David Brogan is the executive director of the New Jersey Apartment Association — Photo by Mary Iuvone for Real Estate NJ
By Joshua Burd
The state Assembly has passed a bill that would shield residents from eviction and require landlords to create payment plans for past due rent during the pandemic, drawing renewed criticism from the apartment industry.
The legislation, S2340, seeks to provide protections to both homeowners and renters once Gov. Phil Murphy has declared an end to the COVID-19 emergency period, which includes a statewide moratorium on foreclosures and evictions. Under the bill, once the moratorium is lifted, landlords would be prohibited from evicting tenants due to nonpayment or habitually late payment of rent during the emergency period.
The New Jersey Apartment Association on Thursday declared its opposition to the bill and to the prospect of owners being required to create payment plans for up to 30 months.
“No landlord wants to see mass evictions during, or at the end of this COVID-19 crisis,” said David Brogan, the NJAA’s executive director. “However, simply shifting the financial burden from one impacted group (tenants) to another impacted group (landlords), without providing any meaningful assistance for those landlords is not only bad public policy, it will create an unnecessary and devastating property tax increase for New Jersey homeowners.
“Furthermore, statutorily restricting rent revenue without compensation will bankrupt small landlords, and for larger landlords, it will lead to layoffs, less money being spent on maintenance and capital improvements and financial obligations will not be able to be met.”
Brogan said the bill incentivizes the nonpayment of rent and will directly affect the net operating income of apartment properties, creating a ripple effect on state and municipal tax rolls. The legislation will “expedite and exacerbate both the number and scope” of what is expected to be a surge of property tax appeals by landlords after the pandemic, the NJAA said, noting that property taxes for apartments are based on net operating income.
“This legislation will exacerbate the financial hardship of rental property owners and will ultimately lead to a decline in property taxes paid by landlords to municipalities,” he said. “Municipalities will have no choice but to look to homeowners to make up the difference.”
The bill, which is also circulating as A4034, calls for setting up the repayment plan as an addendum to the lease agreement, provided the tenant’s rent payments were current prior to the start of the emergency period in early March. The law would not apply to tenants whose gross household income or savings are above a certain threshold.
Landlords must calculate a tenant’s unpaid rent within 10 days of the end of the emergency period, according to the bill. During the repayment period, a landlord would be prohibited from imposing any late fees or any other fees, including attorney’s fees, for rent payments not made during the moratorium.
The legislation also outlines a default payment plan that would take effect if a landlord and tenant cannot reach an agreement on their own or if the agreement is deemed to be unaffordable by the renter. Specifically, the default plan would provide an impacted tenant with six months to repay each month’s worth of rent that was unpaid during the emergency period, with the stipulation that the schedule not exceed 30 months.
Primary sponsors of the bill include Troy Singleton, Steven Oroho and Linda Greenstein in the Senate and Britnee Timberlake, Benjie Wimberly and Angela McKnight in the Assembly.
“There is a way to protect tenants and help landlords while mitigating the impact on property taxes,” Brogan added. “This bill isn’t it.
“If the Legislature wants to help the plight of tenants and thousands of landlords in New Jersey — what we need is meaningful financial assistance, not unfunded mandates that place the burden on hardworking taxpayers.”