By Chris Hanlon, Esq. of Hanlon Niemann
On January 21, 2014 Governor Christie signed into law S-2018. This legislation is an attempt to “even the playing field” by allowing a Court to award a successful tenant legal fees where the landlord has the right to recover legal fees by virtue of its lease. It also requires residential landlords who have such a clause permitting them to recover attorneys’ fees and costs to notify the tenants of this law in bold face type. It requires the immediate use of this new language in all new leases commencing February 1, 2014.
The remedy of the tenant is available if the tenant successfully defends any action or summary proceeding commenced by the landlord arising out of an alleged failure of the tenant to perform any covenant or agreement in the lease or as a result of any successful action for summary proceeding commenced by the tenant against the landlord arising out of a failure of the landlord to perform any covenant or agreement in the lease.
A tenant who has failed to pay the rent, is sued and then pays the rent prior to the Court date in order to secure the dismissal of a nonpayment of rent case will not be considered to have asserted a successful defense under this statute.
The right of the tenant to recover attorneys’ fees and costs is discretionary for the Trial Court. The Court is supposed to exercise its discretion the same way it exercises discretion to award attorneys’ fees and costs to landlords in similar circumstances.
Whenever a landlord uses a lease which provides for the recovery of attorneys’ fees or expenses, the following must appear in bold type face in a font size no less than one point larger than the point size of the rest of the lease, or eleven points, whichever is larger:
“IF THE TENANT IS SUCCESSFUL IN ANY ACTION FOR SUMMARY PROCEEDING ARISING OUT OF THIS LEASE THE TENANT SHALL RECOVER ATTORNEYS’ FEES OR EXPENSES OR BOTH FROM THE LANDLORD TO THE SAME EXTENT THE LANDLORD IS ENTITLED TO RECOVER ATTORNEYS’ FEES OR EXPENSES OR BOTH AS PROVIDED IN THIS LEASE.”
This language must be placed in the same lease clause containing the landlord’s fee remedy.
Existing case law is ambiguous regarding the question of whether a tenant has to actually be paying an attorney to get an award of counsel fees after prevailing in litigation. Some cases have permitted attorney fee awards under other fee shifting schemes for successful pro bono work.
Obviously this poses some risks for landlords. Typically cases filed by landlords are filed for good cause. Landlords must now take care even when filing “run of them mill” summary dispossess cases to focus on at least the following two issues.
The first is that your proofs will be available for any trial. This is particularly important if you filed an eviction action for any cause of action other than for nonpayment of rent or other situations where your witnesses work for management. If you need witnesses, for example, to address behavior which is destroying the peaceful and quiet enjoyment you must make sure those witnesses will come to Court before you file the lawsuit.
The second issue is you must make sure that you are complying with the technical requirements of the law. For example you would not want to have your case dismissed because your Landlord Registration Statement has not been updated with current information. If a tenant hires an attorney and the attorney raises this defense and your case is dismissed this circumstance could be considered a “successful defense” under this statute.
Chris Hanlon, Esq. of Hanlon Neimann P.C. is the head of the firm’s litigation department. He is a passionate and tireless advocate for his clients, willing to work long hours to champion their causes and rights. He is certified by the New Jersey Supreme Court as a Civil Trial Attorney and a frequent speaker/lecturer before state associations and organizations on a number of topics in the law. Chris can be reached via email at chanlon@hnlaw.com or via telephone at (732) 863-9900 x108.