Some Clarifications on Hoboken Rent Control & Z-88
Categories: Hoboken Condos, Legal Matters, Neighborhoods
I read some interesting comments about the rent control issue on another Hoboken blog that was just filled with misinformation. Then someone posted a really nasty comment here today. Listen commentor (you know who you are), if you have to resort to name-calling, dirt slinging and blasphemous generalizations to make your arguments, I’m just gonna delete the comment. It’s my blog, duh! But I don’t have a problem addressing the substantive issues that were presented in it and some of those I read about.
Some Mistruths:
“The developers are out to rape tenants.” – False.
New construction is exempt from rent control. You know all those luxury high-rises at the Shipyard and 333 River built by Applied? Or 1000 Jeff? Or XXX Madison? Not covered. Large, luxury rental buildings built by the big developers in recent years are market rate. The landlord can charge whatever the market will bear.
“Small landlords and owners don’t have a problem with the rent control ordinance” – False.
Hoboken is one of, if not the only, city where single unit condominiums and two-family homes are covered by rent control. Small landlords have been trying to get this changed for decades. If you own a condo and don’t want to sell it because you will lose a great deal of money if you do, why shouldn’t you be able to rent it out at market rate? Even if it’s not your primary residence (because you had a baby and moved to a larger space), why does that unit fall under the ordinance?
“Buyers can find out the legal rents before they buy a property so it’s their fault if they didn’t bother.” – False.
Only the tenant or the current owner can file for a legal rent calculation. Not a buyer.
“Landlords are trying to get rich at the expense of tenants.” – Mostly False.
There may be some unscrupulous landlords out there as anyone can be dishonest. But tenants can be dishonest too. There are tenants who know they are being overcharged and, because there is no limit on how long they can wait to bring a claim against the landlord, they purposely wait as long as possible, in some cases years, so they can go for the treble damages on the “savings”. Pretty big windfall for the tenant, at the landlord’s expense, no?
“Rent control will save diversity in Hoboken.” – False
Is there any evidence of an empirical relationship between those who receive the benefits of rent control and diversity? Studies actually show that cities with rent control laws have higher overall rents than those without. Hoboken should be diverse. Hoboken has a huge amount of subsidized housing. The Hoboken Housing Authority Section 8 projects span Harrison St. from 2nd to 7th with hundreds of apartments for low income occupants. Church Square is a subsidized complex of multiple buildings with hundreds of apartments that are supposed to be for middle income occupants. Marine View Towers are two enormous high-rises of subsidized housing that are supposed to be for middle income occupants.
I’m doing this from memory so bear with me but, there is the entire block of Washington from Newark to 1st; the entire block on the east side of Washington from 12th to 13th (the Yellow Flats), the entire block of the west side of Washington from 12th to 13th; entire blocks on upper Bloomfield; lower Bloomfield, along the entire south side of Columbus park; on Hudson along 12th & 13th – there are simply too many to mention. These were mainly built by Applied with government backing and are supposed to be subsidized housing.
There is Fox Towers on Willow & 13th. There is the large senior building on 1st around Park. All subsidized. That is where the diversity might come from. But does the condo unit down the hall from you that the owners rented out because they couldn’t sell create diversity? Really? If there is a problem with people living in subsidized housing who shouldn’t be then address that problem. Rent control does not do that. These subsidized buildings and who gets the benefit of the below market rents in them is NOT determined by the rent control ordinance.
I happen to be a lawyer. I graduated in the top of my class, made law review, clerked for a Federal Judge, worked for one of the most elite Wall Street law firms and a Fortune 10 company. I also have an MBA in Finance. So I know a little about basic economics and the law. Basic legal principles govern a free market society in order that people have certainty in their dealings for that free market to flourish. That is why there is a limit on when a person can bring an action against another person or entity. It’s called a statute of limitations. The theory is twofold: the potentially aggrieved party has a reasonable time after discovering the harm to seek a remedy and the other party knows that after that given time period elapses the risk of liability and litigation, warranted or not, ends. Certainty in one’s dealings is a core tenet of a free-market. One cannot sleep on his rights. Here, the fact that without the new amendment a tenant can wait indefinitely to bring an action against a landlord flies in the face of this. What is to stop a tenant who knows he is being overcharged to wait to bring an action so that he can increase his (potentially threefold) recover on purpose? Is that fair to a landlord? The common law doctrines of laches, estoppel, and acquiescence all address these very inequities. Go ahead and google them if you want to know more.
As for the “too bad realtors can’t vote” statement made by the nasty poster, we live in Hoboken and have voted in every election for the past 12 years. I hope my peers will go to the polls and join me on Tuesday.
I’m voting “no”, as should you.
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Hoboken Election November 8 – Why you MUST VOTE NO on Z-88: the Hoboken Rent Control Referendum
Categories: For Buyers, For Sellers, Hoboken Condos, Legal Matters, Neighborhoods
“No” means “Yes” the way this referendum is written
Last year, the Hoboken & City Council unanimously enacted an amendment (Z-88) to Hoboken’s archaic rent control laws. A small group of tenant advocates accumulated enough signatures on a petition to suspend the new ordinance and have the issue voted on in this election. A “YES” vote means you want to kill the amendment. A “NO” vote means you want to keep the amendment. You should vote NO! Here is why:
“I live in a condo so I don’t care about any of this.”
Guess what folks, even if you live in a or own a single condo unit, if it was built before 1987 it is covered by rent control. Many of you bought at the height of the market and have outgrown your space. You would like to sell but would rather not take a big hit in a down market. You think, “I could rent and cover my costs while I wait for the market to come back”. What you can charge in rent depends on what the legal rent is for your unit. You can find that out by filing a short form and paying $10 at City Hall. Your condo unit may be covered by rent control. If it is, the way the old law works, you have the risk of huge liability. Much of it for stuff that seems incredibly unfair.
Some Hoboken Rent Control Basics
There is no means test in determining who can live in a rent-controlled apartment. The benefits of rent control can go to a billionaire. Income is not relevant. Assets are not relevant. Rent control in Hoboken has absolutely nothing to do with need. Nothing. We are not talking about subsidized housing. We are talking about your and your neighbors’ condo units and your ability to rent them out for fair market value.
Under the old law, your tenant can sue you and could recover triple damages.
Under the old rent control law, a tenant could live in an apartment for any amount of time – let’s say 20 years – with no problem. Then, on any given day after 20 years of peace and willingly paying the rent, the tenant can decide to bring an action against you for rent overcharges.
Under the old rent control law, a tenant can sue for overcharges going back to PRIOR to when you even owned the property!!! That’s right – you didn’t even own it yet, didn’t collect any of the rent, but you can be forced to pay the tenant for overcharges!
Under the old rent control law, it doesn’t matter what you “thought” the legal rent was when you bought the property. It doesn’t matter that a tenant moved out voluntarily and the landlord is entitled to a 25% increase every three years. If the proper vacancy decontrol papers were not filed with City Hall by the prior owners you will be held responsible. (Oh, and by the way, City Hall wouldn’t take those papers from owners in the past when owners tried to file them.)
Under the old rent control laws, it doesn’t matter if you have leases that prove that the tenants left voluntarily and the rent was raised up to 25% every three years - under the old law the rent control office won’t consider that evidence!
The New Ordinance Puts Reasonable Limits on a Landlord’s Liability while Still Protecting Tenants
The new ordinance puts a 2 year statute of limitations on the tenant. A tenant has 2 years to bring an action. If the claim is not brought withing the first two years, they are barred from bringing it at all.
Certain lawyers make their living by contacting tenants and telling them that they may have a suit against their landlord. These lawyers take the case for no fee – just a percentage of the judgment if the suit is successful.
A tenant could have agreed to pay an advertised, market-rate rent and enter into a lease with the owner. This tenant willingly signed a lease to pay the advertised rent. In fact, these days tenants are fighting to get apartments in Hoboken. There are bidding wars on rental apartments!
If your tenant is contacted by this lawyer, and it turns out that the rent the tenant willingly agreed to pay was over the legal limit you, Mr. Landlord, will have to pay to refund the overcharge going back to the beginning of time. You may have to pay THREE TIMES the difference between the legal rent and his current rent under consumer fraud laws. You will have to pay overcharges going back in time before he even lived there! What a windfall for the tenant! What a disaster for the property owner!
Landlords have been forced to declare bankruptcy because of exorbitant judgments issued against them. Where is the harm to the tenant who willingly agreed to pay the advertised rent? No one forced them to sign the lease.
The new law limits the landlord’s liability for overcharges of rent to the prior two years. Again, entirely fair and reasonable.
The new law allows a landlord to present evidence of legal increases without the actual vacancy decontrol forms (which didn’t even exist until recently).
The new amendment protects tenants by requiring that their landlord notify them upon signing a lease of their right to a legal rent calculation.
The new amendment protects tenants because it does not provide for ANY new rent increases.
The new amendment protects tenants because a judge can still require the landlord to pay triple damages when warranted by the circumstances.
The new amendments protect ALL Hoboken TAXPAYERS because poorly functioning rent control laws further burden single-family and condo owners with higher taxes. Rent control restricts income to rental buildings, so the owners of those buildings pay less in taxes than they would otherwise. There are many 10 unit rental buildings (which buildings are worth millions, by the way) whose owners pay less than $10,000 a year in property tax. Most 2 bedrooms condo owners in Hoboken pay more than that!
More Details on Hoboken Rent Control and How it Hurts Condo Owners
If you are really interested, you can read more about this issue here.
Or watch this video:
http://www.vimeo.com/31376166Or this one:
http://www.vimeo.com/31177377But please go out on November 8 and VOTE NO on Z-88.
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When the Math Says Go Ahead and Buy – in Hoboken!
Categories: For Buyers, Neighborhoods
There was an article in the Real Estate section of yesterday’s New York Times about a young guy who was ready to leave his roommates behind and get a place of his own. Zach Linder’s budget for rent was between $1,400 and $1,500. After exploring Brooklyn’s rental market and finding nothing but too-small studios, he smartly decided it made more sense to buy. Unfortunately, he wasn’t smart enough to think of Hoboken.
He set out searching for a co-op in Brooklyn for under $300,000 with maintenance in the low $700s. His price range limited him to studios. A co-op seriously limits his ability to rent the property out should he outgrow it in the future. He ultimately bought a unit in Prospect Heights for $223,000 but it was in need of electrical and plumbing work. The building is on Plaza Street East, very near the Grand Army Plaza stop of the 2 and the 3 trains and seven stops from Wall Street. Had he only come to Hoboken!
Today in Hoboken, Mr. Linder could have his choice of 41 different units - all condos – for under $300,000. Only four are studios, the other 36 are 1-bedrooms and one is a 2-bedroom. For practically the same price he paid, there is a gorgeous alcove studio at 201 Washington with a brand new kitchen & bath, stainless appliances, a wood-burning fireplace, laundry downstairs and private garage! It’s listed at $229,900 with taxes and maintenance under $618 a month. Its three blocks from the PATH and three stops to World Trade.
Personally, I would have gone for the upper end of his budget and selected the 1-bedroom at 1115 Willow. This property is over 650 square feet with a private entrance and room for a grill. The building has an in-ground pool, a gym and a roof deck, an elevator and is professionally managed. The bus to Port Authority in midtown stops on the corner. It is listed at $299,000 with taxes and maintenance of $677.
If space were the primary concern, I’d choose the 1-bedroom plus den at 841 Willow which is over 880 square feet for an asking price of under $300,000. It has a windowed kitchen, room for a dining table, storage space and is a corner unit with city views. While I am a sucker for a New York City view, even though I was born in Brooklyn, I am no longer a sucker for a New York City address.
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