On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Atlantic County, LT-2123-99, LT-3920-99.
Before Judges Keefe, Eichen and Steinberg.
The opinion of the court was delivered by: Eichen, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
These are consolidated appeals of two summary dispossess actions with respect to an apartment in a building with three dwelling units located in Atlantic City. Plaintiff Patricia McQueen (the landlord), who occupies the second-floor unit on a part-time basis, initiated two successive actions for possession of the first floor apartment leased to defendants Steven Cook and John Brown (the tenants). These actions resulted in judgments in favor of the tenants in both cases. We reverse.
In the first action, plaintiff sought to remove the tenants for non-payment of rent. The tenants raised the defense that the lease was illegal and, therefore, unenforceable because plaintiff had not obtained a municipal occupancy permit as required by Chapter 194 of the Atlantic City Municipal Code (the ordinance). The judge agreed and dismissed the complaint for possession.
In the second action brought immediately after the dismissal of the complaint for non-payment of rent, plaintiff sought to remove the tenants under N.J.S.A. 2A:18-53, claiming the unit was exempt from the Anti-Eviction Act's good cause grounds for eviction, N.J.S.A. 2A:18-61.1a-q, because the premises were owner- occupied with not more than two rental units. N.J.S.A. 2A:18-61.1 (1) The judge dismissed the complaint, concluding that plaintiff's limited occupancy of the second-floor apartment, consisting of eight or nine days per month, did not qualify the unit as "owner-occupied" under the statutory exception.
In the first action, the parties stipulated to the facts. In the second action, the judge heard testimony and made findings of fact with respect to the extent of plaintiff's personal occupancy. These are the relevant facts. Plaintiff is the owner of a three-floor apartment building located at 517 North Ohio Avenue in Atlantic City. Pursuant to a written lease dated August 1, 1994,*fn1 plaintiff leased the first-floor apartment to the tenants at a monthly rent of $500. At the time the complaint was filed on May 7, 1999, the tenants had been withholding their rent for six months because of "alleged habitability defects," and owed rent of approximately $3,000. The record is silent as to the nature of these "alleged habitability defects." Prior to leasing the apartment to the tenants, plaintiff had not obtained an occupancy permit from "the Atlantic City code enforcement office" nor had she obtained such permit at the time the litigation was commenced.*fn2
Plaintiff's primary residence is in Philadelphia but, for the past twenty years, she and her mother have used the Atlantic City apartment on weekends and holidays, as well as for vacations. Plaintiff's apartment is fully furnished and she receives certain "bills" at that address. The third-floor apartment is occupied by plaintiff's cousin, Winfred Young, who does not pay rent.*fn3
With respect to the non-payment of rent action, the trial judge concluded that no rent was legally due and owing because plaintiff failed to obtain an occupancy permit before renting the apartment to the tenants in 1994 or at any subsequent time. He determined that either the failure to obtain the occupancy permit, or the inability to provide the tenant with habitable premises, "standing alone," was a sufficient basis for denying plaintiff's claim for possession, concluding that the lease was unenforceable.
He stated, in relevant part:
If a municipality passes an ordinance which requires a certificate of occupancy as a precondition for renting premises, as the City of Atlantic City has, it must logically follow that a lease which is violative of such an ordinance is unenforceable. Thus a landlord whose lease violates a certificate of occupancy ordinance is unable to prove the amount of rent due, and there is no reason why a tenant cannot assert such illegality as a defense to the claim of rent due, just like any other defense.
With respect to the action based on the owner-occupied exception to the good cause requirement of the Anti-Eviction Act (the Act), N.J.S.A. 2A:18-61.1, the judge determined that because "the property is not plaintiff's principal residence," her occupancy being limited to "weekends totaling at most eight or nine days per month," she was not an "owner-occupier" and, therefore, she could not evict the tenants without good cause ...