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NEW ORDINANCE IN HOBOKEN LIMITS LANDLORD'S ABILITY TO PASS ON LARGE TAX SURCHARGES TO TENANTS
October 2, 2019 Posted in Landlord/Tenant Law Share
Prior to this recent amendment, Hoboken’s Rent Control Ordinance included a provision that allowed landlords with rental properties subject to rent control to pass on large tax surcharges to tenants based on property tax increases dating back to 1988, regardless of when the landlord acquired the property.
Pursuant to Section 155-6 of Hoboken’s Rent Control Ordinance, landlords were allowed to apply to the Rent Regulation Officer annually to seek a tax surcharge to be charged to a tenant because of an increase in municipal property taxes if said taxes are in excess of those assessed for the year that the landlord acquired the property or for the 1988 tax year, whichever assessment date is later. This meant that landlords were allowed to seek a tax surcharge based on the increase in municipal taxes from the year 1988, even if they acquired the property sometime after 1988, and pass on that tax surcharge to the tenants to be collected in equal monthly installments for the next 12 months.
According to municipal officials, this “loophole” allowed newer property owners to circumvent rent control limits and collect higher amounts each month from tenants based upon the application for a large tax surcharge even though these owners did not absorb those tax increases prior to their ownership. With the passing of the amendment to the rent control ordinance, landlords will no longer be able to apply for such a large tax surcharge. The tax surcharge can now only be applied back to the date of when the landlord acquired the property, resulting in a smaller calculated amount, or tax surcharge, that can be passed on to tenants.
Other amendments to the ordinance include the requirement that landlords inform and explain the tax surcharge in writing to tenants, including the actual tax surcharge, total and apportioned, the base rent, and the effective date. The tax surcharge must be imposed at the beginning of a lease term or renewal, meaning that a tax surcharge is not permitted to be assessed to a tenant after the lease term begins. Landlords who have already properly filed for a tax surcharge are grandfathered in, but they will be required to use the new calculations if they reapply.
At Griffin Alexander, P.C., our attorneys have decades of combined experience representing the interests of residential landlords in disputes centering around the application of landlord tenant law in NJ, including those that involve a violation of local rent control ordinances.
We understand how administratively burdensome being a landlord can be (all things considered), and how much pressure is imposed on a landlord for charging rent that he or she believes is reasonable under the circumstances. We’re here to help you navigate the complexities of such a dispute.
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