This summary dispossess action raises the novel issue of whether a municipal property tax increase which results from the conversion of a rental property to a condominium may be passed along to a tenant who remains in possession after the conversion pursuant to N.J.S.A. 2A:18-61.2(g), (or any other statutory provision which protects tenancies which pre-exist the conversion).
The facts, as stipulated and as proven at trial, may be summarized.
Defendants entered into a written lease with Baridge Associates to rent an apartment for a term of one year at 307 Prospect Avenue, Hackensack, New Jersey. They continued their tenancy after the expiration of the lease on a month-to-month basis.
Plaintiff, successor to Baridge Associates converted the building known as Baridge House from a rental property to a condominium. N.J.S.A. 46:8B-1 et seq. Defendants having refused to exercise their option to purchase the unit which they occupy (N.J.S.A. 2A:18-61.8), have remained in their apartment, protected by the three-year notice provision of N.J.S.A. 2A:18-61.2(g).
Subsequent to the conversion the building suffered a municipal property tax increase of approximately 270%. Plaintiff has charged the defendants with their proportional share of its tax increase, raising defendants' tax surcharge from $757.67 to $2,043.70.
Defendants have refused to pay the increased surcharge and plaintiff, therefore, has brought this summary dispossess action, alleging nonpayment of rent. N.J.S.A. 2A:18-61.1(a).
Plaintiff argues that the Hackensack rent control ordinance (Code of the City of Hackensack, hereinafter Code, § 134) does not apply to rental units within a converted building and, therefore, the tenant may prevail only by showing that the increase is unconscionable. Edgemere at Somerset v. Johnson, 143 N.J. Super. 222 (Cty.Ct.1976).
This argument is clearly without merit inasmuch as the Appellate Division has recently held that the Hackensack rent control ordinance does, in fact, apply to rental units within condominium buildings. G.D. Management Co. v. Negri, 182 N.J. Super. 409 (App.Div.1982).
Alternatively, plaintiff argues that the increased tax surcharge is expressly permitted by the Hackensack rent control ordinance. Code § 134-6. The Code provides that:
No landlord may request or receive a percentage increase in rent which is greater than 50% of the percentage difference between the consumer price index 90 days prior to the expiration or termination or anniversary of the lease and the consumer price index 90 days prior to the date of the lease term commenced or, in the case of multi-year leases the last prior annual anniversary [§ 134-3(a)]
The Code further provides that if the landlord incurs extraordinary operating expenses, he may apply for hardship relief to the Rent Stabilization Board. Code § 134-3(e)(1).
Code § 134-6 provides for tax surcharges against the tenant, in favor of the landlord in the event of an increase in municipal property taxes. This surcharge may be collected by the landlord ...