These were two summary actions for possession pursuant to N.J.S.A. 2A:18-61.1(f). This landlord served both tenants with notices to quit together with an increase in the rent. These cases were tried together because the landlord is the same in both cases, both tenants reside in the same building, there is no fact that differs materially in either case for the resolution of the subject legal issue, both cases were scheduled to be tried one immediately after the other, and they presented the set that "if it's not physical, it's not real." Id. at 414-415.
The legal issue presented is: who has the burden of proof in a summary action for possession where the landlord has increased the rent and a tenant refuses to pay the increased rent and claims that the increase is unconscionable? I have found no authority in New Jersey dealing directly with this issue. (Another issue common to both cases but not material to the resolution of this issue was resolved in a separate opinion which determined that these tenancies were subject to the requirements of N.J.S.A. 2A:18-61.1, rather than N.J.S.A. 2A:18-53.).
The rents were raised from $230 (Sanchez) and $250 (Rivera) to $400. The proportions of increase are 74% and 60%. The tenants acknowledged that they received the notices and that the notices complied procedurally with N.J.S.A. 2A:18-61.2.
Defendants claimed that the increase was unconscionable. The landlord testified that the increase was needed to meet the expenses of real estate taxes, mortgage payments, repairs, and maintenance expenses. However, neither party presented any factual basis for their claims. The landlord relied upon the premise that the tenants had to sustain the burden of proof that the increase was unconscionable, and the tenants relied upon the premise that the landlord had to justify the amount of increase, i.e., that the increase was not unconscionable (or, to
eliminate the double negative, that the increase was conscionable). Based upon the lack of any factual basis to support their positions, each proposed that whoever has the burden cannot prevail.
Under N.J.S.A. 2A:18-61.1(f), a landlord may raise a tenant's rent
provided the increase in rent is not unconscionable and complies with any and all other laws or municipal ordinances governing rent increases.
Although the subject property is in Newark, which does have a rent-control ordinance, it is exempt under the terms of that ordinance. Accordingly, the issue must be resolved by reference to subsection (f). I know of no common law defense to an increase in rent that is unconscionable. See Marine View Housing Co. v. Benoit, 188 N.J. Super. 539, 543 (Law Div.1982) which points out that the defense of unconscionability is statutorily created. The issue, therefor, becomes the interpretation of the statute providing that defense. Parenthetically, if a tenancy is subject to N.J.S.A. 2A:18-53, rather than N.J.S.A. 2A:18-61.1, the issue is not material because the landlord may evict the tenant without "good cause" and then set a new rent subject only to municipal ordinances and the forces of the marketplace. Likewise, the issue does not exist where the control of rents is preempted by federal legislation (subsidized housing) or where there is a rent-control ordinance.
Consideration of the Statutory Provision.
I find it significant that the statute uses the double negative "not unconscionable" in the subsection, rather than "conscionable" (which is the word sometimes used in Hill Manor, infra). However, contrast that with N.J.S.A. 2A:18-61.1(i). In that subsection, the standard used is "reasonable," a positive word; ...