Charging Rent in Excess of a Rental Control Ordinance: Violation of the New Jersey Consumer Fraud Act

February 24, 2014

Randolph H. Wolf recently represented a client who lived in a rent-controlled building in New Jersey.  The client entered into a lease with his landlord in 1996.  The initial monthly rent was $765.00.  Each year thereafter, the client renewed his lease with the landlord and, with each renewal, the landlord increased the monthly rent.  The client recently discovered that these increases in rent violated the Red Bank Rent Control Ordinance and retained Randolph H. Wolf to recover the excess rent payments.  Based upon the legal rent calculation provided under the ordinance, the client had overpaid rent in the amount of approximately $50,000.00.

Randolph H. Wolf brought suit against the landlord not only for the excess rent payments, but also for violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.  This is because if a landlord increases a tenant’s rent in violation of the local rent control ordinance, the landlord can be found to have violated the New Jersey Consumer Fraud Act.  This can have very costly consequences, including the awarding of treble (or triple) damages to the tenant along with attorney’s fees and costs.  Thus, Randolph Wolf brought suit for treble damages in excess of $150,000.00 as well as attorney’s fees and costs.
The landlord, in defense, argued that he was unaware that the rent he was charging the client violated the rent control ordinance.  In Wozniak v. Pennella, 373 N.J. Super. 445 (App. Div. 2004), however, a defendant landlord argued that his increase of rent above what was permitted by a rent control ordinance was not a violation of the CFA because he did not believe the rent control ordinance applied to the premises.  The Appellate Division rejected that argument, stating that as an experienced landlord of a building with four units, the defendant’s plea of ignorance was unconvincing. Thus, a landlord is presumed to know the laws pertaining to the ownership and operation of its rental property.  This includes knowledge of any municipal rent control ordinances.  The court then concluded that the defendant had committed an affirmative act by charging plaintiff excess rent in violation of the rent control ordinance, and therefore, plaintiff need not show that defendant intended to violate the CFA.

If you believe that you have been charged rent in excess of that permitted by your local rent control ordinance, contact an attorney experienced in this area today.  If, on the other hand, you are a landlord, it is imperative that you determine whether a rental apartment is subject to a rent control ordinance.  If you are not sure, check with your local rent control officer or ask your attorney.  Make sure that you obtain a copy of the ordinance, that you read it, and ensure that you fully comply with it.  If you violate the ordinance, your tenant may bring a claim against you.  As can be seen above, the danger is if the tenant claims  a violation of the Consumer Fraud Act.  If successful, the tenant would be entitled to a judgment for triple the amount of the excess rent payments, together with any attorney’s fees and costs.  This could prove to be very costly.

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