By: Hon. Mahlon L. Fast, J.S.C. Retired
As a practical matter, this issue becomes relevant only after a tenant has vacated/been evicted. The landlord will then deduct the fee for repairs, repainting, refurbishing and cleaning of a unit from the security deposit or sue the former tenant for a money judgment (SC or DC case). Any deduction from a security deposit is made at the landlord’s risk:
Charges made by a landlord against security are at a landlord’s risk. Mury v. Tublitz, 151 N.J. Super. 39 (App. Div. 1977). If the landlord could avoid a penalty simply by sending a letter itemizing deductions from the security deposit within 30 days of the vacating, the penalty would be meaningless; according to the wording of the statute, it is the wrongful withholding, not a malicious withholding, that matters. This concept was again confirmed in Reilly v. Weiss, 406 N.J. Super. 71, 80 (App. Div. 2009). “Any deductions the landlord makes must be ‘itemized,’ and notice must be forwarded to the tenant.” The burden of proving damages rests with the landlord. Reilly at 76.
Some leases have extremely specific provisions spelling out the amount to be charged for, for example, missing keys, broken cabinets, broken doors, missing fixtures, burned out bulbs, etc., usually followed by language such as “these charges are examples only, and may be changed from time to time.” In other words, the costs listed are meaningless – not binding on any party. The vagueness of charges by example, in my opinion, makes them unenforceable.
A charge of $500 for repainting if the tenant vacates prior to the lease termination date (or is evicted), or more – if the repainting requires more than one coat of paint – is not only vague, but also loses sight of the size of the apartment, or the number of rooms to be repainted.
Some leases have a stated charge – to be paid in advance – for papering or painting (whether done by landlord or tenant, with landlord’s approval, of course). If that provision states that it is a non-refundable charge, then it should not be confused with a security deposit. But, query whether it may be considered a “rent increase” under the applicable rent control/levelling ordinance.
Other leases include “(1) the cost of preparing the property for re-rental and (2) a brokerage charge for re-renting prior to the termination date” (including eviction). In my opinion, if (1) is a result of excessive wear and tear, the landlord would be entitled to reimbursement, but if there is no excessive wear and tear, then it is my opinion that the former tenant would not be responsible for the ordinary cost of preparation for rental to a new tenant. In my opinion, a charge for (2) is very questionable because it is an expense normally incidental to the landlord’s operation rather than attributable to the tenant’s having vacated; that is, it would be incurred by the landlord at one time or another, in any event.
While others may include a charge for “the cost of re-entering, re-renting, cleaning and repairing the Apartment …” reduced by “rent received from any new tenant.” (That lease had no limit to the “rent received from any new tenant.”)
In my opinion, the enforceability of these examples of lease provisions is highly questionable:
Residential tenants are viewed as a special class of individuals for whom the legislature has articulated a need for special protection; offending contractual provisions are in direct violation of this protective scheme. … The defendant’s transparent attempt to collect monies under the circumstances detailed here represents a deviation from the public policy of this state … As a result, the agreement, even if characterized as having a binding contractual effect, is void ab initio on public policy grounds.
“Public policy” includes not only statutory provisions, but also authoritative case law based on “equitable” principles. I believe that a lease provision providing what is, essentially, a penalty provision, would be subject to scrutiny as a “contract of adhesion.”
A “contract of adhesion” has been defined as a contract “presented on a take-it-or-leave-it basis, commonly in standardized printed form, without opportunity of the ‘adhering’ party to negotiate except perhaps on a few particulars.” (Citations omitted.) The Court has observed that “the determination that a contract is one of adhesion is the beginning, not the end, of the inquiry into whether a contract, or any specific term therein, should be deemed unenforceable based on policy considerations.” (Citations omitted.) “A sharpened inquiry concerning unconscionability is necessary when a contract of adhesion is involved.” Ibid. Relevant factors deserving of attention when a court is asked to declare a contract of adhesion unenforceable were articulated in Rudbart:
In determining whether to enforce the terms of a contract of adhesion, we look not only to the take-it-or-leave-it nature or the standardized form of the document but also to (1) the subject matter of the contract, (2) the parties’ relative bargaining positions, (3) the degree of economic compulsion motivating the “adhering” party, and (4) the public interests affected by the contract.
….The point is that the decision whether a particular agreement or provision therein is unenforceable is fact-sensitive and must be determined on a case-by-case basis. (Citations omitted.)
Thus, the contract is unenforceable because its terms are “manifestly unfair or oppressive and are dictated by a dominant party.” (Citations omitted.) Gamble v. Connolly, 399 N.J. Super. 130 (Law Div., 2007).
It is my opinion that the courts of New Jersey are strongly inclined to consider residential tenants as the subservient party in a lease “negotiation;” that most residential leases are considered contracts of adhesion, and therefore subject to a “sharpened scrutiny.
It is further my opinion that charges, fees, or by whatever name imposed upon a tenant, must be based not only on a bona fide negotiation but that the charge, fee, or the like must be based on some valid relationship to both the basis for, and amount of, any such charge.
A landlord may ask what is the hazard in including a charge for a refurbishment fee, repainting fee, repair fee, move out cost schedule, replacement charges, or administrative fee. My answer, as pointed out above, that any deduction from a security deposit is made at the risk of the landlord. That risk – the hazard – is double the amount of a security deposit that has been wrongfully withheld.
But all is not lost – a landlord is entitled to compensation for legal damages proximately caused by a tenant’s breach of a lease, and that may be rightfully withheld from the return of a security deposit. And the right of the landlord to compensation for legal damages should be appropriately stated in a lease.
Mahlon L. Fast, J.S.C., Retired and of counsel to the firm Ehrlich, Petriello, Gudin and Plaza, P.C. located in Newark, NJ. He is the author of the Landlord/Tenant and Related Actions in the Superior Court of New Jersey -as well as A Judge’s Primer for Small Claims Practice in the Special Civil Part Of the Superior Court of New Jersey and has over 40 published judicial opinions . He served as Judge of the Superior Court of New Jersey and was a member of the Supreme Court Committee on Special Civil Part Practice (Chair of Landlord/Tenant Subcommittee). Prior to that he was a partner with Fast & Fast, Esqs specializing in general civil practice emphasizing: estate planning and administration; all aspects relating to real estate . He can be reached at (973) 951-2160 or via email at mfast@epgp-law.com.
The information you obtain herein is not to be construed as legal advice. You should consult with a qualified attorney for your particular matter or situation. You should not attempt to implement any legal document that might have an adverse effect on you without having first consulted with counsel.