May 23, 2017 Practice Points

Confidentiality of Tenant Litigation to Avoid Blacklisting

Legislative activity in New Jersey may signal more legal protections for tenants from blacklisting and unfair retaliation by landlords

by Ralph H. Schofield, Jr.

On March 6, 2017, an article published by WNYC News discussed an epidemic in landlord-tenant cases: Tenants get no relief against deadbeat landlords for moldy, infested apartments, because they cannot afford to post rent to the court registry, which is a common prerequisite to asserting the “slumlord” defense to nonpayment. That article included the results of the research of Seton Hall Law School professor Paula Franzese, who was then mentioned as asking New Jersey state legislators to pass bills making landlord-tenant court records confidential to prevent future landlords from discriminating against renter applicants based on past eviction cases, known as blacklisting.

In fact, on February 27, 2017, identical bills were introduced by Democrats in the two houses of the New Jersey legislature (the Senate and the General Assembly) purporting to establish confidentiality of landlord-tenant court records and address adverse actions on rental applications. The bill recognizes that for more than 40 years, “New Jersey remains in the grip of a critical shortage of decent, affordable rental housing.” Tenant screening reports, including credit and criminal records, are being applied arbitrarily or, perhaps worse, pretextually to screen out tenants. Landlord-tenant court filings are public and show up on screening reports regardless of, and often without reference to, whether the case may have been dismissed due to settlement or a tenant’s valid defenses. The bill asks the state legislature to find that such a screening process “has a serious ‘chilling effect’ on tenants’ assertion and exercise of their statutory and common law rights.”

The proposed bill would make court records for cases brought by landlords against their tenants confidential and unavailable to the public absent a judgment for possession and only after the latest of 60 days after the action was filed, 45 days after the resolution of the matter, resolution of an appeal if the landlord prevails, failure of the tenant to satisfy any conditions of the judgment, and resolution of an order to show cause seeking to vacate the judgment if the landlord prevails. In any event, an action brought by a tenant asserting a legal right against a landlord would remain confidential and unavailable to the public regardless of outcome, unless the tenant consents otherwise.

The proposed bill goes further by allowing a tenant to apply to have eviction judgments more than three years old be purged. And the bill would prohibit a landlord from considering, in evaluating a prospective tenant, eviction judgments over three years old and any other landlord-tenant action that did not result in an unreversed, non-dismissed judgment for possession. As an added check, any landlord who takes an adverse action on a rental application, including rejection or imposition of unusual conditions, must give a statutory notice of reasons why, disclosing and appending any screening information accessed by the landlord. A violation of the statute by a landlord would include a penalty of at least $1,000 for the first offense and at least $5,000 for each subsequent offense, along with reasonable attorney fees, in addition to any other remedy available. Furthermore, the act would apply retroactively to seal prior court records.

Few states have taken steps toward protecting tenants in this way. Virginia, however, has a law on the books protecting tenants at least from unsubstantiated blacklisting. The law prohibits landlords from releasing non-public information about their tenants for use by other prospective landlords without the tenants’ consent except a rent-payment record and unresolved notices of material noncompliance or termination. Presumably a check on the accuracy of such records and notices would be common law defamation claims.

As of the date of this writing, the New Jersey bill has not gone further than introduction and referral to committee (the Senate Community and Urban Affairs Committee and the Assembly Housing and Community Development Committee). The New Jersey state legislature is in session through June 29.  But even if not passed, Professor Franzese’s research and lobbying have, at a minimum, some initial traction. We might expect further efforts to protect tenants in the future, in New Jersey and elsewhere.

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