Legislation sponsored by Assemblywoman Verlina Reynolds Jackson and Assemblyman Benjie Wimberly to expand liability of residential landlords associated with limited liability companies (LLCs) and other commercial entities was approved by the Assembly Housing and Community Development Committee on Thursday.
Specifically, the bill (A-4379) states that in addition to having the ability to hold a commercial entity itself liable for housing code charges, building code charges, health code charges, and charges issued under the “Hotel and Multiple Dwelling Law,” a court may also hold the members, managers, and directors of an LLC jointly and severally liable for such charges.
A court may do this so long as:
· The charge concerns property leased by the entity for residential purposes;
· The charge remains unpaid on the first day of the thirteenth month following the due date of the charge;
· Notice of the charge and impending enforcement has been issued to the address of the record owner, the registered against, the managing agent, the members in the case of a limited liability company, the directors and officers in the case of a corporation, and each holder of a recorded mortgage and other existing lienholders, if provided with the landlord’s registration information; and
· The defendant does not successfully assert an affirmative defense showing a lack of ability to ensure payment of the charge.
“The ultimate purpose of this bill is to strengthen the relationship between tenants and their landlords,” said Reynolds Jackson (D-Mercer). “Separating individuals from an LLC will help to promote accountability and transparency among the two parties and will ultimately make for a more pleasant renting or property owning experience.”
In addition, the bill requires a landlord organized as any other legal or commercial entity to also submit the name and address of a registered agent, along with the name and address of the members in the case of an LLC. This also applies to officers and directors in the case of a corporation when registering as a landlord. Under current law, landlord registration requirements only include submission of the name and address of a registered agent who may accept service of process if the landlord is a corporation.
“Simply put, landlords need to be held accountable for their actions or lack thereof,” said Wimberly (D-Bergen/Passaic). “When they are part of an LLC or larger company, it is hard to tell who is responsible for code violations or wrongful evictions. This bill helps to bring more clarity to the situation along with creating a safer, more stable environment for New Jersey tenants.”
Finally, this bill would allow municipalities to amend their housing, building, and health codes to direct that any charge issued to a landlord for violating codes could be enforced as a lien on the property. This would only be permitted, though, if the charge remains unpaid.