In our last blog post discussing Landlord-Tenant Law The Jayson Law Group LLC examined the first statute of The Abandoned Property Act (“the Act”). We created a hypothetical for the Landlord, and will look at what the Landlord should be doing with the abandoned property. If you have not read it we suggest you read it to know the example which the rest of this series is referencing. In this post we examine the next two statutes in the Act. Now let us take a look at the notice requirements of The Abandoned Property Act.
N.J.S.A. 2A:18-73. Notice to tenant prior to disposition
Before a Landlord disposes of the abandoned personal property of the Tenant, the Landlord must give the Tenant written notice. But what must be in the notice and how must the notice be delivered? Under N.J.S.A. 2A:18-73 the Landlord must notify the Tenant in writing, sent by certified mail, return receipt requested or by receipted first class mail addressed to the Tenant. This mailing must be sent to the Tenant’s last known address, which could be the address where the Tenant was just evicted, as well as any other address(es) known by the Landlord. The envelope must be marked “Please Forward.”
The statute goes on to define “receipted first class mail” as mail where the sender obtains a certificate of mailing.
If the property being disposed of is a mobile home, the Landlord must also give notice to the Director of Motor Vehicles and any lienholders with security interests recorded with the Division of Motor Vehicles in the property.
Now let us examine what needs to be included in the notice.
N.J.S.A. 2A:18-74. Contents of notice
While N.J.S.A. 2A:18-73 discusses how the notice should be delivered, N.J.S.A. 2A:18-74 discusses the language that needs to be included in that notice.
The Landlord must inform the Tenant that the property is considered abandoned and must be removed from the premises or from the place of safe keeping, which we will discuss in a future blog post.
The amount of time the Tenant has to retrieve the abandoned property depends. For any property that is not a manufactured or mobile home the Tenant has the sooner of 30 days after delivery of the notice or 33 days after the mailing date. If the property is a manufactured or mobile home, the Tenant has the sooner of 75 days after the delivery of the notice or 78 days after the date of mailing. The notice must also notify the Tenant that failure to claim the abandoned property in the applicable timeframe will result in the abandoned property either being sold or disposed.
The Landlord must also notify the Tenant that failure to remove the abandoned property will allow the Landlord the ability to sell the property at a public or private sale; or, the Landlord may destroy the abandoned property of the Tenant if the Landlord makes a determination that the value of the property is so low that the cost of storage and conducting a public sale would exceed the amount that would be realized from the sale. The Landlord must also notify the Tenant of the Landlord’s right to sell the items of value and dispose of the remaining property.
The Landlord must inform residential tenants that if there is any unpaid rent it will not hinder the Tenant’s ability to reclaim abandoned property, provided that the Tenant reclaims the property within the time provided in the notice.
N.J.S.A. 2A:18-76: Conditions under which the property is considered abandoned
While N.J.S.A. 2A:18-75 discusses how a Landlord should store abandoned property, how is a Landlord to know if the property is abandoned? In Part 2 of this series we discussed the amount of time a Tenant has to notify the Landlord of the Tenant’s intent to reclaim the property. N.J.S.A. 2A:18-76(a) states that if a Tenant responds either in writing or orally of their intent to remove the property on or before the notice date expires, the Tenant has the later of either the date specified in the notice originally sent by the Landlord or within 15 days after the Tenant’s response to the Landlord. If the Tenant fails to remove the abandoned property from the premise within the time time frame discussed above, the property is “conclusively presumed to be abandoned.” (N.J.S.A. 2A:18-76(a)). So what does this mean? Here is an example:
On March 1 the Landlord sends a notice to the Tenant notifying the Tenant of the abandoned property. The notice is delivered on March 4. The Tenant has until April 3 to claim the property. If the Tenant claims the property before March 20, the Tenant has until April 3 to remove the abandoned property. If the Tenant notifies the Landlord after March 20, the Tenant has 15 days from the date the Tenant notified the Landlord of the Tenant’s intent to remove the abandoned property. If the Tenant fails to remove the abandoned property by the date allowed by the statute, April 3 or later depending on when the Tenant notifies the Landlord of the Tenant’s intent to remove the abandoned property, then the Landlord can treat the property as abandoned by the Tenant.
Similar rules are also in effect with manufactured or mobile homes. The difference being that a lienholder of the manufactured or mobile home can also choose to pay rent as a condition of leaving the property on premises. But if the lienholder fails to pay rent or remove the manufactured or mobile home in the allotted time, the later of the notice period or 15 days after the lienholder’s written response, the Landlord can treat the abandoned property as if the lienholder did not respond.
Failure by either the Tenant or the lienholder to respond to the notice(s) sent by the Landlord within the time allotted under N.J.S.A. 2A:18-74 will result in the Landlord’s ability to deem the property conclusively abandoned.
N.J.S.A. 2A:18-75 Storing abandoned property
Once the Landlord notifies the Tenant in accordance with N.J.S.A. 2A:18-73 and N.J.S.A. 2A:18-74 of the Landlord’s intention with the Tenant’s abandoned property, the Landlord must now store the property for the notice period. N.J.S.A. 2A:18-75 dictates that the Landlord store the Tenant’s abandoned property in a place of safekeeping. Furthermore, the Landlord must maintain reasonable care of the property during the notice period. There are certain exceptions to this requirement. Any perishable food that the Tenant abandoned may be promptly disposed and the Landlord must allow an animal control agency or humane society the ability to remove any abandoned pets or livestock.
If the Tenant abandons and manufactured dwelling or residential vehicle then the the Landlord must store that type of abandoned property either on the space previously rented, elsewhere on the premises, or in a safe and secure offsite location.
N.J.S.A. 2A:18-75 also discusses whose responsibility it is to pay for these costs. Under the statute, Landlord’s can be reimbursed for reasonable storage charges and costs incidental to storage. Should the Landlord decide to store the property in a commercial storage facility, the Landlord is entitled to the costs of the actual storage plus reasonable costs of remove of the abandoned property to the storage facility.
So when can the Landlord be reimbursed for these expenses? N.J.S.A. 2A:18-77 discusses this issue.
N.J.S.A. 2A:18-77 Tenant’s reimsbursement for storage costs
The law under N.J.S.A. 2A:18-77 states that a Tenant shall reimburse the Landlord for reasonable storage costs during the period the Landlord stored the property upon the removal by the Tenant of the abandoned property. The statute does go on to say that the Landlord is only entitled to be reimbursed for the fair market value of the costs. Furthermore, if the Landlord complies with The Abandoned Property Act (N.J.S.A. 2A:18-72 et. seq.), N.J.S.A. 2A:18-77 protects a Landlord should the Tenant’s abandoned property be damaged during the course of storage. However, the Landlord is not protected if the landlord acted deliberately or negligently or by omission in the damaging of the Tenant’s abandoned property.
N.J.S.A. 2A:18-79 Disposal of property, options
N.J.S.A. 2A:18-78 allows for the Landlord to handle the abandoned property in three different ways:
a. The Landlord can sell the abandoned property in a public or private sale;
b. The Landlord can destroy or dispose of the property if the Landlord determines that the abandon property’s value is so low that the cost of storage and conducting a private sale would exceed the amount realized from the sale, OR
c. The Landlord can do a hybrid of Sections a and b of this Statute and sell the abandoned property that has value while destroying or disposing the abandoned property with no value.
If the Landlord decides to hold a public or private sale in accordance with N.J.S.A. 2A:18-78. the Landlord must ensure that the sale be in accordance with New Jersey’s adoption of the Uniform Commercial Code’s Article 9 (author’s note: check back in for our blog post discussing the UCC).
What if the Landlord decides to hold a sale? What happens to the money? N.J.S.A. 2A:18-80 discusses this situation.
N.J.S.A. 2A:18-80 Deductions from sale proceeds
Once the abandoned property is sold, the Landlord is allowed to deduct the reasonable cots of notice, storage and sale, and any unpaid rent and charges not covered by the security deposit. What about any money left after the Landlord deducts these costs? The Landlord must give to the Tenant any of the money remaining from the sale of the abandoned property and must give to the Tenant and itemized accounting as well.
The Landlord must complete their due diligence in locating the Tenant. If after doing their due diligence the Landlord cannot locate the Tenant, the money due the Tenant is to be deposited with the Superior Court. If after 10 years the money is not claimed, that money will go to the State of New Jersey.
N.J.S.A. 2A:18-81 Compliance with act constitutes complete defense
Three months after the Landlord disposes of the Tenant’s abandoned property, the Tenant files a suit against the Landlord for the cost of the property. What can the Landlord do? If the Landlord complied with the requirements of The Abandoned Property Act, from notifying the Tenant with the appropriate language, correctly stored the abandoned property, waiting the appropriate amount of time before disposing or selling the property, and correctly deducted expenses and handled the proceeds, then according to N.J.S.A. 2A:18-81 the Landlord has a complete defense to the Tenant’s claims.
But what happens if the Landlord did not comply with the Act? To learn that answer we need to examine N.J.S.A. 2A:18-82.
N.J.S.A. 2A:18-82 Noncompliance with act; tenant’s recovery
While compliance with the Act by the Landlord will result in a complete defense to a suit by the Tenant, should the Landlord not comply with the Act, the courts will find in favor of the Tenant. The Tenant will not be responsible for an reimbursement to the Landlord for storage and removal of the abandoned property. Furthermore, the Tenant will be allowed to recover up to twice the actual damages sustained by the Tenant. Therefore, as a Landlord it is imperative that you comply with the act.
A Few Odds and Ends
The last two statutes we are going to examine in The Abandoned Property Act are N.J.S.A. 2A:18-83 and N.J.S.A. 2A:18-84. The first statute states that The Abandoned Property Act does not apply to any unclaimed property that falls under The Unclaimed Property Act, which will not be discussed in this series. The latter statute states that The Abandoned Property Act does not apply to motor vehicles.
Conclusion
For Landlords it is imperative to comply with the procedures established in the Act to dispose of your Tenant’s abandoned property as there is no benefit to the Landlord to not comply with the Act. There is no money to be made as the Landlord from disposing of the Tenant’s abandoned property, the Landlord can only recoup expenses. However, failure to comply with the Act will result in the Landlord being out any money spent in trying to dispose of the Tenant’s abandoned property plus up to twice the value of the property the Landlord disposed.
This concludes The Jayson Law Group LLC’s examination of the ability of the Landlord to dispose of the Tenant’s abandoned property. If you are in need of a New Jersey landlord attorney, I invite you to contact me either by phone or email to set up a consultation.