N.J. landlord sues Murphy to stop order allowing tenants to pay rent with security deposits

Posted Jun 06, 2020

A New Jersey landlord is challenging Gov. Phil Murphy’s executive order allowing tenants to use their security deposits to pay their rent during the coronavirus crisis.

In a lawsuit filed in federal court, Matthew Johnson claims the governor’s order violates his constitutional rights and the contract he signed with his tenant for a $600 security deposit at his rental property in Cherry Hill, according to a statement released by New Civil Liberties Alliance, a nonpartisan legal group that filed the suit Tuesday.

The lawsuit could be the first in a long line of landlord-tenant issues that arise from the economic fallout of the coronavirus pandemic. Some legal experts have criticized the first-term governor for his overarching executive orders that could go beyond his constitutional powers, including intervening with rent payments.

“This is a straightforward case of administrative overreach," said Jared McClain, a staff counsel with the alliance that filed the suit. "New Jersey law gives the governor specific emergency powers that have to do with things like vaccines, hospitals, and the state militia. Residential lease contracts have nothing to do with the powers Governor Murphy invoked here,”

When pressed by reporters during his daily briefings in March and April, Murphy admitted he faced hurdles when offering relief to renters.

“Renters are just a more complicated set of individuals to regulate because they’re private contracts between people but we’re doing everything we can to find relief for the people of New Jersey who rent,” his chief counsel Matt Platkin noted at the April 1 briefing.

A tenant who lives in the Barclay Towers complex and is not named in the lawsuit informed Johnson on March 31 that he had been laid off from his job and planned to file for unemployment benefits. The single Cherry HIll condo is the only property Johnson rents out.

Now, with Murphy’s April 28 executive order that allows security deposits to be a form of rent payment, the tenant is “increasingly likely to take advantage of the 2018 lease,” the lawsuit said.

And without a security deposit, the suit continues, Johnson could be forced to pay out of his own pocket for any damage caused by the tenant or to bring “a costly and timely small-claims action against the tenant.”

“As a landlord and a board officer for two condo associations, I know the financial difficulties that a tenant can cause by damaging a rental property, in which case the only saving grace is the security deposit,” Johnson said in a statement to NJ Advance Media. “I’m concerned about the position it will put myself and other landlords in if we allow a governor to modify a private contract with the stroke of a pen.”

The lawsuit also asserts that the executive order goes beyond Murphy’s authority, claiming that the governor can’t waive the requirements of leases because of financial hardship, even if that hardship results from the public health emergency. And landlords should be compensated by the state should their tenant does not pay back their security deposit, which they are not currently required to do.

Johnson’s 14th Amendment rights to have equal protection under the law were violated as well, the suit continues, as Murphy singled out residential landlords which resulted in “a loss of his civil liberties.”

“Johnson no longer has the security deposit for which he rightfully contracted. He is now in a worse position than he was before, due solely to an executive order the governor had no legal power to make,” the lawsuit states.

The state Attorney General’s Office did not respond to request for comment.

Murphy has offered other forms of rental relief to tenants as well. On May 29, a $100 million emergency rental assistance fund was created for struggling tenants who became unemployed during the pandemic.

He’s also enacted a moratorium on lockouts due to evictions and foreclosures, and suspended rent increases for 36,000 low- and moderate-income homes, and some cities, including Hoboken and Newark, have independently imposed rent freezes.

Since the pandemic began in mid-March, about 1.2 million New Jersey residents have filed for unemployment, as nonessential business were forced to close, causing the state’s unemployment rate to surge to 15.3%. Many say they’ve been waiting for weeks to get paid and have struggled with the state’s busy phone and online systems.

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commented 2020-06-07 21:07:42 -0700
something must be done to this insanity. My tenant is taking advantage and has not paid me since January way before the pandemic and does not have any fear of being locked out. Month after month is going by and I am in such debt adding up to 20k and they just dont care to even redpond. Murphy, who gave you the right to put me into bankruptcy by the hands of illegal activity. You must change something please