News Bulletin

From the Law Office of Michael D. Mirne
3200 Sunset Avenue Ocean, NJ 07712
(732) 988-7200 Fax (732) 776-7444
Internet: www.mirnelaw.com

In this month's newsletter, we will discuss a major change in the way Tenancy Complaints are filed under the new Hodges decision.

Synopsis of Hodges v. Finestein

As most landlords are aware, it is illegal to assess late fees and legal fees against Section 8 tenants in an eviction action. The case of Hodges v. Finestein involved a law firm which did not comply with this rule and was eventually sued by two of the Section 8 tenants whom they had evicted. In a surprising decision, the New Jersey Supreme Court ruled that law firms regularly practicing in the area of landlord and tenant litigation were debt collectors under the Federal Fair Debt Collections Practices Act (FDCPA). The New Jersey Supreme Court's decision marked the first time that any Court in the nation determined that the FDCPA applied to landlords.

Understanding the Fair Debt Collections Practices Act of 1968

The FDCPA was originally enacted to protect consumers from abusive debt collections practices. The practices targeted by this legislation include using "any false, deceptive or misleading representation or means in connection with the collection of any debt," as well as using "unfair or unconscionable means to collect any debt." The FDCPA broadly defines debt as "any obligation... to pay money out of any transaction... primarily for personal, family or household purposes." The FDCPA further describes substantial penalties for debt collectors who are found guilty of violating this Act.

The Defendant's Argument

The Defendants in the Hodges matter argued that since Tenancy Court was limited in its jurisdiction to only hearing issues of possession and not being able to order a money judgment, that the FDCPA did not apply to Landlords and their attorneys in filing tenancy matters. The Defendants further argued that the procedural requirements of the FDCPA could not be satisfied in the time it takes for an eviction to reach its trial date. The Supreme Court of New Jersey was not persuaded by either argument.

With regard to the first argument raised by the Defendant, the Court stated that since the filing of an eviction is a powerful tool for forcing a tenant to pay a debt, the Plaintiff's attorney should be considered a debt collector, notwithstanding the fact that the Courts in eviction actions did not have the statutory authority to actually force the tenant to pay the debts which they incurred. In response to the second argument, the Supreme Court decided to implement some procedures, primarily the Verification of all tenancy complaints.

New Procedure - Effective February 1, 2007

Under the new rules, all Tenancy complaints filed after February 1 must meet the following requirements:

1. Verification - The Complaint must contain the signature of the Landlord (the signature of the landlord's attorney is no longer sufficient);

2. The Complaint must state the amount that needs to be paid in order for the tenant to have the matter dismissed;

3. The Complaint must state that if the tenant receives housing assistance, that late fees and legal fees are not included in the complaint.

For attorneys who file evictions, the first requirement presents a substantial procedural hurdle because it requires the client to provide an original signature on each complaint. Our office had initially responded to this requirement by generating a new addendum, which many counties allowed us to add to the tenancy complaint to make it comport with the new Hodges requirements. Most recently, our software provider furnished us with the newly created form, which is now accepted in almost all New Jersey Courts. Please note, however, that some counties like Ocean County and Passaic County still insist that we use their version of the modified form. We expect that within a few weeks our office will have the new forms for those counties scanned so that we can e-mail them directly to our clients for signatures.