Court Opinion

ID: 7308912
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:57:32.44425+00
Date Added: 2024-06-11T08:48:30.138140
License: Public Domain

Oowpoed, J. A. D.
(dissenting in part). I agree with the majority insofar as the opinion denies the right to treble damages for rental overcharges accruing on or after July 1, 1956. As to the rentals exacted from the plaintiffs prior to that date I am satisfied that these were in excess of what was lawful under the Rent Control Act of 1953 and its subsequent extensions and the implementing regulations of the State Rent Control Director, and that recovery of treble damages therefor appropriately apportioned between the plaintiffs should be allowed.
As I read the opinion of my brethren it holds that once particular housing space previously controlled under the act as a housing unit is converted or rearranged for rental purposes by a process which involves the use of some new added physical space, the landlord is automatically permitted to charge any rental he chooses and this becomes the new lawful base rental without prior administrative approval. And this eventuates notwithstanding that, as in the present case, the new housing accommodations are constituted, to the extent of about 85%, by the particular housing space theretofore under control. In my judgment this result is prohibited by the regulations, except under conditions referred to hereinafter and not met in this ease, and is contrary to the basic policy of the act.
*67This case is controlled by the statute and regulations as they stood between July and November 1955, when the alteration of the apartment was effected, and when plaintiffs became tenants, not by the provisions of the Union City Rent Control Ordinance adopted in 1956 pursuant to the Rent Control Act of 1956. The here material portion of the regulations adopted by the State Rent Control Director on June 15, 1955, is set forth in the majority opinion. This regulation is not contended to be “plainly and palpably inconsistent with the statute” and it must therefore be accorded recognition as part and parcel of the legislative regulatory scheme. Grenewicz v. Ligham, 34 N. J. Super. 1, 9 (App. Div. 1955). The regulation provides that “the following additional housing space shall be totally excepted under the conditions hereinafter set forth.” (Emphasis added) The crucial classification is (d). This reads:
“Additional housing space created by conversion itmo'lvmi7 structural changes in particular housing space by substantial alterations or remodelling.” (Emphasis added)
However, even in a (d) situation there must be compliance with subparagraph (2) under (d), (2) specifying that the conversion must result in additional self-contained family units of a type for which there is a shortage in the area, and there then follows a proviso that “such housing space shall continue to be subject to control until an order of decontrol has been entered, after a determination, pursuant to the regulations.”
The key words in (d) are “additional” and “involving.” The inescapable literal import of the paragraph is that where the totality of additional or new housing space, whether or not it consists in part of space not theretofore in existence, either physically or as regulated housing space, is created by a conversion, not of but merely involving structural changes in particular housing space by substantial alterations or remodelling, we have a case of eligibility for decontrol, provided the additional conditions set forth in subparagraph (2) are met.
*68Applying the language to the present situation, we find that the two apartments with which we are here concerned were created by conversion which did involve structural changes in the particular housing space constituted by the six-room apartment previously under control, through substantial alterations or remodelling. It follows, therefore, that the two new apartments which resulted from the conversion operation are within the literal ambit of the regulation which was in effect at the time the work of conversion was undertaken and the letting to the present tenants took place. The additional units qualified for decontrol, but decontrol was not automatic. Control continued until the administrative agency made the order and determination specified in (d)(2). Such a determination and order were not made until long after July 1, 1956.
In my opinion, the foregoing literal reading of the regulation comports with clear basic rent control policy. Where there is a conversion and remodelling involving existing housing space with the result that there are more self-contained family units than previously, we have two results, one possibly inimical to rent control objectives, and the other favorable. The harmful possibility is that rents may be increased without a proportionately increased amount of investment, so that,. in effect, essentially the same space is paying a higher rent. The temptation of converting to evade the intent and policy of the act is always present. Erom this standpoint the fact that the conversion operation involves the furnishing of some additional physical space is not material. On the other hand, public policy may be served by conversions where the result is accommodations for more families. The regulations determine that the second indicated policy objective will control, provided the additional dwelling units are of a type for which there is a shortage in the particular area. The determination of that fact is reserved to the rent control agency and therefore the conversion does not automatically remove the property from rent control but must await an order of decontrol in which the administrative authority will not only make the *69findings requisite under (2) but also determine whether what has happened constitutes a satisfaction of (d). Additionally, there is the desirable condition that at any given time anyone interested in the property, whether as owner, tenant or prospective new tenant, can be informed by the rent control agency as to the specific rent control status of the property. To hold that a conversion of space plainly within the foregoing regulation is effective to terminate the existing lawful base rental and allow the landlord to create a new one at whatever rent he can command in the market, is largely to frustrate the intent and purpose of the regulation, as just outlined.
Other provisions of the regulations adopted by the State Director make it clear that that official did not regard an increase in the physical space of a housing accommodation rented to a particular tenant as automatically decontrolling the rental unit or permitting the charging of a higher rental without agency authorization. Article Y, dealing with “Adjustments in Kents,” allows an increase when the landlord and tenant by written agreement agree to a “substantial increase in dwelling space” (Y, 9(f)); excepts from a regulation concerning the permissible amount of increases during a specific period cases of “increase of space * * * with the consent of the tenant” (Y, 8(c)); and provides for the issuance of a “prior opinion” (advance administrative consent) fixing increased rents “when the landlord seeks to increase the space, services,” etc. If the view of the majority as to the basic intent of the statute were sound, landlords would not have to make such applications for rental increases where there was an increase of space in a rental unit comprising particular housing space.
The New York cases cited by the majority are not applicable here. We are controlled by our own statute and regulations, which, unlike those which apparently governed the New York courts, do not make continuity of identity of particular housing accommodations a determinative criterion of automatic decontrol or of a change in lawful base rental. *70Under our statute, what is directly controlled is housing-space, not housing accommodations, except indirectly.
I conclude that the lawful base rental for these apartments continued, through the month of June 1956 and thereafter until March 28, 1957, to be the registered rental of $60.50 which was in effect prior to the conversion, and that the receipt of rent in excess of that amount was unlawful and subject to the statutory sanction of an action of this kind.