Legal Updates

A State Superior Court Judge has agreed with Conell Foley and reversed the action of the Hoboken Rent Leveling & Stabilization Board finding that an apartment building is not exempt from local rent control. 

Under the New Jersey Rent Control Exemption Law, newly constructed apartment buildings are exempt from municipal rent control for a time not to exceed the lesser of the period of amortization of the initial mortgage or 30 years following completion of construction. To claim an exemption, the owner of a qualified property must file a written notice to the municipal construction official at least 30 days prior to the issuance of the certificate of occupancy. Once an exemption is so claimed, the statute bars a municipality from taking any action that may limit, diminish, alter or impair that exemption. 

In a matter concerning a building at 1400 Clinton Street that was completed in 2014, the issue raised by the Hoboken Rent Board was the duration of the exemption period. On an appeal by a tenant, the Board found that the period of exemption was limited to the three-year term of a construction loan because a mortgage and security agreement had been recorded for that loan. The Board concluded the exemption ended in 2017.

Connell Foley argued that the Board had no legal authority to determine the status of a property under the Exemption Law.  It argued further that the construction loan did not constitute a mortgage as contemplated under the Exemption Law because it did not include a period of amortization as defined under the statute.  Finally, it was argued that to read the Exemption Law to include short term construction financing to establish the exemption period was contrary to the clearly stated purpose of the law.

The court agreed and found that the Board had no authority to render the decision.  As for the duration of the exemption, the court agreed also that because the construction loan did not include a period of amortization as defined under the law, the exemption period could not be tied to the term of that loan. The court held that the exemption period was 30 years following completion of construction. 

The owner was represented by Connell Foley partners, W. Nevins McCann, Robert Verdibello and Richard DeAngelis who argued the matter.