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NJ Residential Tenants & Illegal Apartments: Can a Landlord Deduct Back Rent from the Relocation Benefit?

As the prior post mentioned, illegal apartments are growing problem in Northern New Jersey cities like Newark, Hoboken, and Jersey City. For starters, the relocation statute, N.J.S.A. §2A:18-61.1h states that tenants displaced because of an illegal occupancy are entitled to a payment of six times the monthly rent from the landlord. In many cases, “displaced because of an illegal occupancy” means that a landlord maintains units in n building beyond what the zone for that area provides (for example, a three family apartment building in a two family zone). An evicted tenant is then entitled to the relocation benefit under 61.1h. A common question posed by illegal apartment tenants is: Can my landlord deduct rent I owe from my relocation benefit? The problem was addressed by the New Jersey Supreme Court in the Miah v. Ahmed, 179 N.J. 511, (2004).

The tenant in Miah v. Ahmed, lived in an illegal apartment and stopped paying rent. The landlord sued, in a separate action, for the rent owed in a case sounding in unjust enrichment. When the tenant was awarded relocation benefits in a landlord-tenant case, the landlord’s position was that any rent owed by tenant should be deducted from the relocation benefit to be paid. After analyzing the text of the relocation statute, the court concluded that a landlord had no right to deduct (or setoff) the rent owed by tenant from the relocation benefit. In short, tenants who occupy illegal apartments may be entitled to six months rent as relocation regardless of any back rent owed.

There is a finer point of distinction to be made. In Miah v. Ahmed, the landlord sought to recover to rent owed by way of deducting it from the relocation to be paid. Although the New Jersey Supreme Court ruled that the landlord may not setoff, the court did not reach the issue of whether the landlord was entitled to some payment from the tenant in another action. Whether the landlord is owed back rent is the collision between the public policy against landlords making money off of illegal apartments and equitable principles such as unjust enrichment. A case on point is McQueen v. Brown, 342 N.J. Super. 120 (App. Div. 2001) but is outside the scope of this post. Tenants who fail to pay rent in illegal apartment contexts should be prepared for the possibility of liability arising from another action. A consultation with Offit Kurman can help a tenant along the road of securing a relocation benefit from their landlord and out of their illegal apartment.

Since the facts of each circumstance vary, a tenant should consult an attorney with his/her specific circumstances. Offit Kurman practices landlord tenant law throughout New York and New Jersey assisting tenants in avoiding unnecessary and costly delays. The firm’s geographic practice area includes: New York City (Manhattan, New York County, Brooklyn, Kings County, Queens, Queens County, Bronx County, Staten Island, Richmond County) and New Jersey (Jersey City, Hoboken, Bayonne, Hudson County, Newark, Essex County, Woodbridge, Middlesex County). The Firm invites you to visit the “Promises” page for our new way of doing business. Contact us today for a guaranteed free initial consultation.