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NJ Rent Control & Consumer Fraud: Violations of Rent Control Laws Are Actionable As Consumer Fraud

Local rent control laws are an important part of maintaining an affordable housing supply in densely populated areas. Prior posts explained the basics of rent control and some nuances between cities. Generally, tenants who pay rent in excess of the rent control rent (the “legal rent”) have two remedies. The first is an application to the local rent control board (sometimes called a rent leveling board) for a credit. The credit allows a tenant to pay a reduced rent going forward until the tenant “catches up” with the overcharge. The second remedy is much more powerful. Violations of rent control ordinances are actionable under the New Jersey Consumer Fraud Act (the “CFA”). Under the CFA, a rent control overcharge may entitle a tenant to triple damages and mandatory attorney’s fees. The principle that a rent control violation is also a consumer fraud violation comes from an Appellate Division decision called Wozniak v. Pennella, 373 N.J. Super. 445 (App. Div. 2004).

In Wozniak, tenants sued the their landlord once they realized they were paying more rent than was allowed under their city’s rent control ordinance. The tenants paid an illegal rent for some time. Rather than sue only for a refund of the over-payment, the tenants alleged that a violation of rent control is a violation of the Consumer Fraud Act. At trial, the judge concluded the landlord violated the CFA by “affirmative act.” This finding was crucial to the tenants’ case.

A violation of the Consumer Fraud Act by “affirmative act” does not require the plaintiff to show that the defendant intended to commit a violation of the CFA. In a landlord-tenant context this is critical. Most rent control laws are nuanced and specific. If a landlord is not diligent, he may unknowingly violate rent control. For consumer fraud purposes, it does not matter. Violations of the CFA by affirmative act do not require intent. Even an innocent and unknowing violation of rent control can trigger triple damages under the Consumer Fraud Act. The CFA is triggered the moment a tenant pays an illegal rent.

The policy behind this principle is simple. No one is forced to be a landlord. When someone chooses to be a landlord that person is charged with the responsibility of complying with rent control. As far as the law is concerned, if you don’t want to take the time to comply with rent control, don’t be a landlord. Rent control and the CFA are designed to protect tenant-consumers. To allow unknowing violations is to allow ignorance to circumvent the purposes of rent control and the CFA.

When the case finally made its way to the Appellate Division, the court concluded that rent control and the CFA must be read together in the broadest sense. Practically, this means that a tenant is not forced to choose between a credit from the rent control board and triple damages under the CFA. In fact, a tenant may be entitled to both. Accordingly the court, holding a landlord liable under both enhances the “laudatory purpose of the CFA.”

Once a tenant is aware of a rent control violation it is important to consult an attorney right away. Thinking a landlord violated rent control is much different than proving it. In fact, just as landlords are charged with following rent control tenants are required to follow the agency process for securing a legal rent determination. Failing to follow any step along the way can be fatal to a rent control CFA case.

Since the facts of each circumstance vary, a landlord or 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, Paterson, Passaic County). The Firm invites you to visit the “Promises” page for our new way of doing business. Contact us