Landlords - what happens when your tenant can't pay rent during the pandemic?

Posted by: Wiley Lavender on Thursday, April 2, 2020

On Thursday, March 19, 2020, the “COVID-19 Emergency Response Package,” a collection of 28 separate bills, was quickly approved by the NJ Legislature and signed into law by Governor Phil Murphy. One of the bills gave the Governor the authority to issue an executive order declaring a moratorium on removing individuals from their homes pursuant to an eviction or foreclosure proceeding. With this authority and guided by the urgency of slowing the spread of Covid-19, Gov. Murphy immediately signed Executive Order No. 106, which imposes such a moratorium. According to the Order, unless it is first revoked or modified by the Governor in a subsequent executive order, the moratorium is to remain effect until it has been determined that the Public Health Emergency and the State of Emergency established by Executive Order No. 103 (2020) have both passed.

In the time since Executive Order No. 106 was signed, the Covid-19 health crisis has only grown. Initially, on March 14, 2020, the New Jersey Supreme Court issued a notice stating that all landlord/tenant court proceedings would be suspended for two weeks, or up through March 27, 2020. However, with reports that the crisis is expected to hit its peak in NJ sometime in late April/early May, the Supreme Court has decided to extend the suspension of the landlord/tenant calendar indefinitely.

With the start of April, some residential landlords find themselves with tenants not being able pay rent because of the pandemic. This, coupled with the moratorium on evictions currently in place through Executive Order No. 106, has landlords very concerned and rightly so. Fortunately, Executive Order No. 106 does set forth certain limitations which landlords should take note of.

First, the moratorium only applies to the actual removal of individuals from their homes pursuant to an eviction or foreclosure proceeding. In an eviction, when a judgment for possession is granted to the landlord, the tenant is required to vacate the rental within three business days. Should the tenant fail to do so, the landlord may then apply for a warrant of removal which authorizes a Special Civil Court Officer to remove/lock-out the tenant from the rental. With Executive Order No. 106, Court Officers are currently barred from doing this, or in other words “executing” the warrant of removal. The moratorium does not however, bar landlords from filing their eviction complaints and having said complaints served upon the rental property by a Court Officer. As provided on the NJ Court’s website, the Courts are closed to the public but are still accepting and processing mail-in filings.

And, second it is important to note that Executive Order No. 106 explicitly states it does not relieve a tenant from his or her obligation to pay the scheduled rent. Therefore, if a tenant fails to pay the rent by its due date, the moratorium does not bar a landlord from filing an eviction complaint to remove the tenant or filing a separate complaint to recover a money judgment for the unpaid rents. If a landlord chooses to file an eviction complaint, while the parties are waiting for the mortarium to be lifted and the Courts to reconvene the landlord/tenant calendar, the landlord and tenant can use the additional time to discuss ways of resolving their dispute. This could mean establishing a payment plan for the arrearages or agreeing to a rental adjustment. If landlord and tenant can come an agreement, the terms of the agreement can be memorialized in writing by way of a consent judgment and filed with the Court under the docket number assigned to the landlord’s complaint. Aside from consent judgments requiring a tenant to vacate by a certain date, most consent judgments can be submitted to the Court without a formal hearing. With a consent judgment filed with the Court, in the event of a breach the landlord has the ability to apply for a warrant of removal and do so without the need of a trial.

Even with these limitations, during this crisis it is strongly recommended that landlords make good faith attempts to resolve tenant disputes before initiating any legal action. Landlords should be mindful that pursuing an eviction action based on nonpayment of rent during a global pandemic may hurt their reputation. However, should those negotiations breakdown, we can help. We will take the time to review a landlord’s issues and desired goals and determine the best course of action during these troubling times.