By Chris Hanlon, Esq. of Scarinci Hollenbeck
In 2007 the Supreme Court decided Maglies v. Estate of Bertha Guy, 193 N.J. 108 (2007). In that case the Court was considering when an “occupant” permitted by the landlord to reside in the premises, could be protected by the enhanced rights of a tenant and secure protection against eviction under the Anti-Eviction Act. The Supreme Court was dealing with a Section 8 tenancy but it did not appear to limit its ruling to Section 8 tenants. It crafted a three part test for when an “occupant” could evolve to a “tenant’s” rights under the law. The Court indicated that an occupant becomes “a functional co-tenant” when they can demonstrate: (1) They have been continuously in residence; (2) they have been a substantial contributor toward the satisfaction of the tenancy’s financial obligations; and (3) that the contribution has been acknowledged and acquiesced to by the landlord.
Just recently, in September of 2009, the Appellate Division of the Superior Court has now decided how that rule will apply in a tenancy which is not involved with a Section 8 subsidy. Golden Peak, LLC v. Melgar. The Court has applied the same rule. In that case, the tenant in the rent controlled apartment was a mother. Her son was the occupant. She moved out to an assisted living facility. The mother was listed as the tenant on the lease. The son was listed as an authorized occupant. Based upon the facts recited by the Court the son resided there “at least ten years and. . .perhaps for as long as twenty years.” In the recent past, the rent was paid by many checks drawn against a joint checking account listing both the mother and the son on the face of the check. Some of the checks were actually signed by the son. The landlord accepted these checks. The son was listed as an occupant on one of the leases executed during the time he lived there. The son was the sole tenant for more than five years (this latter fact was disputed at trial).
In Golden Peak the Court acknowledged the three part rule of Maglies and applied it. The language used by the Golden Peak Appellate Panel, however, appears to expand the doctrine. In its ruling the Court acknowledged the occupant’s “undisputed contribution to the financial obligations of the tenancy and the landlord’s acknowledgment and acquiescence in his residency.”
Maglies required the landlord’s acknowledgment and acquiescence by the landlord in the financial contribution by the occupant. There is a difference between acknowledging a tenant resides on the premises (and acquiescing in it), and acknowledging that the tenant is making a financial contribution to the tenancy (and acquiescing in it). This difference is consistent with New Jersey Contract law. Contracts can be amended or formed by the actions of the parties. It is logical and consistent with public policy that a landlord who repeatedly accepts rent money from a person other than his tenant who resides on the property should expect that person would claim tenancy rights. That is different from accepting rent from a named tenant, while recognizing that person might have family members who also reside on the premises (who are not rent payers). This distinction is important and any landlord finding himself in the unfortunate position of having to deal with this issue should be aware of the stricter requirements of the Supreme Court rule and oppose application of a broader standard implied in this Appellate Division decision which, on its face, was intent on applying the Supreme Court rule.
Landlords who want to address the status of occupants and avoid having them evolve into tenants should have the occupant sign a document acknowledging that they are in fact occupants and not tenants. They should confirm that they are not rent payers. At the inception of the occupancy, if the person will not acknowledge that they are not rent payers, then creditworthiness and income based screening should be allowed (and enforced) against that occupant. Therefore, in order to control these situations it is important for landlords to be diligent in monitoring their population and reacting quickly, with a “papered file” to attempt to control the occupancy to avoid having an individual’s occupancy become a tenancy against the landlord’s wishes.
For more information please visit www.scarincihollenbeck.com.