Harry's Village, Inc. v. Egg Harbor Tp.
| Citation | 446 A.2d 862,89 N.J. 576 |
| Parties | HARRY'S VILLAGE, INC., Plaintiff-Appellant, v. EGG HARBOR TOWNSHIP, and Egg Harbor Township Rent Review Board, Defendants, and Forty Eight States Residents Association, Defendant-Respondent. |
| Decision Date | 07 June 1982 |
| Court | United States State Supreme Court (New Jersey) |
Maurice Y. Cole, Jr., Atlantic City, for plaintiff-appellant (Cole & Cole, Atlantic City, attys., Maurice Y. Cole and William P. Busch, Jr., Clarksboro, on the brief).
David G. Sciarra, Atlantic City, for defendant-respondent (Joseph P. Murray, Director, Cape-Atlantic Legal Services, Newark, attorney).
Jorge O. Aviles, Gregory G. Diebold, Jersey City, and Maureen C. Schweitzer, Hoboken, submitted a brief on behalf of amicus curiae Legal Services of New Jersey (Timothy K. Madden, Director, Hudson County Legal Services, Union City, attorney).
The opinion of the Court was delivered by
The issue in this case is whether a landlord, who has obtained a rent increase from a rent control board, must serve tenants with a notice to quit before the rent increase becomes effective. Resolution requires evaluation of the interrelationship between the common law, the anti-eviction act, N.J.S.A. 2A:18-53, 61.1 to -61.12, and a municipal rent control ordinance. We hold that, after receiving authorization from a municipal rent control board to increase rent, a landlord must nonetheless give a valid notice to quit for the rent increase to be effective.
The Egg Harbor Township rent control ordinance, enacted in 1977, permits landlords unilaterally to pass along at the end of a periodic tenancy any reasonable increases in property taxes and in costs of operations, maintenance and services. Tenants may contest the accuracy of those increases before the Board. Prior Board approval, however, is required before a landlord may increase rents because of capital improvements or hardship. A landlord may apply for a hardship surcharge when rents are insufficient to cover the costs of mortgage payments, taxes, operating expenses, other "special hardships," and a reasonable profit.
Under the ordinance, the landlord must notify each tenant of the time and place of the hearing. If the Board grants the landlord a capital improvement or hardship increase, it must notify the landlord in writing, and the landlord must "forthwith" serve each tenant with a copy of the Board's decision. A hardship surcharge is valid for one year, and a landlord must reapply to extend the surcharge.
Harry's Village, Inc. owns and operates in Egg Harbor Township a mobile home park known as Harry's Village No. 1, consisting of 226 trailer sites. After assuming ownership on November 2, 1977, Harry's Village made several capital improvements: it patched potholes, repaved streets, installed street lights and street signs, and dug two new wells.
Upon realizing that the rental income would not cover all its costs, Harry's Village applied on March 17, 1978 to the Egg Harbor Township Rent Review Board to require tenants to pay for their own heat, to increase rent to cover capital improvements and for a hardship surcharge. At all times the landlord and tenants association were represented by counsel.
The Board held a hearing on August 10, 1978 and granted certain relief to Harry's Village. In addition to requiring tenants to provide their own fuel, the Board set rents based on lot size: 40' X 60' lots--$85 monthly; 50' X 70' lots--$95 monthly; and 60' X 90' lots--$105 monthly.
Although dissatisfied with the amount of the increase, Harry's Village simultaneously notified the tenants of the Board's decision and filed an action in lieu of prerogative writ challenging the rent increase as inadequate and also challenging the ordinance as unconstitutional. During the pendency of the action, the tenants complied with the rent increase. Nonetheless, their attorney wrote Harry's Village that, in the future, tenants would not pay a rent increase unless it was preceded by a valid notice to quit as required by N.J.S.A. 2A:18-61.1 (Supp.1981-1982). While recognizing that the rent increases were inadequate, the trial court continued the increases and remanded the matter for a new hearing before the Board.
The Board conducted further hearings, and on April 10 it granted Harry's Village the right to charge the following rents effective May 1, 1979: 40' X 60' lot--$100; 50' X 70' lot--$110; and 60' X 90' lot--$115.
Once again Harry's Village challenged the decision before the trial court as arbitrary and capricious and alleged that the ordinance was unconstitutional. Furthermore, at a hearing on May 22, Harry's Village informed the Court that the tenants were not paying the rent increase granted by the Board. The defendants asserted that they had not been notified in writing of the Board's decision, as required by the ordinance, and that Harry's Village, despite their prior warning, had failed to serve them with a notice to quit. Harry's Village replied it could not comply with the ordinance because the Board had not issued a written opinion to be served on the tenants and that no notice to quit was necessary to effectuate the decision of the Board.
The court ordered the Board to issue immediately a written decision and reserved decision on the necessity of the notice to quit. The following day, May 23, 1979, the Board released its decision and on May 24 Harry's Village sent each tenant a copy of the decision and the following notice:
I hereby give you notice that the rent for lots as of May 1, 1979 at Harry's Village I Mobile Home Park, as fixed by the Egg Harbor Township Rent Review Board, is as follows:
40 X 60 .............$100 per month
50 X 70 .............$110 per month
60 X 90 .............$115 per month
If you fail to pay the above rent for May and June prior to Wednesday, June 27, 1979, you are hereby notified to vacate and quit the premises now occupied by you no later than June 27, 1979 ....
On June 9, 1979 the court made its final decision, holding the rent control ordinance constitutional. Once again, however, the court found that the Board had acted arbitrarily. The tenants acquiesced in the landlord's request that the trial judge make findings and conclusions based on the second hearing before the Board. Accordingly, the court determined that the monthly rents should be: 40' X 60' lot--$103; 50' X 70' lot--$118; and 60' X 90' lot--$128. The court made the increase effective the same date as the Board's second decision, May 1, 1979. Also, the court ruled that a notice to quit was not required when a rent control ordinance provides tenants adequate notice of Board proceedings and rent increases. Immediately thereafter, Harry's Village amended its May 24 notice by personally serving on each tenant a copy of the court order increasing the rent retroactive to May 1. In addition, tenants received a copy of a letter reminding them, in accordance with the May 24 notice, that rent arrears were due immediately.
The tenants paid the increase under protest and appealed to the Appellate Division. In an unpublished opinion, the Appellate Division affirmed the decision of the Law Division, but ruled that a notice to quit was necessary before increasing rent. Furthermore, the Appellate Division found that the May 24 notice was not a valid notice to quit. Although the reason for that conclusion is unclear, the court apparently found the May 24 notice to be insufficient because it terminated the tenancies on June 27, not on their anniversary date, the first of the month. Presumably, the notice of the increase granted by the Law Division was deemed ineffective because the notice did not demand possession on a certain date. Having concluded that the notice to quit was invalid, the Appellate Division held that the rent increases awarded by the Law Division never became effective. We granted certification, 87 N.J. 370, 434 A.2d 1058 (1981). We modify and affirm the judgment of the Appellate Division.
The relationship of landlord and tenant, formerly the province of the common law, is now regulated also by legislation and sometimes by municipal ordinance. In the absence of a uniform state policy on rent control, a minority of municipalities has enacted rent control ordinances. The regulation of rent increases is a morass of uncoordinated responses by the courts, the Legislature and municipalities. Charting a certain course while fairly balancing the interests of both landlords and tenants is a difficult, but critically important, task. Briefly stated, a fair balance must result in rents that are high enough to attract reasonable investors but not so high as to provide more than a fair return to those investors or to subject tenants to unfair rent increases. Troy Hills Village v. Parsippany-Troy Hills Tp. Council, 68 N.J. 604, 628, 350 A.2d 34 (1975).
Although the residents of Harry's Village do not have written leases, they pay their rent monthly. Accordingly, they are periodic month-to-month tenants. Maier v. Champion, 97 N.J.L. 493, 495, 117 A. 603 (E. & A. 1922); Albey v. Weingart, 71 N.J.L. 92, 93, 58 A. 87 (Sup.Ct.1904); Steffens v. Earl, 40 N.J.L. 128, 137-38 (Sup.Ct.1878). A month-to-month tenancy is a continuing relationship that remains unabated at its original terms until terminated by one of the parties. See Stamboulos v. McKee, 134 N.J.Super. 567, 570-71, 342 A.2d 529 (App.Div.1975); Skyline Gardens, Inc. v. McGarry, 22 N.J.Super. 193, 196, 91 A.2d 621 (App.Div.1952). Either party may terminate a monthly tenancy by serving upon the other a month's notice to quit. Steffens v. Earl, supra, 40 N.J.L. at 134 (); S.D.G. v. Inventory Control Co., 178 N.J.Super. 411, 414-15, 429 A.2d 394 (App.Div.1981) ().
To increase the rent of a month-to-month tenant, the landlord must serve a notice to quit...
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