Tenant’s Rights to Illegal Units

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 What Is an Illegal Unit?

An illegal unit is a unit used for residential purposes that is not registered with the local authorities as required by local law. The occupation of such a unit as a residence may be an illegal tenancy. Other conditions may make a unit illegal, for example, if it has been condemned as uninhabitable by local housing authorities. 

A search of public files can be made at the housing inspection department or agency of the city or county in which the unit is located. In this way, a person can determine whether or not a unit is legal.

Do Tenants Renting an Illegal Unit Have Any Rights?

There is such a thing as illegal tenant rights. What those rights may be will depend on the law of the state and city or county in which an illegal unit is located. The tenant’s rights will also depend on the reason for the illegality of the unit. Usually, the tenant of an illegal unit has the same rights as a tenant renting a legal unit, including a right to controlled rent if the jurisdiction in which the unit is located has rent control. Also, if a unit needs repairs, and a tenant’s request for repair is ignored by the landlord, the tenant may be able to make the repairs themselves and receive an appropriate rent reduction to cover the cost.

Ultimately, a tenant living in an illegal unit may have more options than the tenant of a legal unit, since the owner of the illegal unit may be exposed to a greater degree of liability than the owner of a legal unit. But a tenant should not assume this until they know the law of the state and locality in which the unit is located. Unfortunately, perhaps, landlord-tenant law varies from state to state, county to county within a state and even from city to city within one county. It is complicated.

What Happens If the Rental Unit Is Found to Be Illegal?

What happens if a rental unit is found to be illegal may depend on why it is illegal. For example, a rental unit may be found unfit for human habitation. If that happens, it might be condemned and the tenant would have to move. Or, if a rental unit is not in the condition in which a landlord is legally obligated to maintain it, the tenant can complain to local housing authorities who may act to make the landlord upgrade its condition.

In  many locations, state law or local ordinances may require residential landlords to register their rental property with a government agency. This registration may serve various purposes. For example, in cities that have rent control ordinances, the registration may serve the purpose of allowing the agency with which a unit is registered to monitor the rent and ensure that increases are done properly and do not exceed the annual allowable increase. Usually, the penalty for failure to register is the imposition of a fine.

Another way in which a rental unit may be illegal is if it violates local zoning ordinances. For example, a house may be designated a single family residence in which only one family can live legally. But a landlord may rent out rooms or floors of the house to a number of different tenants. 

A tenant would have to check with the local zoning authority to learn whether this makes a tenancy illegal and if so, what the legal consequences are for the tenant. 

In New Jersey, the lease for an illegal tenancy is null and void. This would mean that the tenant’s obligation to pay rent under the lease would stop. Of course, if a tenant stops paying rent, the landlord has the right to evict the tenant. However, in New Jersey, this means that the tenant is entitled to be paid an amount of money equal to six times the monthly rent. The purpose of this payment is to help the tenant move to a new unit. 

Of course, to evict a tenant in any rental situation, the landlord must file a court action. This takes time and until the court orders the tenant to leave, in New Jersey, the tenant could remain in the rental unit without paying rent. The landlord must pay the six months rent to the tenant before the tenant can be evicted. A landlord in this situation is likely to want to negotiate a settlement. A tenant in this situation would be well advised to consult an experienced landlord-tenant law attorney to ensure that the landlord does what New Jersey law requires. 

The landlord would also be required to return the security deposit to the tenant, provided, of course, that the tenant has complied with all of the applicable rules regarding leaving the unit in the same condition it was in when the tenant moved into it.  A tenant who vacates a tenancy should always take pictures of the unit before they vacate, so they can prove they left it in good condition. 

Of course, if a tenant does cause damage, the landlord can deduct the cost of repairing it from a security deposit. However, in New Jersey, if the unit was illegal, the landlord cannot deduct any amount from the security deposit for unpaid rent. The lease is null and void, because the unit is illegal, so the landlord cannot recover rent under a null-and-void lease. But remember, this is the law in New Jersey. The law in a different state may be different.

This registration requirement is in addition to other legal requirements in some jurisdictions, such as the requirement that a landlord obtain a business license. Usually, in most localities, failing to register the rental property would result in fines against the landlord, as well as other administrative penalties. It may not have any meaningful impact on the rights of the tenant.

If the unit is cited as illegal by the local municipality, in some states, such as New Jersey, this would mean that the parties’s rental agreement is unenforceable. This does not mean however, that the tenant has the right to remain on the premises or to withhold rent. It just means that the agreement may not be used against a tenant. And if the tenant does not pay the rent, the tenant can be evicted.

The citation of an illegal unit can require the landlord to fix any violations either by bringing the unit into compliance with the applicable law, or to demolish the unit. In the event that the landlord is unable to cure the violation, the unit may have to be removed and the tenant evicted. If the tenant is evicted because the unit cannot be brought to code, the landlord might be liable to the tenant for the cost of finding and relocating to a new residence. 

What Should I Do If I Have Been Evicted from an Illegal Unit?

First thing, a tenant needs to know if a unit has been rented to them illegally. They might consult with a landlord-tenant lawyer who can guide them in determining if a unit has been rented illegally. Or, they can check with local housing or zoning authorities regarding the legality of a rental unit. 

If a unit has been rented illegally, the next step is to consult state and local law to determine what the consequences may be for the parties, landlord and tenant. As mentioned above, in some localities, if the illegality involves a simple failure to register a unit, it may not have any implications for the tenant. The tenant might still owe rent to the landlord and if it is not paid, the landlord may have the right to evict the tenant. In other jurisdictions, e.g. the State of New Jersey, the illegality may make the lease null and void 

If the tenant knew before leasing the unit that it was illegal, then the law might block the tenant from taking advantage of the illegality by avoiding the payment of rent. In any event, a tenant does not want to take any action until consulting an experienced landlord-tenant law attorney about what rights they have in the place where they rent the illegal unit.

Also if a person receives notice that their landlord has started eviction proceedings, they want to take action as quickly as possible, because delay can lead to forfeiting rights to contest or at least delay the eviction. Again, a landlord-tenant lawyer can help a tenant decide on their best course of action depending on the legality of the unit, the terms of the lease and the state and local laws that apply to the situation.

Should I Consult a Lawyer If I Live in an Illegal Unit?

Even though renting illegal units is often done, it has substantial risks that should not be ignored. Future tenants can protect themselves by checking with a knowledgeable landlord tenant lawyer before signing a lease for help in figuring out if a unit is or is not illegal and what the implications might be. If a tenant learns that they are in an illegal unit, they should consult a landlord-tenant lawyer for advice as to how to proceed.

In the long run, a tenant might want to avoid illegal rentals. And landlords may not want to rent them out. In any event, consulting with an experienced landlord-tenant lawyer is the best way to find out what the law is in your location, so you can make the best, most informed decisions.

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