New Jersey Residential Landlords Prohibited from Requiring Electronic Payments | Practical Law

New Jersey Residential Landlords Prohibited from Requiring Electronic Payments | Practical Law

Effective January 13, 2020, New Jersey Senate Bill No.1493 prohibits residential landlords from requiring tenants to make rent or other payments by electronic means. The bill amends New Jersey's Truth-in-Renting Act.

New Jersey Residential Landlords Prohibited from Requiring Electronic Payments

Practical Law Legal Update w-023-6189 (Approx. 4 pages)

New Jersey Residential Landlords Prohibited from Requiring Electronic Payments

by Practical Law Real Estate
Published on 16 Jan 2020 • New Jersey
Effective January 13, 2020, New Jersey Senate Bill No.1493 prohibits residential landlords from requiring tenants to make rent or other payments by electronic means. The bill amends New Jersey's Truth-in-Renting Act.
On Monday, January 13, 2020, New Jersey Governor Phil Murphy signed into law Senate Bill No. 1493 ("S1493") which prohibits residential landlords from requiring tenants or prospective tenants to make rent or other payments by means of electronic funds transfers. The bill amends portions of New Jersey's Truth-in-Renting Act (N.J.S.A. 46:8-44 to 46:8-51).

Background

The increasing tendency of residential landlords to require payments solely by electronic funds transfers adversely impacts many low-income or otherwise disadvantaged people. By requiring electronic payments, tenants and prospective tenants who do not have bank accounts or credit cards may be effectively denied access to affordable housing. To combat this problem, New Jersey passed into law S1493.

Outcome

S1493 prohibits residential landlords from requiring tenants or prospective tenants to use electronic fund transfers to pay for:
The law applies to residential lease agreements, extensions, or renewals entered into on or after January 13, 2020.

Scope of Law

For purposes of S1493, a "Landlord" is defined as any person who leases or offers to lease dwelling units for a term of at least one month (N.J.S.A. 46:8-44(a)).
"Dwelling units" excludes those units in:
  • Rental properties containing two or fewer units.
  • Owner-occupied premises containing three or fewer units.
  • Hotels, motels, or other guest houses serving transient or seasonal residents.

Electronic Funds Transfer

An "electronic funds transfer" is defined as a transfer of funds that is:
  • Initiated through:
    • an electronic terminal;
    • telephone;
    • computer; or
    • magnetic tape.
  • For the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a customer's account. For example, through the use of an automated clearinghouse (ACH) system.
An electronic funds transfer includes any automatic transfers from a tenant's account on a regular, periodic, or recurring basis.

Receipt Requirement

S1493 requires that, for each cash payment, the landlord must provide a printed or emailed receipt. The receipt must accurately indicate:
  • The payment amount.
  • The purpose of the payment.
  • When the payment was received.
  • The landlord's and tenant's names.
  • The individual's name accepting the payment.

Penalties for Non-Compliance

Landlords violating S1493 are subject to a fine of:
  • $100 for the first violation.
  • $200 for the second violation occurring within five years of the first violation.
  • $300 for any later violation occurring within the five-year period.

Affirmative Defense

In any eviction action, the tenant may raise as an affirmative defense the landlord's violation of S1493 for any months during which a violation occurred.

Practical Implications

The shortage of affordable housing is driving ever-greater government scrutiny of residential landlords and their practices. New Jersey landlords and management companies will need to implement procedures to comply with the provisions of S1493 and ensure that their employees and agents are properly trained.