S1493

An Act prohibiting landlords from requiring residential tenants to remit rent and certain other payments through electronic funds transfer, requiring landlords to provide receipts for cash payments, and amending and supplementing P.L.1975, c.310.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.1975, c.310 (C.46:8-44) is amended to read as follows:

2. As used in this act:

a. "Landlord" means any person who rents or leases or offers to rent or lease, for a term of at least [1] one month, dwelling units, except dwelling units in rental premises containing not more than two such units, or in owner-occupied premises of not more than three dwelling units, or in hotels, motels or other guest houses serving transient or seasonal guests.

b. "Department" means the Department of Community Affairs.

c. "Commissioner" means the Commissioner [of the Department] of Community Affairs.

d. “Electronic funds transfer" means a transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer’s account, including, but not limited to, through the use of an automated clearinghouse (ACH) system.

(cf: P.L.1975, c.310, s.2)

2. (New section) No landlord shall require a tenant or prospective tenant to remit any amount due to the landlord pursuant to a residential lease, renewal, or extension agreement by means of electronic funds transfer, including but not limited to an electronic funds transfer system that automatically transfers funds on a regular, periodic, and recurring basis. A landlord who violates this section shall be subject to the penalty provisions of section 5 of P.L.1975, c.310 (C.46:8-47).

3. (New section) a. A landlord shall provide a written receipt to a tenant for each cash payment made to the landlord for any amount due to the landlord pursuant to a residential lease, renewal, or extension agreement. The receipt shall include the following:

(1) the name and address of the landlord;

(2) the name and title of the agent of the landlord, if the cash payment is made to an agent;

(3) the name and address of the tenant;

(4) the date and amount of the cash payment;

(5) a description of what the cash payment covers; and

(6) the signature of the landlord or the agent of the landlord, as applicable.

b. A landlord who violates this section shall be subject to the penalty provisions of section 5 of P.L.1975, c.310 (C.46:8-47), except that the penalty shall be $100 more for a second violation by a landlord within a five-year period, and the penalty shall be $200 more for each subsequent violation by a landlord within a five-year period.

c. It shall be a valid defense in any action or proceeding against a tenant to recover possession of real property for the nonpayment of rent that the landlord violated this section with respect to the months in which the violation or violations occurred.

4. This act shall take effect immediately, and sections 2 and 3 shall be applicable to a lease, renewal, or extension agreement executed on or after the date of enactment of this act.

STATEMENT

This bill prohibits a landlord from requiring that a tenant or prospective tenant pay any rent, security deposit, utilities, parking fees, or other lease-related payments owed to the landlord, by means of electronic funds transfer, including automatic debit payments that transfer funds from a tenant’s bank account on a regular, periodic, and recurring basis. The term “electronic funds transfer” includes payment made through an automated debit or credit system, or through an automated clearing house (ACH).

This bill is limited in scope in that its provisions would only apply to residential lease agreements, including residential lease renewal and lease extension agreements. The bill would apply to agreements executed by all parties on or after the date the bill is signed into law. Nothing in this bill would prohibit a landlord and tenant (or prospective tenant) from mutually and willingly agreeing to allow for such electronic funds transfer.

This bill also requires a landlord to provide a written receipt to a tenant for each cash payment the tenant makes to the landlord per a residential lease. This receipt is required to include the name and address of the landlord, or an agent of the landlord if the cash payment is made to an agent; the name and address of the tenant; the date and amount of the cash payment; a description of what the cash payment covers; and a signature of the landlord or agent, as applicable.

A landlord who violates the provisions of this bill may be liable for an initial penalty of up to $100 for each offense. A second violation, occurring within a five-year period, is subject to a $200 penalty. Any subsequent violation within the five-year period is subject to a $300 penalty.

In any eviction action against a tenant on the basis of an alleged failure to pay rent, the tenant may raise as a defense that the landlord violated the bill’s cash payment receipt requirement during the month or months in which the violation or violations occurred.

Tenants face hardship when a landlord requires that rental and other payments be made through electronic means, as some individuals do not have access to banking or other financial accounts. Issues may likewise arise when a landlord, as a precondition to entering into a lease agreement or to renewing an existing lease, requires the tenant to agree to authorize automatic debit payments each month. This practice is harmful to renters as it limits the ability of individuals to retain control over their finances. It furthermore may be used as a means to discriminate against low-income and disadvantaged tenants, thereby limiting access to affordable rental housing. This bill, by giving tenants the option to agree to such practices instead of having it forced upon them, would ensure tenants are afforded control over their own financial and housing decisions.