Basics of New Jersey Residential Leases
In New Jersey, the purpose of a residential lease is to set forth the terms and conditions under which a landlord allows a tenant to occupy a residential dwelling. Broadly speaking, the lease serves to protect both the landlord’s right to obtain rent and to safeguard the health, safety, and welfare of the tenants from unreasonable activities at the premises. Similarly, the lease serves to protect the tenant’s right to have a habitable living environment during the term of the lease and the ability to enforce the terms of the lease . The relationship between landlords and tenants can be complicated, but standard form leases help to ensure that landlords and tenants are on the same page. Standard form leases are commonly used throughout the New Jersey real estate community because they are easy to understand and apply the standards of common use and law to situations which may be complicated and unique to the circumstances of tenancy.
How the NJ Realtors Standard Form of Residential Lease Differs
The New Jersey Realtors Standard Form of Residential Lease is a lease intended for residential tenancies. The parties to the form lease are a landlord (lessor) and a tenant (lessee), with the option for a property manager to participate with the parties as the "owner’s agent." The primary components of the NJ Realtors Standard Form of Residential Lease are as follows:
Lease Duration. Specifically, the lease duration covers the start date of the lease, the end date of the lease, and whether or not the lease converts to a monthly/month-to-month agreement upon expiration. Both the landlord and tenant must sign the lease form in order for the agreement to be valid.
Payment Terms. The lease sets forth the amount of rent due by the tenant to the lessor as well as the date by which the rent is to be paid. It also establishes information about any additional funds the tenant may owe to the landlord or property manager, such as for utilities, security deposits, late fees, and other applicable fees.
Tenant Obligations. The Standard Form of Residential Lease also obligates the tenant to complete various tasks in order to remain in compliance with both the terms of the lease and with New Jersey law. This includes obtaining renter’s insurance, notifying the landlord of any damages, and limiting the number of people who live at the leased property.
Security Deposit Information. It is important to note that New Jersey law places limits on the amount of funds that a landlord can require as a security deposit for the lease. New Jersey law also requires a property owner to place a tenant’s security deposit into an account outlined and approved by the state.
Lease Modification Information. The lease agreement also addresses the topic of lease modifications, including whether the lease may be extended, the penalty for default, and how the lease may be terminated.
Additional Terms of the Lease. These include pet policies, parking policies, appliance maintenance policies and other miscellaneous terms that are specific to the tenant, the landlord, or the managed property. Failure to comply with these terms could also result in premature termination of the lease.
Advantages of a Standard Form of Lease
The New Jersey Realtors Standard Form of Residential Lease is a streamlined document that offers significant advantages for both the individual landlord and tenant when compared to other ways of leasing a residential property, such as a custom lease or a lease that has been written without a thorough understanding of New Jersey landlord-tenant law.
For landlords, the greatest benefit is a simplified process. The landlord can fill in the blanks and be confident that the lease complies with state law. Considerable time is saved when a rental property is rented several times a year, since by using a standard form, many of the questions that arise during the lease negotiation process have already been answered. The property specifications previously completed by the landlord also prevent unnecessary back-and-forth communication from the start of the relationship. From an economic perspective, a lease created by an attorney usually costs roughly $400; this fee may seem like a good deal, but when compared to the standard form lease, it does not take into account how much time (money) will be saved by the landlord because the complicated aspects of leasing a property are no longer an issue for them.
For the tenant, the advantages are similar, as the tenant no longer has to invest in legal costs in order to obtain the protections that are available under New Jersey law. The specific terms regarding the property are completed before the negotiation of the lease begins. The lack of back-and-forth with the landlord on such issues makes a process that often feels negative for a tenant into a positive one.
Standard Form Lease Common Provisions
The Standard Form of Residential Lease from the NJ Realtors includes typical provisions that are found in most leases. Even though they are standard, it is important that those who are relying on the lease are familiar with its contents.
Security Deposit. A security deposit is typically retained by the landlord for purposes of offsets against damages caused by the tenant. Under the standard lease form, a security deposit shall not exceed 1 ½ month’s rent. The maximum security deposit allowable is 1 ½ month’s rent. The security deposit must be held in an account that is separate and apart from the landlord’s other assets. The lease form anticipates that the money will earn interest that inures to the benefit of the tenant.
Repairs and Maintenance. The standard lease form requires the tenant to care for the premises and keep them in good order. Included in the responsibility of the tenant is a requirement to immediately report any needed repairs to the landlord. The lease form includes an explicit obligation for the tenant to avoid waste, neglect, unduly dangerous conduct, and unlawful acts. Thus, not only may the tenant be responsible for damages to the rental unit, but the tenant may be held responsible for any injury or damage to third parties.
Utilities. The standard lease form usually obligates the tenant to maintain heat and hot water at an appropriate minimum temperature. Importantly, in condominium and cooperatives, the master deed, declaration and proprietary lease respectively, may impose an obligation for the tenant to pay an extra assessment or other charge for the unit. Therefore, a tenant in a condominium or cooperative should comply with the governing documents including the master deed, declaration and bylaws.
Termination of Lease. Typically, when the lease term expires, the tenant is required to vacate the premises. However, there are often opportunities to extend the lease. The parties may elect to engage in a month to month tenancy.
Legal Issues & Legal Compliance
In addition to the standard lease provision, realtors and landlords must also be aware of a number of state laws, rules, and regulations which impact residential leases. Most importantly, all leases must comply with the New Jersey Anti-Eviction Act ("Act"), N.J.S.A. 2A:18-61 et seq. The Act limits the ability of landlords to evict nonpaying tenants and those who reside in rental units for more than 180 days. Except for certain limited exceptions, they must offer the tenant a "cause", or reason, for the eviction. Additionally, the landlord must establish the cause in court, after providing written notice of at least one month to the tenant.
Very important to tenants is the State’s laws regarding return of security deposits. Under the Act, N.J.S.A. 46:8-19 et seq., a security deposit is defined as any advance, benefit or deposit in the nature of money given to the landlord for the use and benefit of the tenant, including any sums paid as advance rent. A lease can only require the payment of one and a half months’ rent (no more than five percent of the monthly rent paid in advance). The landlord holding such a deposit cannot withhold more than one and a half months’ rent, plus any amount of the deposit which he may have used legally within the first six months of the tenancy. Such use includes payment for unpaid rent, or for repairs to damages caused directly by the tenant’s conduct, or reimbursement for increases in property taxes and municipal fees above a set amount.
New Jersey law also requires that security or advance rental deposits be placed in an interest bearing account in a bank or other lending institution, and may only pay the tenant 75% of any interest earned annually. The lease must provide the tenant with the name and address of the institution in which the deposit is kept , and if a tenant so requests, a receipt confirming the deposit.
Should a tenant fail to pay the last month’s rent when due, the landlord may apply the amount owed against the security or advance rental deposit held by him. If such deductions are made, the tenant must be notified in writing. Additionally, the tenant must be notified immediately of the reassignment of a security deposit if the property is sold or rented to another landlord. Upon termination of the lease, the landlord must return the balance of a security deposit, if any, together with the last month’s rent. If the landlord fails to do so within 30 days of the termination of the lease, then the tenant is entitled to receive statutory interest on the full amount of the deposit.
A lease which does not conform to the above stated New Jersey laws regarding the use of security deposits is void and unenforceable. Both the tenant and the owner/lawful holder of the deposit may recover double the amount of the deposits in question, and reasonable attorney’s fees. N.J.S.A. 46:8-21.1. The penalties for a landlord’s failure to comply with the provisions of N.J.S.A. 46:8-19 et seq. may be severe, particularly because landlords are required to apply these same security deposit requirements to all tenants, at the risk of confusing the Courts.
Other important provisions of the New Jersey Anti-Eviction Act include N.J.S.A. 2A:18-61.1, which requires that a landlord serve a tenant with a notice to quit for nonpayment of rent within 5 days of the rent being due; N.J.S.A. 2A:18-72, providing that a tenant may not be evicted during the months of December through March; and N.J.S.A. 46:8-20, which makes it unlawful for a landlord to intimidate or threaten a tenant in order to gain possession of premises occupied by a tenant.
Modifications to the Standard Form
The New Jersey Realtors Standard Form of Residential Lease may not address every specific situation. Modifying the standard form to fit a particular property is an option, but care should be taken to avoid provisions that cancel or change meaning in the lease. In particular, landlords may need to add:
Modifications should be clear and unambiguous to ensure no confusion for the tenant. All modifications should be written in a language that both parties agree to. As with all residential leases in New Jersey, any provision added that has the opposite or contrary intention to the New Jersey Real Estate Commission rules will be held void.
It is critical to put anything that is outside of the standard leases in writing and signed by both the landlord and the tenant. A separate lease addendum can be created that will list all modifications to the standard lease form. For example, if a pet deposit is going to be charged, it should be placed in a specific lease addendum.
How to Get The NJ Realtors Standard form of Lease
The New Jersey Realtors Standard Form of Residential Lease is widely available to realtors and landlords who are members of the New Jersey Realtors Association. New Jersey Realtors, formerly known as the New Jersey Association of Realtors, has created the form and offers it as a benefit of membership. To access and use the Standard Form of Residential Lease as a realtor, one must hold a membership with New Jersey Realtors.
Non-members such as homeowners, landlords, real estate investors and management companies can also find the New Jersey Realtors Standard Form Residential Lease online by subscribing on the NJ Realtors website. By registering as an individual, users have direct access to the Standard Form of Lease and other residential forms offered by NJ Realtors.
Conclusion: Navigating Residential Leases In New Jersey
In conclusion, the New Jersey Realtors Standard Form of Residential Lease is an invaluable tool for landlords and tenants navigating rental agreements in the state. By using this comprehensive and legally sound template, parties can avoid common pitfalls and potential legal disputes down the line. However, it is essential to remember that each leasing situation is unique and may require additional clauses or modifications not covered, or not sufficiently addressed, by the standard lease form. It is crucial to seek the assistance of a qualified legal professional when drafting a residential lease agreement , as a legal advisor can tailor additional clauses to meet the specific needs and circumstances of the parties involved.
Engaging an attorney not only ensures that your lease is comprehensive and legally sound, but also cements the foundation for a trusting relationship with your legal advisor moving forward. In addition, the use of the New Jersey Realtors Standard Form of Residential Lease and the advice of a legal professional encourages comprehensive and consistent lease agreements and helps ensure compliance, clarity, and consistency in all resident leases.