considered in determining whether defects affect habitability of premises (and thus can be considered in determining amount of rent abatement) are whether the condition violates applicable housing code or sanitary regulations, whether the condition affects vital facility, the effect of the condition on safety and sanitation, the duration of the condition, the age of the structure, the amount of rent, and whether the tenant waived the right to object to the condition or was responsible for the condition. C.F. Seabrook Co. v. Beck, 174 N.J. Super. 577, 417 A. 2d 89 (A.D. 1980). In Chess v. Muhammad, 179 N.J. Super. 75, 430 A. 2d 928 (A.D. 1981) the court held that tenants were not entitled to an abatement in a summary dispossess action for failure by the tenant to pay rent when the landlord repaired a defective condition within a reasonable time after learning of its existence. In another case on point, a court said the failure by a landlord in a multistoried building to supply heat, hot water, garbage disposal, or elevator service was a breach of implied covenant of habitability and could be considered in diminution of rent; but the malfunction of Venetian blinds, water leaks, wall cracks and lack of painting were

4 primarily amenities and would not be considered in diminution of rent. Academy Spires, Inc. v. Brown, 111 N.J. Super. 477, 268 A. 2d 556 (1970). (2) RETALIATION OR REPRISAL New Jersey Statute 2A: provides that no landlord of residential premises, except owner occupied with not more than 2 rental units, shall serve a notice to quit upon any tenant or institute any action against a tenant to recover possession of premises: a. As a reprisal for the tenant's efforts to secure or enforce any rights under the lease or contract, or under the laws of the State of New Jersey or its governmental subdivisions, or of the United States; or b. As a reprisal for the tenant's good faith complaint to a governmental authority of the landlord's alleged violation of any health or safety law, regulation, code or ordinance, or State law or regulation which has as its objective the regulation of premises used for dwelling purposes; or C. As a reprisal for the tenant's being an organizer of, a member of, or involve din any activities of, any lawful organization; or d. On account of the tenant's failure or refusal to comply with the terms of the tenancy as altered by the landlord, if the landlord shall have altered substantially the terms of the tenancy as a reprisal for any actions of the tenant set forth in subsection a, b and C. Substantial alteration shall include the refusal to renew a lease or to continue a tenancy of the tenant without cause.

5 Under subsection b of this section the tenant shall originally bring his good faith complaint to the attention of the landlord or his agent and give the landlord a reasonable time to correct the violation before complaining to a governmental authority. A landlord shall be subject to a civil action by the tenant for damages and other appropriate relief, including injunctive and other equitable remedies, as may be determined by a court of competent jurisdiction in every case in which the landlord has violated this statute. (3) WAIVER The issue of wavier most commonly arises when tenants (i) have pets in violation of a lease or, (ii) pay rent habitually late in violation of a lease. The rule is that where a landlord has knowledge of a cause for forfeiture (eviction) and he continues to recognize the tenant and the existence of the lease, he waives the forfeiture. In simple terms, if you have a right to evict a tenant on one of the statutory grounds for a summary dispossess action, and you delay exercising that right, it may be waived. Waiver is a question of fact, not law, for a court to determine. There are a number of court decisions on this issue. The clearest example of a landlord waiving its right to evict would be the acceptance of rent from a tenant after a court has entered a judgment of possession without first entering into a written consent judgment. If a landlord serves a Notice to Quit upon a tenant (which as you know should contain a demand for possession) and then accepts rent after the service of the notice, the landlord has waived its right to proceed against the tenant based on that notice. Burstein v. Liberty Bell Village, Inc., 120 N.J. Super. 54, 293 A.2d 283 (1972) I have seen landlords do this unknowingly. Tenants do not generally know the landlord is

6 precluded from accepting the rent. Despite receiving a valid Notice to Quit, tenants may attempt to pay their rent in the usual manner. Whenever a Notice to Quit is served upon a tenant, a landlord should not accept rent. But all is not always lost, if the landlord receives and processes such a rent payment. If a landlord has served a Notice to Quit, and the tenant delivers payment to a landlord's representative, mails in the rent, or drops it into a lockbox of the landlord's designed for that purpose, the payment should be returned immediately. If the payment was negotiated (cashed), a landlord can mail one of its own checks back to the tenant with a brief explanatory letter. Otherwise, depending on the statutory section the tenant violated, a landlord may be able to serve a new Notice to Quit. A leading New Jersey case on waiver provided that where the sale of bus tickets had been engaged in by tenant for a long time to landlord s knowledge and during that time regular rent had been tendered and accepted, the landlord waived alleged breaches of use covenant resulting from sale of tickets; equity and good conscience would require reasonable notice from the landlord to the tenant to discontinue the practice and from thenceforth to abide by use limitations of the lease and, unless such notice was served and bus tickets sold thereafter, equity should bar forfeiture of the lease on basis of the sale of tickets. Carteret Properties v. Variety Donuts, Inc., 49 N.J. 116, 228 A. 2d 674 (1967). (4) UNCONSCIONABILITY

7 A tenant may raise the defense of unconscionability when a landlord seeks to impose new terms upon the tenant that did not previously exist. This is generally seen in the context of a rent increase that the tenant feels is unreasonable. In New Jersey, a number of municipalities have rent control ordinances, limiting the percentage a landlord may increase a tenant's rent. As another example, I argued and won a case in the Appellate Division of the Superior Court for a landlord who discontinued the use of a central "air conditioning" type system in a 50 unit apartment building. Some tenants refused to sign a renewal lease that did not obligate the landlord to provide this service. The tenants contended that an unconscionable lease change had been foisted upon them. The landlord contended that the change was out of necessity (the old system was damaging the building from leaky pipes in the walls), and the tenants were free to install their own air conditioners. The Appellate Division found that the lease was reasonable even though it did not obligate the landlord to provide a service as it had previously. (5) BANKRUPTCY The filing of a petition in bankruptcy (Federal Court) stays any case in State Court, against the filing party. If a landlord seeks to pursue a tenant during the pendency of a tenant's bankruptcy proceedings, they must apply to the Bankruptcy court for permission to pursue the tenant in bankruptcy court, or ask the Bankruptcy court for permission to pursue the eviction action in State Court.

8 Briefly, in bankruptcy, a lease must either be assumed or rejected. If it is assumed by the tenant, the landlord will be paid all rent that is due. If it is rejected by the tenant, the landlord has a right to take possession. In either event, if a tenant ceases paying rent, a landlord should move expeditiously after a bankruptcy filing by a tenant to vacate the Automatic Stay so that possession of the premises may be recovered. Section 311 of the Bankruptcy Reform Act of 2005 amends Code sec. 362(b) to provide that certain new exceptions from the automatic stay are established for landlords seeking to evict tenants. The first exception to the stay, Code sec. 362 (b)(22) allows the continuance of any eviction proceeding involving the debtor s residential property in which the landlord obtained a judgment of possession prior to the filing of the bankruptcy petition. 362(l) of the Code allows a tenant to deposit all of the rent that is due with the clerk of the court. This would enable a tenant to make an application for relief from the judgment of possession with the tenancy court. The second exception to the stay, Code sec. 362(b)(23) deals with evictions based on endangerment of the premises or illegal use of controlled dangerous substances at the rented premises. This section would apply if the eviction proceeding was commenced before the filing of the bankruptcy case, or if the endangerment or illegal use occurred within 30 days before the bankruptcy filing.

9 In either case, the landlord is required to file a certification with the bankruptcy court setting forth the facts the landlord alleges give rise to the exception, and the debtor would be able to contest the application. (6) TRANSFER TO SUPERIOR COURT I have included transfer to Superior Court under defenses, but it is more aptly entitled claim for off set. Because actions in the Landlord/Tenant court are summary proceedings, and the jurisdiction of the court is limited to awarding possession of the premises, the Rules of Court provide that a tenant may make a claim for relief which exceeds the Jurisdiction of the Special Civil Part by having the case transferred to the general jurisdiction of the Law Division. This procedure requires the tenant to file and serve a motion in the Landlord/Tenant Court. The leading case in New Jersey for the factors and standards considered on a removal motion is the 1970 case of Morroco v. Felton, 112 N.J. Super The recent trend in the landlord/tenant courts is away from favoring the transfer. That is, the tenancy court judges are retaining jurisdiction over the cases. Generally the judges allow the parties to engage in limited discovery which is otherwise not contemplated in the Court Rules of procedure in summary dispossess cases. (7) LANDLORD REGISTRATION ACT As explained in detail above, if a landlord fails to comply with the Landlord Registration Act, a judgment of possession may not enter.

10 (8) SECURITY DEPOSIT ACT If the landlord fails to notify the tenant of the location of the tenant's security deposit within 30 days after receipt, the tenant may elect to apply the deposit to the current rent due. See a detailed discussion of security deposits above. (9) RELOCATION ASSISTANCE When a landlord seeks to permanently board up or demolish the rented demised premises because of housing or health code violations, the Anti-Eviction Act, subsection (g) provides that no warrant of removal shall be issued until the Tenant Relocation Assistance Act (N.J.S.A. 52:31B1 and 20:4-1) provisions have been met. (10) PAYMENT OF RENT By far, the most common defense tenants raise to a landlord s allegation of non-payment of rent, is payment. The law provides: (1) That if a tenant pays the outstanding rent together with the accrued costs of the proceedings, he may have the proceedings dismissed, Community Realty Management, Inc. v. Harris, 155 N.J. 212, 714 A.2d 282 (1998), and N.J.S.A. 2A: (11) No Right of Reentry Reserved When a landlord seeks to terminate a tenant s right to possession of demised premises based upon the breach of a lease covenant (or lease term) the lease must contain a reservation in the landlord to the right of reentry for such breach. Absent such a reservation of rights, the landlord s only recourse is to sue for money damages in a breach of contract case.

11 (12) Requirements for an Attorney Unless the landlord is a sole proprietor or a partner in a general partnership, an attorney must be used to file the court papers AND appear in court on the landlord s behalf. If a corporation or an LLC either files papers or appears in court without legal counsel the case is subject to being dismissed for violation of Court Rules (Cited in an earlier section of this manual.) (13) Improper, Missing, or Defective Notice to Cease and/or Quit A properly formatted Notice to Quit, and Notice to Cease, if required, is a jurisdictional prerequisite to the entry of a judgment for possession under most grounds of the Anti- Eviction Act. If any required Notice was not served, the Complaint MUST be dismissed and a Landlord will have to start the eviction procedure over.