In an editorial, Hudson County Commissioner Bill O’Dea (D-2), a Jersey City mayoral candidate, explains why rent receivership preserves affordable housing.
Not a month goes by when I don’t get a call concerning a multiple dwelling building in Jersey City where there are significant health and safety violations that have gone unabated for several months.
Landlords, who are recent purchasers, are motivated to ‘empty out the building’, then do some major repairs. Then they reset the rents at market – often 100-200% higher!
Additionally, existing landlords can get a higher sale price if they deliver an empty property with all vacant units. This is a real problem happening now.
The preservation of existing ‘affordable housing’ units is almost always easier and much less expensive than constructing new ones.
The reality is that we need to do both when a recent Regional Plan Association report stated that Jersey City has a shortage of 3,700 low/mod units.
Case backlogs and often lax enforcement of code violations have exacerbated this situation.
There is an answer to help address the growing problem of buildings being pushed into vacancy resulting in the loss of affordable units that are then replaced with market rate units: Jersey City must re-enact a rent receivership ordinance and re-institute the Office of Rent Receivership (property conservation).
Rent receivership is a major tool in preserving and restoring problem rental properties. Court appointed receivers have broad powers to operate and restore a property. They can even borrow the money necessary to rehabilitate the property.
This tool makes the rehabilitation process move so much faster.
Since the receiver is collecting all the rent, the owner is greatly disincentivized to let the property fall into disrepair and must meet stringent requirements to regain control of the property, once a receiver is appointed.
If these requirements are not met in a timely manner, the court can authorize the receiver to sell the property to a third party, and guarantee that the affordable rents stay in place!
In order to place the property in the hands of a receiver, a court must determine either:
1. Building code violations affecting the health or safety of tenants remain unabated for 90 days.
2. Buildings have a pattern of repeated code violations over a period of a year or more.
An action to appoint a receiver can be made by the city, a lien holder, individual tenants, a ‘tenant organization’ representing the majority of tenants, and non-profit organizations representing community organizations.
Only the court can appoint the receiver, and to qualify as a receiver, an entity must “demonstrate knowledge and substantial experience in the operation, maintenance and improvement of residential buildings.”
The Department of Community Affairs has a registry of qualified entities.
Once appointed, the receiver has up to 60 days to submit a plan to operate, maintain and improve the residential property!
The plan is not limited to only correcting the specific violations that triggered the receivership, but all issues needed to bring the property back up to code.
Once the plan is approved by the court all revenues (rents) collected from the property are applied to implement it.
Since the cost of correcting the violations is often substantial, a receiver can borrow money to get the work done. If the mortgage holder refuses to subordinate its position, the court can authorize the receiver to borrow the money and place a lien on the property.
This lien takes preference over ALL OTHER liens except municipal liens. This ensures the property is brought back to code – quickly and correctly!
In order for an owner to regain the property there are several things they must do:
1. Demonstrate it will carry out any remaining features in the receiver’s plan.
2. Pay or deposit all funds needed to meet the obligations.
3. Assume all legal obligations, including repayment of debt.
4. Pay all liens and municipal costs incurred.
5. Post a bond as determined by the court up to 50% of fair market value which is forfeit for future violations.
It was a mistake when the city did away with the Office of Property Conservation and Rent Receivership. It’s time to correct that mistake.
When I was a city council member, the office was an effective deterrent to neglectful landlords and used receivership to preserve hundreds of units of affordable rent-controlled housing!
As Mayor, I will make sure this will happen starting DAY ONE. But we don’t need to wait till next January. The City Council can pass the enabling ordinance NOW!
While not perfect, re-instating and effectively implementing rent receivership is a critical tool to combat greedy landlords and speculators.
It complements the current efforts of the Waterfront Project to protect tenants, and it ties in perfectly with the Right to Counsel program that the city will fund starting in 2026.
Using receivership to take over properties before owners run them down, force out all the tenants and sell them for a huge profit, can guarantee that rent on these units remain AFFORDABLE!
