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Municipalities Should Review Their Landlord Registration Ordinances in Light of Timber Glen

Feb 19, 2016 | Written by: Tara A. St. Angelo, Esq. |

Recently, the Appellate Division issued an opinion regarding a municipality’s authority to license residential rental properties pursuant to the New Jersey Licensing Act, N.J.S.A. 40:52-1 et seq.  Timber Glen Phase III, LLC v. Twp. of Hamilton, 44 N.J. Super. 514 (App. Div. 2015).

In December 2011, Hamilton Township passed an ordinance imposing a licensing fee on all residential landlords.  Timber Glen Phase III, LLC and JSM at Timber Glen (collectively “Timber Glen”), the owners of approximately 500 rental units in Hamilton, filed an action in lieu of prerogative writ challenging the validity of the licensing ordinance.  At trial, Hamilton argued that the Licensing Act empowered it to impose such fees and requirements.  Timber Glen, on the other hand, argued that the Licensing Act limited the authority to impose fees and licensing requirements only to rentals with terms of 175 days or less.  Initially, the trial court ruled in Hamilton’s favor and upheld the ordinance.  The trial court relied on N.J.S.A. 40:52-1(d), which allows municipalities to pass ordinances regarding the licensing of:

Hotels, boarding houses, lodging and rooming houses, trailer camps and camp sites, motels, furnished and unfurnished rented housing or living units and all other places and buildings used for sleeping and lodging purposes, and the occupancy thereof, restaurants and all other eating places, and the keepers thereof...

However, such decision was overturned on appeal and the Appellate Division agreed with Timber Glen’s interpretation of the Licensing Act.  The Appellate Division held that because the Licensing Act was amended in 1998 to include subsection (n) allowing licensing of “rental of real property for a term less than 175 consecutive days for residential purposes by a person having a permanent place of residence elsewhere…” the Legislature intended to limit the licensing of residential rental apartments.

There are three important points to take away from this case:

1. A municipality may not require licensing of residential rentals with terms greater than 175 days. The Appellate Division held that a municipality “may not mandate by ordinance licensure of residential rentals for 175 days or more, accompanied by an annual licensing fee.”  Timber Glen, supra 441 N.J. Super. at 532.

2. The holding does not impact landlord registration under the New Jersey Landlord Registration Act (N.J.S.A. 46:8-28 et seq.).  The Landlord Registration Act requires that a one or two unit (non-owner occupied) rental dwelling file a registration statement with the clerk of the municipality.  N.J.S.A. 46:8-28.  In the case of a rental property containing more than 2 rental dwelling units, such registration shall be filed with the Bureau of Housing Inspection.  Id. The Bureau is then required to forward the validated registration to the municipality.  N.J.S.A. 46:8-28.1.  Therefore, a municipality is still able to keep track of residential rental properties within the municipality.                        

The Landlord Registration Act does permit “a filing fee not exceeding the filing for hotels and multiple dwellings established by section 12 of P.L.1967, c.76 (C.55:13A-12).”  N.J.S.A. 46:8-28.5.  N.J.S.A. 55:13A-12 has not been updated since 1967 and states that the fee charged is $10.  In my review of municipal ordinances throughout the state, I have not come across a municipality that charges a fee that low.  However, the Bureau of Housing Inspection still only charges $10 for registrations. 

The Landlord Registration Act does not require annual registration, but does not forbid it.

3. The holding only impacts licensing of residential landlords, not inspections of residential rental units.  The Timber Glen decision does not affect a municipality’s power to regulate residential rentals pursuant to the Hotel and Multiple Dwelling Law (HMDL) (N.J.S.A. 55:13A-13 et seq.) or statutes regarding certificates of inspection (N.J.S.A. 40:48-2.12m).  Therefore, municipalities are not devoid of any authority to make sure that residents living in rental properties are in safe, habitable conditions.   In a footnote, the Appellate Division stated: “ Our opinion is confined to the authority to license and does not address defendant’s regulatory or inspection authority granted by other statutes designed to assure rental premises remain safe, building and fire code compliant and structurally sound.”  Timber Glen, supra, 441 N.J. 532 n. 4.

The HMDL mandates that “multiple dwelling[s]…shall be inspected at least once every five years for the purposes of determining the extent to which each…multiple dwelling complies with” the HMDL.  N.J.S.A. 55:13A-13(a).  “Multiple dwellings” are defined as those having 3 or more dwelling units.  N.J.S.A. 55:13A-3.  Subsection (b) therein sets forth a fee structure for such inspections and states that a “certificate of inspection and the fees therefore shall not be required more often than once every five years.”  The inspection obligation and ability to collect the fees can be delegated to the municipality.  N.J.S.A. 55:13A-13a(b).  Therefore, by ordinance, a municipality can mandate inspections every 5 years of all multiple dwellings.

Additionally, a municipality can still require by ordinance that residential landlords obtain a certificate of occupancy when there is a change in tenancy of any rental dwelling or a new rental is created.  N.J.S.A. 40:48-2.12m.  Municipalities are also empowered to charge a fee for the required inspection.  Id.  In fact, the Court in Lake Valley Associates, LLC v. Twp. of Pemberton, 411 N.J. Super. 501 (2010) upheld a municipality’s power to require a certificate of occupancy and inspection upon a change in tenancy.

Therefore, in light of the Timber Glen decision municipalities should review their ordinances for compliance with the holding and the Landlord Registration Act.  The State does provide a form for registration and municipalities may want to consider revising their forms to be similar. 

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Tara St. Angelo, Esq. concentrates her practice primarily in the areas of municipal and land use law. Contact Ms. St. Angelo at Gebhardt & Kiefer, PC at 908-735-5161 or via email.