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Edgemere at Somerset v. Johnson

March 23, 1976

EDGEMERE AT SOMERSET, PLAINTIFF,
v.
BARBARA JEAN JOHNSON, ET AL., DEFENDANTS



Gaynor, J.c.c.

Gaynor

The above designated cases present common issues of law and fact and, accordingly, this opinion and decision will be applicable and dispositive of each of said actions.

At the outset we wish to state that the issues do not involve matters relating to whether plaintiff landlord has furnished or is furnishing the services required under the tenancy agreements, or has maintained or is maintaining the premises in a habitable condition, or has engaged in or is engaging in any acts of retaliation against tenants, or has pursued or is pursuing any conduct which is violative of the rights of its tenants. We mention this specifically so that there may not be any misunderstanding as to the limited nature of the issue presented in these actions for decision by this court.

Plaintiff seeks summary dispossession of defendants pursuant to N.J.S.A. 2A:18-61.1(f) because of their nonpayment

of rental increases effective December 1, 1975. Defendants contend that the rental increases are unconscionable and do not comply with applicable laws and municipal ordinances, and hence are not permissible under the aforesaid statute. It is conceded that the increases are in excess of amounts allowable under guidelines set by the Franklin Township Rent Leveling Board (Board) but are in accord with the maximum rentals prescribed by the Department of Housing and Urban Development (HUD). Thus, the threshold question submitted to the court is whether under the existent circumstances the prescription by HUD is preemptive of the action of the Board. A secondary issue is whether the increased rentals are unconscionable.

Plaintiff is the owner of a garden apartment complex consisting of 398 rental units, having acquired it by purchase from the Federal Housing Administration in September 1974. The purchase was financed with a mortgage insured by HUD in accordance with the National Housing Act, 12 U.S.C.A. ยง 1702 et seq. Upon application of plaintiff to HUD, that agency, pursuant to its Regulation 24 C.F.R. , Part 403 (40 F.R. 4951-8), declared that the rentals permitted under the guidelines of the Board were insufficient to protect the economic interest of HUD in the project and that the appropriate rentals should be those as increased by plaintiff effective December 1, 1975. In issuing this directive HUD specifically noted that its action preempted any local law or regulation inconsistent therewith. No suggestion has been made that HUD's determination of the necessary rent level is unsupported by data as to the operating expenses of the project, or that HUD lacks the authority to establish maximum rentals for the subject premises.

The preemptive effect of HUD's determination as to the minimum rent levels for the subject premises was contained in the following notice issued by that department to the Board:

To: Franklin Township Rent Leveling Board

Municipal Building

Franklin Township

Somerset County, New ...


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