New Law Governing Landlord’s Right to Attorney Fees in Eviction Actions

As reported by the American Apartment Owner Association, Governor Christie recently signed into law a bill that gives New Jersey tenants the right to collect lawyer’s fees and costs from landlords when they are successful in court.

The rule applies if the landlord has reserved the same right in the lease. The new law applies to all leases entered into on or after February 1, 2014.

Prior to the enactment of the law, landlords could reserve the unilateral right to be compensated by tenants should the landlord prevail in any legal action.

According to Matt Shapiro, President of the membership-based New Jersey Tenants Organization (NJTO), this new law is the most important advance in tenants’ rights in many years. “New Jersey has some of the best tenants’ rights laws in the country, but, until now, not when it came to these unfair legal fees,” said Shapiro. “Nearly every lease in the state has one of these clauses giving the landlord the right to sue for legal fees and costs in addition to whatever else he’s suing for, but it’s been a one-way deal.”

The NJTO successfully argued that the  one-way legal fees provisions could be intimidating to tenants, who had little bargaining power to change the terms of the lease agreement.

According to Shapiro, a major advantage of the new law is the requirement that landlords inform tenants of the requirement by using bold print in the same clause that gives the right to landlords to collect legal fees.

The often-included lease provision is an attempt to mitigate damages incurred by a landlord who has been forced  to bring an eviction action based upon – in the majority of the cases -the tenant’s failure to pay rent, and has therefore been forced to hire an attorney to prosecute that eviction. The law allows the landlord to shift those legal fees onto the tenant, particularly in cases where the eviction was brought solely based on the tenant’s failure to pay rent (most eviction actions in NJ are for failure to pay rent, as opposed to a for-cause ground such as too many people living on the premises). It should be noted that the attorney’s fees are added to the total amount of back rents a tenant is required to pay if he or she intends on remaining in the property. And in New Jersey, an action for eviction will only give the landlord a Judgement of Possession – not a money judgment. When tenants decide not to “pay and stay” and instead simply leave, the only way for the landlord to enforce their right to collect the amounts outstanding is to sue the tenant again, but this time in civil court solely for a money judgment.

Thus, in order for Landlords to preserve their right to collect attorney fees & costs from the tenant if forced to bring an action for eviction (1) they must advise the tenant in the lease that the tenant will be responsible for legal fees if eviction is sought; (2) they must additionally apprise the tenant of their own right to attorney fees should the tenant prevail in an action against the landlord; and (3) they must ensure the language is in conspicuously set forth in bold print.

Landlord-Tenant issue? Call Michael P. DeRose, Esq., at 215-968-6602.