The principal issue in this case is whether parties to a residential lease may waive the strictures of a local rent control ordinance and agree to a rental in excess of that which would be permissible under the ordinance.
The parties signed a memorandum which expressly set forth the maximum amount of rental chargeable under the Lakewood Township Rent Control Ordinance. In the same agreement the tenant knowingly waived the limit and agreed to pay a higher
amount. Now the tenant asserts that the contract is void because it contravenes the ordinance and the public policy which underlies the legislation.
Rent control ordinances do not depend on a showing of a housing emergency to pass constitutional muster. Hutton Park Gardens v. West Orange , 68 N.J. 543 (1975). The constitutional test applied is the same as any other exercise of the police power. We must ask, could the legislative body rationally conclude that the ordinance was in the public interest? Brunetti v. New Milford , 68 N.J. 576 (1975). Housing shortages, prevalence of exorbitant rentals, monopoly control of the housing market and widespread substandard housing are factors which can individually or jointly support the adoption of such controls. Chapter XIIIA of the codified ordinances of the Township of Lakewood, § 13A-1, embodies each of these rationales in the statement of purpose for its ordinance. The public policies encompassed in such considerations cannot easily be ignored.
An attempt to "waive" rent limitations is in reality an effort to assert that the private right to contract freely can supercede the public interest expressly and impliedly embodied in rental control provisions. The attempt must fail simply because the private interest has to yield to the public benefits flowing from valid police power legislation. Inganamort v. Fort Lee , 131 N.J. Super. 558 (Ch.Div.1974); 5 McQuillin, Municipal Corporation (3 ed. 1969), § 19.37 at 493-497.
Our courts have stated on at least two occasions that a landlord may not charge a rent in excess of the maximum fixed under rent control legislation. Jamouneau v. Harner , 16 N.J. 500, 513 (1954); Lutz v. Goldberg , 7 N.J. Super. 288, 292 (App.Div.1950). Additionally, it has been held that the payment of rent in excess of the maximum allowed by ordinance results in an unjust enrichment and entitles the tenant to restitution if the rent was paid either involuntarily or under compulsion due to the unavailability of housing accommodations. Brinkmann
v. Urban Realty Co., Inc. , 10 N.J. 113 (1959); Jenkins v. Kaplan , 50 N.J. Super. 274 (App.Div.1958). However, no decision in New Jersey has expressly held that a knowing or informed waiver of the rent control provisions is impermissible.
As the court pointed out in Jamouneau:
The basic right of private property perforce yields to an overriding public need. There is an ever-increasing demand for accommodation of the right of property and of contract to the inexorable needs and pressures of our complex economy and intricate social organism. The vital community interest is paramount. Utility rate contracts give way to this attribute of sovereign power; and the contractual arrangements between landlord and tenants as well. [16 N.J. at 514 citations omitted]
Furthermore, the various rationales supporting the adoption of rent control ordinances bespeak the need to establish reasonable balance in the contractual relationship of landlord and tenant. "Absent such legislative control, the principle of freedom to contract is non-existent and unilateral terms result." Shell Oil Co. v. Marinello , 63 N.J. 402, 408 (1973). Our courts have not hesitated to invalidate unconscionable contract provisions which tend to impede the public ...