In today’s article, we will discuss the importance of two separate documents required for residential real estate owners.

Certificates of Occupancy

The first document is the Certificate of Occupancy. The vast majority of New Jersey state municipalities require a landlord to obtain a new Certificate of Occupancy each time a new tenant moves in. The inspections that accompany the application for a certificate of occupancy vary by municipality. All towns will check the smoke detectors, and if there is gas heating, the carbon monoxide detector will also be checked. Some cities will also conduct much more comprehensive reviews in an attempt to improve the quality of housing throughout the city. It should be noted that a municipality is no longer allowed to require a new occupancy inspection certificate when a family expands by natural means (for example, the birth of a new child).

While most homeowners are vaguely familiar with the fines the municipality can impose on them for failing to obtain a certificate of occupancy, few are familiar with the much more serious consequences that can result from such non-compliance. When certificates of occupancy are required, a house rented without a certificate of occupancy constitutes an illegal contract. Therefore, in Khoudary v. Salem Board of Social Services, 260 NJS 79 (App. Div. 1992), the Court determined that a landlord who rents without a certificate of occupancy does not have the authority to file a rental claim.

In essence, what the Khoudary Court said was that it would not help the owner to enforce an illegal contract. In the event that the tenant vacates the premises owing rents, either for previous months or months that may expire under the current lease, the owner cannot file an action to collect the rents and, furthermore, none of the tenant’s guarantees. I deposit towards these rents. The landlord can still bring an action or retain the security for damages, such as the destruction of the apartment. It remains uncertain whether a court should allow a tenant to bring an action for the return of all rents previously paid under the illegal lease; however, most courts will rule that the tenant must pay the quantum merit benefit of the use of the apartment.

For nearly a decade, the courts interpreted the Khoudary ruling to mean that failure to obtain a certificate of occupancy was an impediment to eviction. However, this issue has since been clarified. In McQueen v. Brown and Cook, 342 NJS 120 (App. Div. 2001), the Court ruled that while failure to obtain a certificate of occupancy made the lease illegal, the landlord still retained the right to evict the tenant. Essentially, the Court’s decision holds that a tenant should not be able to benefit from the illegal contract and, furthermore, it is clear that leaving the tenant in the illegal rent would be contrary to public order.

Owner registration statement

While not obtaining a certificate of occupancy is not an impediment to eviction, not obtaining a landlord registration statement (a / k / a Landlord Identity Statement) will prevent an eviction. All non-owner-occupied residential dwellings in the state of New Jersey must be recorded as rental. Unlike certificates of occupancy, the registration statement does not require inspection and does not need to be repeated upon the arrival of new tenants. In most cases, a single registration statement will be effective in perpetuity.

In the event that the rental is a single-family or two-family dwelling, the registration may be submitted to the municipal secretary. In some cases, the municipality will charge a nominal fee for property registration and an additional fee for renovations. In the event the property consists of three or more residential dwellings, the property must be registered with the New Jersey Division of Community Affairs. The Landlord Registration Statement should state the names of the landlords and their emergency contact numbers.

Failure to comply with the registration requirement can have serious consequences for homeowners. Most notably, NJSA 46: 8-33 states that “no sentence of possession can be entered until it has been served. [with the Act]… “While the Statute states that the Court can continue the case (up to 90 days) until the breach is corrected, some homeowners may be caught off guard. Some New Jersey counties even require the homeowner to present proof of registration at the time of the lease hearing.

Another consequence of not obtaining a registration statement is the imposition of fines. This firm has been hired to represent several homeowners who have been unable to obtain registration statements. As in the case of not obtaining a certificate of occupancy, the fines for not registering can be quite high and cities often impose a separate penalty for each individual dwelling within the building.

In conclusion, it is best to ensure that you obtain both a Certificate of Occupancy and a Declaration of Registration from the owner before renting your property. If you forget to present one of these two documents, you may be subject to substantial penalties from both the municipality and a civil action with your tenants.

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