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ORDINANCE PROHIBITING THE IMPOSITION OF CERTAIN BROKERAGE COSTS UPON RESIDENTIAL TENANTS IN THE CITY OF NEWARK
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WHEREAS, the City of Newark (the “City”) has a substantial interest in protecting residential tenants and prospective tenants and promoting access to safe and affordable rental housing within the City; and
WHEREAS, individuals seeking residential rental housing may incur significant upfront costs in connection with securing a rental unit, including security deposits, advance rent, applicable fees, moving expenses, and other costs associated with establishing a new residence; and
WHEREAS, the imposition of fees, commissions, or other charges for real estate brokerage services upon tenants and prospective tenants can substantially increase the upfront cost of securing residential rental housing and create an additional financial barrier to obtaining housing; and
WHEREAS, in certain residential rental transactions, a tenant or prospective tenant may be required to pay fees or commissions for brokerage services, notwithstanding that the brokerage firm or real estate professional was retained or engaged by, or provided services on behalf of, the landlord; and
WHEREAS, the Municipal Council finds that fees and commissions for brokerage services associated with the rental of residential real property should not be imposed upon or passed through to tenants or prospective tenants and that a landlord that retains or engages a brokerage firm should remain responsible for the costs of the brokerage services obtained by the landlord; and
WHEREAS, the Municipal Council further finds that tenants and prospective tenants shall receive clear and conspicuous disclosure of all fees for which they will be responsible in connection with the rental of residential real property before entering into a lease or other rental agreement; and
WHEREAS, legislation is presenting pending before the New Jersey Legislature that would establish additional protections concerning the imposition of brokerage fees and other charges upon residential tenants, reflecting ongoing State concern regarding the impact of such charges on individuals seeking residential rental housing; and
WHEREAS, the City desires to establish local protections for tenants and prospective tenants of residential real property located within the City by prohibiting the imposition, pass-through, or collection of brokerage fees from tenants and by requiring transparency concerning other fees associated with residential rental transactions; and
WHEREAS, the Municipal Council finds that the protections established by this Ordinance will promote transparency in residential rental transactions, reduce financial barriers to securing residential housing, and further the health, safety, and welfare of the residents of the City.
NOW, THEREFORE, BE IT ORDAINED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
SECTION 1. The foregoing whereas clauses are incorporated herein by reference and made a part hereof.
SECTION 2. Purpose and Effect.
The purpose of this Ordinance is to protect residential tenants and prospective residential tenants in the City of Newark from the imposition of fees, commissions, charges, or other costs for or related to brokerage services in connection with the rental of residential real property and to promote transparency concerning fees imposed in connection with residential rental transactions.
SECTION 3. Definitions.
“Brokerage Firm” means a real estate brokerage firm, including real estate brokers, real estate broker-salespersons, and real estate salespersons licensed or otherwise authorized to provide Brokerage Services in the State of New Jersey pursuant to Chapter 15 of Title 45 of the Revised Statutes who are affiliated with the brokerage firm, unless the context requires the terms to be considered separately.
“Brokerage Services” means the rendering of services for which a real estate license is required pursuant to Chapter 15 of Title 45 of the Revised Statutes.
“Landlord” means any person, firm, corporation, or other business entity, including a property manager or other agent thereof, that leases, rents, or offers to lease or rent Residential Real Property to a Tenant.
“Residential Real Property” means real property located within the City of Newark that is used or offered for use as a residence by a Tenant pursuant to a lease, rental agreement, or other agreement for residential occupancy.
“Tenant” means any person who leases or rents, or prospectively offers or applies to lease or rent, Residential Real Property.
SECTION 4. Prohibited Brokerage Costs
a. In connection with the rental of any Residential Real Property located within the City of Newark, a Brokerage Firm shall not:
i. impose upon, pass through to, or accept from any Tenant, directly or indirectly, any fees, commissions, or charges for or related to Brokerage Services; or
ii. require or condition the leasing of any Residential Real Property upon a Tenant engaging a Brokerage Firm or agent thereof; or
iii. post or cause to be posted a listing for any Residential Real Property representing that any fees, charges, or commissions for Brokerage Services are required to be paid by a Tenant in violation of this Section.
b. In connection with the rental of any Residential Real Property located within the City of Newark, a Landlord shall not:
i. impose upon, pass through to, or accept from a Tenant, directly or indirectly, any fees, commissions, or charges for or related to Brokerage Services; or
ii. require or condition the leasing of a Residential Real Property upon a Tenant engaging a Brokerage Firm or agent thereof; or
iii. post or cause to be posted a listing for Residential Real Property representing that any fees, charges, or commissions for Brokerage Services are required to be paid by a Tenant in violation of this Section.
c. A Landlord shall not require a Tenant to reimburse the Landlord, directly or indirectly, for any Brokerage Compensation incurred by the Landlord in connection with the rental of any Residential Real Property
d. A Landlord shall not increase the rent, impose an additional fee or charge, reduce a concession or benefit otherwise available to a Tenant, or take any other action for the purpose of imposing upon, passing through to, or recovering from a Tenant any fees, commissions, charges, or other costs for or related to Brokerage Services.
SECTION 5. Disclosure of Fees.
a. A listing related to the rental of Residential Real Property shall disclose, in a clear and conspicuous manner, all fees to be paid by the Tenant for the rental of the property.
b. Prior to the execution of an agreement for the rental of Residential Real Property, the Landlord or Landlord’s agent shall provide to the Tenant an itemized written disclosure of any fees that the Tenant is required to pay to the Landlord or to any other person at the direction of the Landlord in connection with the rental.
c. The itemized written disclosure required pursuant to subsection (b) shall include a short description of each fee, and the Tenant shall sign the itemized written disclosure prior to signing a lease for the rental of Residential Real Property.
d. The Landlord or Landlord’s agent shall retain the signed written disclosure required by this Section for three (3) years and shall provide a copy of the signed written disclosure to the Tenant.
SECTION 6. Landlord Attestation.
Landlord shall include an attestation concerning the requirements of this Ordinance in the application for Residential Real Property. The attestation shall appear conspicuously in no less than twelve-point, bold-faced type. The attestation shall state substantially as follows:
“THE LANDLORD AFFIRMS THAT THE LANDLORD OR THE LANDLORD’S AGENTS ARE PROHIBITED BY THE REVISED GENERAL ORDINANCES OF THE CITY OF NEWARK FROM IMPOSING UPON, PASSING THROUGH TO, OR ACCEPTING FROM A TENANT OR PROSPECTIVE TENANT, DIRECTLY OR INDIRECTLY, ANY FEES, COMISSIONS, OR CHARGES FOR OR RELATED TO BROKERAGE SERVICES. THE LANDLORD AFFIRMS COMPLIANCE WITH THIS REQUIREMENT AND ACKNOWLEDGES THAT A VIOLATION IS SUBJECT TO THE PENALITIES AND REMEDIES PROVIDED BY THE REVISED GENERAL ORDINANCE OF THE CITY OF NEWARK.”
SECTION 7. Relationship to Brokerage Agreements and Applicable Law.
a. Nothing in this Ordinance shall be construed to prohibit a Landlord from retaining, engaging, or compensating a Brokerage Firm in connection with the rental of Residential Real Property, or to limit the amount of compensation that a Landlord and Brokerage Firm may otherwise lawfully agree upon, provided that no such portion of such compensation is imposed upon, passed through to, or accepted from a Tenant in violation of this Ordinance.
b. In the event State law imposes requirements concerning Brokerage Services or brokerage costs in connection with rental of Residential Real Property that provides equal or greater protection to a Tenant than the requirements of this Ordinance, State law shall control to the extent of any conflict.
c. Except where expressly preempted or prohibited by State or federal law, the requirements of this Ordinance shall remain applicable and enforceable.
SECTION 8. Enforcement and Penalties
Any Landlord, Brokerage Firm, or other person who violates any provision of this Ordinance shall be subject to a fine not exceeding One Thousand Two Hundred Fifty Dollars ($1,250) for each violation. Each fee, commission, or charge for or related to Brokerage Services imposed upon, passed through to, or accepted from a Tenant in violation of this Ordinance shall constitute a separate violation. This Ordinance shall be enforce4d by the Department of Economic Housing and Development, Division of Rent Control, Newark Department of Public Safety, and such other City officials as may be authorized by law.
SECTION 9. Inconsistency of the ordinances; repealer.
All ordinances or parts of ordinances inconsistent with this ordinance are hereby repealed to the extent of their inconsistencies only. This ordinance shall take effect twenty (20) days after passage and publication, as required by law.
SECTION 10. Partial invalidity of ordinance; severability.
Should any section, paragraph, sentence, clause, or phrase of this ordinance be declared unconstitutional or invalid for any reason, the remaining portions of this ordinance shall not be affected thereby and shall remain in full force an effect, and to that end the provisions of this ordinance are hereby declared to be severable.
STATEMENT
This Ordinance prohibits landlords and brokerage firms from imposing upon, passing through to, or accepting from residential tenants or prospective residential tenants any fees, commissions, or changes for or related to brokerage services in connection with the rental of residential real property located within the City of Newark. The Ordinance further establishes disclosure and attestation requirements concerning fees associated with residential rental transactions and provides for enforcement and penalties for violations.