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Pinewood Estates of Michigan v. Barnegat Township Rent Leveling Board

Decided: October 21, 1992.

PINEWOOD ESTATES OF MICHIGAN, PLAINTIFF,
v.
BARNEGAT TOWNSHIP RENT LEVELING BOARD



Rosalie B. Cooper, J.s.c.

Cooper

The issue presented for consideration by this court is whether an appraiser's fees for a report and testimony in support of a landlord's application for a hardship rent increase should be allowed by the Barnegat Township Rent Control Board as reasonable and necessary operating expenses.

Hardship rent increases are governed by Section 64-8A of the Barnegat Township Rent Leveling Ordinance which states:

A landlord who finds that present rental income and additional charges from the mobile home park on which he seeks relief hereunder are insufficient to cover the cost of payments on a first mortgage and any subsequent mortgages directly used to improve and upgrade the mobile home park and/or payments for maintenance and/or all operating costs, and at the same time ensure the landlord a just and reasonable return, may appeal to the Rent Leveling Board for an increase in rental income. Following a hearing, the Board may grant the landlord a hardship rent increase to meet these needs after considering the proofs presented by the landlord, the condition of the mobile home park and the degree of hardship to the landlord.

Because of the great number of hardship applications involving appraisers' opinions, it is surprising that this issue is one of first impression not only in New Jersey but throughout the country, so far as the exhaustive research of counsel and this court has revealed.

It was the initial impression of this court that appraisers' fees would be an adjunct to or derive through the applicant's attorney's fees since an attorney, in support of an application for a hardship rent increase would, of necessity, be obligated to offer expert testimony to support the landlord's application. After studying this matter, this court has concluded that not only are such fees ancillary to attorney's fees but they also have independent

standing as reasonable and necessary operating expenses.

The only New Jersey case in which professional fees were considered in a rent control context as operating expenses is Park Tower Apartments, Inc. v. City of Bayonne, 185 N.J. Super. 211, 447 A.2d 1359 (Law Div.1982) where the court stated "reasonable legal fees, if actually paid, must similarly be allowed as a proper part of administrative and miscellaneous expenses." Id. at 224, 447 A.2d 1359. It is significant that there was no indication in the Park Tower Apartments, Inc. case that the decision designating legal fees, actually paid by a landlord, as allowable administrative or miscellaneous expenses, included legal fees incurred with regard to the proffering of a hardship application to a rent control board. In fact, in the case at bar, counsel for the applicant/landlord has conceded that Park Tower Apartments, Inc. is not a precedent in that regard.

Because there is no guiding precedent with respect to considering appraisal fees as auxiliary to attorney's fees in New Jersey, it is appropriate to consider out-of-state cases.

The out-of-state cases studied by this court consider the justification for allowing attorney's fees as reasonable and necessary operating expenses and afford the rationale for this court's decision in holding that appraisers' fees are allowable as reasonable and necessary operating expenses. The cases considered are: Allen J. Realty Co. v. Herman, 31 Misc.2d 861, 221 N.Y.S.2d 1017 (Sup.Ct.1961); Litman v. Weaver, 20 Misc.2d 1032, 190 N.Y.S.2d 910 (Sup.Ct.1959), aff'd 10 A.D.2d 865, 201 N.Y.S.2d 497 (N.Y.App.Div.1960); and Mara v. Abrams, 142 N.Y.S.2d 200 (Sup.Ct.1955). Premised on the Conclusion that a "landlord requires legal assistance to present an application for increases" in rent applications based on hardship, the consensus of opinion in these cases is that attorney's fees should be awarded as reasonable and necessary operating expenses. See Allen J. Realty Co., supra, 31 Misc.2d 861,

221 N.Y.S.2d at 1019; Litman v. Weaver, supra, 20 Misc.2d 1032, 190 N.Y.S.2d at 913; and Mara v. Abrams, ...


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