AMITY HEIGHTS v. SHAQUAN KING & OCCUPANTS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

AMITY HEIGHTS (NIA),

Plaintiff-Respondent,

v.

SHAQUAN KING & OCCUPANTS,

Defendant-Appellant.

_________________________________

December 30, 2016

Argued October 25, 2016 Decided

Before Judges Ostrer and Vernoia.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Cumberland County, Docket No. LT-716-15.

Brenda L. Rascher argued the cause for appellants (South Jersey Legal Services, Inc., attorneys; Ms. Rascher and Kenneth M. Goldman, on the brief).

Rebecca J. Bertram argued the cause for respondent.

PER CURIAM

Defendant Shaquan King appeals a June 11, 2015 order denying her motion to dismiss the complaint, and granting a judgment of possession to plaintiff Amity Heights (NIA) based on defendant's alleged failure to pay rent. Because the record shows plaintiff failed to comply with applicable federal regulations when it increased defendant's rent, we are satisfied the court lacked jurisdiction, and reverse.

I.

Plaintiff is the owner of a residential housing complex and receives funding from the United States Department of Housing and Urban Development (HUD) under the Project-Based Section 8 Program. Defendant became a tenant in plaintiff's housing complex in February 2010, when she executed a lease for a subsidized apartment under which she was not obligated to pay rent.

On April 2, 2015, plaintiff filed a complaint seeking a judgment of possession claiming defendant failed to pay $1176 in monthly rent due for February, March, and April 2015. Defendant moved to dismiss the complaint arguing the court lacked jurisdiction because plaintiff failed to comply with the applicable federal regulations when it terminated defendant's Section 8 rental subsidy and increased plaintiff's personal monthly rent obligations on February 1, 2015 from $0 to $1176. On June 11, 2015, the court denied defendant's motion to dismiss the complaint and entered a judgment of possession. This appeal followed.

As the owner of a subsidized housing facility, plaintiff is required to annually reexamine and determine the family income and composition of each tenant receiving Section 8 subsidies. 24 C.F.R. 5.657(b) (2016). Tenants are required to "supply any information requested by the owner or HUD for use in a regularly scheduled reexamination or an interim reexamination of family income and composition in accordance with HUD requirements." Id. 5.659.

HUD regulations require a tenant to cooperate with the owner by providing information in annual recertification forms in order to receive a rent subsidy. The policies and procedures governing the recertification process are contained in a handbook published by HUD. See U.S. Dep't of Hous. and Urban Dev., HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Hous. Programs (2013), https://portal.hud.gov/hudportal/documents/hudduc?id=43503HSGH

.pdf. ("HUD Handbook"); See Cmty. Realty Mgmt. v. Harris, 155 N.J. 212, 233 (1998) (citing sections of the HUD Handbook as federal regulations applicable to the owner of a Section 8 housing complex). "The HUD Handbook 'is a one-source "rule book" on the occupancy policies and procedures governing the subsidized multifamily programs' of HUD." Kuzuri Kijiji, Inc. v. Bryan, 371 N.J. Super. 263, 265 (App. Div. 2004).

Annual recertification is required to ensure "tenants pay rents commensurate with their ability to pay." HUD Handbook, supra, 7-4(A). Recertifications must be completed prior to the tenant's recertification anniversary date, which is the first day of the month in which a tenant first moved into the property. Id. 7-5(A), (B)(1). Because defendant moved into her unit in February 2010, her recertification anniversary date was February 1.

The recertification process requires that the owner provide four separate notices to a tenant "about the tenants' responsibility to provide information about changes in family income or composition necessary to properly complete an annual recertification." Id. 7-7(A), (B). The HUD Handbook details the requirements for each of the four required notices.

The owner is required to provide the tenant with an initial notice at the time of recertification "to ensure that tenants understand that they will need to report to the property's management office by [a] specified date the following year to prepare for their next recertification." Id. 7-7(B)(1). The tenant and owner must sign the initial notice and the owner must provide the tenant with a copy and retain the original. Id. 7-7(B)(1)(b), (c).

The owner must also send the tenant a first reminder notice 120 days prior to the tenant's recertification anniversary date. Id. 7-7(B)(2)(a). In general terms, the notice must advise the tenant of the information he or she is required to supply for recertification, the name of the staff person the tenant must contact to schedule a recertification interview, and the date by which the tenant must contact the owner and provide the information required for recertification. Id. 7-7(B)(2)(b)(1)-(6). The first reminder notice must also advise the tenant that "if the tenant fails to respond before the recertification anniversary date, the tenant will lose the" rent subsidy and will be responsible for paying the full rent. Id. 7-7(B)(2)(b)(7).

If the tenant fails to respond to the first reminder notice, the owner must send the tenant a second reminder notice at least ninety days prior to the tenant's recertification anniversary date. Id. 7-7(B)(3)(a). The second reminder notice must advise the tenant of the information required in the first reminder notice and inform the tenant that his or her recertification information is due. Id. 7-7(B)(3)(a), (b).

If the tenant fails to respond to the second reminder notice the owner must send the tenant a third reminder notice no later than sixty days prior to the recertification anniversary date. Id. 7-7(B)(4)(a). The notice "must" include the information required in the first reminder notice and "[s]pecify the amount of rent the tenant will be required to pay if the tenant fails to provide the required recertification information by the recertification anniversary date and state that [the] rent increase will be made without additional notice." Id. 7-7(B)(4)(b)(2).

Here, defendant received a child support order in July 2014, and began receiving weekly child support payments in September 2014. On October 1, 2014, November 1, 2014, and December 1, 2014, plaintiff sent defendant the first, second, and third reminder notices respectively, each explaining defendant's obligation to complete the annual recertification prior to February 1, 2015. The notices advised defendant of the documents to bring to the meeting with the housing complex's site manager, including receipts for "alimony/child support payments," and stated if she failed to respond and meet with the site manager prior to December 10, 2014, the owner had "the right to terminate [defendant's] assistance and charge [defendant] the market rent effective" February 1, 2015.

The notices also provided that if defendant responded after February 1, 2015, plaintiff had "the right to implement any rent increase resulting from recertification without providing [defendant] a 30-day written notice." Contrary to the requirements of the HUD Handbook, however, the December 1, 2014 third reminder notice did not include the amount of rent defendant would be required to pay if she failed to provide the required recertification information by her recertification anniversary date. Ibid.

On December 16, 2014, defendant signed lease addendums and other forms related to her lease, one of which required defendant to disclose her receipt of alimony and child support payments. Defendant completed the recertification questionnaire but did not disclose she had been receiving child support payments since September 2014. In January 2015, however, defendant advised plaintiff she obtained a child support order effective July 31, 2014, and had been receiving weekly child support payments since September 2014.

On February 23, 2015, plaintiff's site manager sent defendant a recertification adjustment letter advising that effective February 1, 2015, defendant's share of the rent was "adjusted to $10[] per month, based on recertification requirements." Plaintiff's site manager sent a second letter to defendant on the same day stating that defendant's share of the rent was adjusted to $10 per month effective October 1, 2014.

The letters required defendant to "visit the rental office immediately to sign [her] new lease and corresponding paperwork." They further advised that defendant's "[f]ailure to sign a new lease would mean that [she] no longer [would] have a lease," and that "[w]ithout a lease [she would] have no protections under law and legal proceedings will be initiated."1

Although plaintiff's site manager sent the February 23, 2015 letters advising defendant her share of the rent had been adjusted to $10 per month effective October 2014, plaintiff sent defendant a notice to quit and demand for possession of the leased premises on March 9, 2015. The notice informed defendant she was required to "quit and vacate the premises" on March 19, 2015, for failure to pay monthly rent of $1176 for February and March, totaling $2352 plus late fees. The notice stated defendant had ten days to discuss the proposed termination, and that if she remained in the "leased premises on the termination date" the owner would "seek to enforce the termination in court through an eviction action."

On April 2, 2015, plaintiff filed a verified complaint alleging nonpayment of rent, and sought possession of the property or $3528, which plaintiff claimed was the total unpaid rent due for the months of February, March, and April. Plaintiff alleged defendant was obligated to pay the entire monthly rent without allowance for any Section 8 subsidy.

On April 7, 2015, defendant completed additional forms related to her lease that were provided by plaintiff. The forms indicated defendant's rent was the full market rate of $1160 per month, of which HUD would pay $1150 and defendant was responsible for the remaining $10. Plaintiff's representative certified that he tried to upload the forms defendant executed to the "HUD website but was unable to do so as the system . . . indicated that [the leased premises] had been restored to market rent," which plaintiff's representative believed "was based upon [defendant's] failure to complete her [recertification] documentation in a timely manner."

Defendant filed a motion to dismiss the complaint, claiming the court lacked jurisdiction because plaintiff failed to comply with the requirements of the applicable federal regulations, the HUD Handbook, and defendant's lease for imposition of the increased rent plaintiff alleged was due and owing. Defendant also asserted the court lacked jurisdiction because plaintiff failed to provide a notice to quit prior to the filing of the complaint in conformity with federal and state law.

Plaintiff opposed defendant's motion but did not cross-move for any relief. Plaintiff argued defendant failed to timely submit the information required for recertification and sign a new lease. Plaintiff also claimed it was entitled to increase defendant's rent to the full market monthly rate of $1176 effective February 1, 2015, defendant thereafter failed to pay the rent due, and it provided defendant with the required notice to quit prior to the filing of the complaint.

The court heard argument on plaintiff's motion and issued a written decision and order denying plaintiff's motion to dismiss. The court entered a judgment of possession. The court found defendant failed to timely provide information required for recertification of her rent subsidy, plaintiff properly increased defendant's rent to the full market rate effective February 1, 2015, defendant failed to pay the required rent, and plaintiff provided a notice to quit in accordance with federal and state law. A warrant of removal was issued on June 18, 2015.

Defendant filed a motion for a stay pending appeal, which was denied by the trial court on June 25, 2015. Following defendant's filing of a notice of appeal on June 25, 2015, the court issued a supplemental memorandum of decision pursuant to Rule 2:5-1(b) further explaining its reasons for the entry of its June 11, 2015 order. Defendant also filed an emergent application for a stay of eviction pending appeal, which we denied on July 1, 2015.

II.

A party seeking to overturn a judgment of possession must demonstrate on appeal that the judge abused his or her discretion in entering the judgment. Harris, supra, 155 N.J. at 236. We will not disturb the factual findings of the trial judge unless "they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Klump v. Borough of Avalon, 202 N.J. 390, 412 (2010) (quoting Abtrax Pharm. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995)). We review a trial court's conclusions of law de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 379 (1995).

Defendant claims she could not be properly evicted based upon her failure to pay the full market rent plaintiff alleged was unpaid and overdue because plaintiff did not have the legal authority to increase her rent to the full market rate effective February 1, 2015. More particularly, defendant contends plaintiff was precluded from increasing the rent because plaintiff's third reminder notice failed to inform her concerning the termination of her rental subsidy and increase in rent as required by the HUD handbook. We agree.

"Under federal law, an owner landlord is required to satisfy specific requirements when attempting to terminate a subsidized tenancy. We have held federal requirements to be jurisdictional prerequisites to the establishment of good cause for eviction in state court." Riverview Towers Assocs. v. Jones, 358 N.J. Super. 85, 88 (App. Div. 2003). In Housing Authority of the City of Newark v. Raindrop, 287 N.J. Super. 222, 231 (App. Div. 1996), we held that a landlord's failure to follow federal notice requirements for the termination of a lease could not be regarded as "technical noncompliance" but instead "denied the trial court jurisdiction." See also Winns v. Rosado, 440 N.J. Super. 98, 106 (Law Div. 2014) (finding plaintiff's failure to provide notice of the action to the Department of Community Affairs as required under federal regulations deprived the court of jurisdiction over plaintiff's complaint for judgment of possession).

Here, plaintiff's complaint was exclusively based upon defendant's failure to pay a monthly rent plaintiff had increased to $1176 per month effective February 1, 2015. Plaintiff argued it was entitled to terminate defendant's rent subsidy and increase defendant's rent because she did not timely complete the recertification process prior to February 1, 2015. Plaintiff's decision to increase the rent based upon defendant's purported failure, however, was not in accord with the requirements of the applicable federal regulations.

To terminate defendant's subsidy and increase her rent to the full market rate, plaintiff was required to "provide proper [written] notice of the increase to" defendant. HUD Handbook, supra, 8-6(A)(2). The written notice must include the date the subsidy will terminate, the reason for the termination, and "[t]he amount of rent [defendant would] be required to pay." Ibid.

Consistent with the HUD Handbook's requirements, paragraph four of defendant's lease provides that plaintiff will change defendant's rent or rent subsidy payment "only in accordance with the time frames and administrative procedures set forth in HUD's handbooks, instructions and regulations." Under the lease, plaintiff is required to provide written notice of any changes to defendant's rent or rent subsidy, and the notice is required to "state the new amount [defendant] is required to pay, the date the new amount is effective, and the reasons for the change in rent."

Paragraph fifteen of the lease permits plaintiff to increase defendant's rent to a "higher, HUD-approved market rent" where defendant "does not submit the required recertification information by the date specified in [plaintiff's] request." Paragraph fifteen also requires that rent increase be made in accordance with HUD's handbooks, instructions and regulations.

The recertification process required that plaintiff provide defendant with three reminder notices, each containing specific information set forth in the HUD Handbook. See id. 7-7(B)(2)(b). Plaintiff contends the third reminder notice it sent to defendant constituted the written notice required to terminate defendant's subsidy and increase her rent based on her alleged failure to timely provide the requisite information for her recertification. We reject plaintiff's contention because the third reminder notice did not satisfy the requirements of the lease or the HUD Handbook.

The notice did not include the amount of defendant's new rent and instead stated only that plaintiff "would terminate [defendant's] assistance and charge [her] the market rent of $____." See id. 8-6(A)(3)(a) (notice to terminate subsidy and increase rent must include "[t]he amount of rent [defendant would] be required to pay"); 7-7(B)(4)(b)(2) (third reminder notice must "[s]pecify the amount of rent the tenant will be required to pay if the tenant fails to provide the required recertification information by the recertification anniversary date").

The motion court did not address plaintiff's failure to comply with the notice requirements of the lease and the HUD Handbook and erroneously concluded plaintiff was entitled to terminate defendant's subsidy and increase her rent. Nonetheless, we are persuaded plaintiff's failure to comply with the notice requirements of the lease and the HUD Handbook deprived the court of jurisdiction to enter the judgment of possession. Entry of the judgment was based on defendant's failure to pay a monthly rental amount that plaintiff imposed in violation of the requirements of the lease and the HUD Handbook. Plaintiff's compliance with the federal requirements is a "jurisdictional prerequisite" to establishing good cause for the entry of a judgment for possession. Riverview Tower Assocs., supra, 358 N.J. Super. at 88. The court lacked jurisdiction to enter the judgment of possession here and erred in denying defendant's motion to dismiss the complaint.2

Reversed.

1 In support of her motion to dismiss the complaint, defendant certified that she spoke with an assistant manager employed by plaintiff in March 2015, after receiving the February 23, 2015 notices, and paid $10 towards her rent. Plaintiff submitted a certification denying its receipt of the payment. Resolution of this factual dispute is unnecessary to our disposition of this appeal.

2 Because we are convinced the court did not have jurisdiction, it is unnecessary to consider defendant's other arguments.