New Jersey lawmakers seek to expand personal liability for LLC protected delinquent landlords

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JACKSON TOWNSHIP, NJ – A bill has been introduced into the legislature in Trenton that seeks to pierce the corporate veil of unscrupulous landlords hiding behind LLC protection across the state of New Jersey.

In Jackson Township, the issue has been of growing concern as many of the rural community’s homes are being purchased by nearly untraceable LLCs and rented out as Airbnb rentals and transient housing.

Now, Legislation sponsored by Senate Majority Leader M. Teresa Ruiz and Senator Shirley Turner, which would expand liability for certain commercial entities when acting as residential landlords, cleared the Senate Community and Urban Affairs Committee today.

“Sadly, there are bad actors around the state hiding behind LLCs to avoid taking responsibility for the conditions of the buildings they manage. At the detriment of residents and neighborhoods, they are able to skirt enforcement agencies and refuse to make much-needed renovations,” said Senator Ruiz (D-Essex). “By closing this loophole we can hold bad actors accountable and improve the living conditions of tenants around the state.”

The bill, S-523, would allow a court to hold a corporation, limited liability company (LLC) or other commercial entity liable for charges related to housing codes, building codes or health codes. It would also allow courts to hold them liable for charges related to the Hotel and Multiple Dwelling Law, the Democrat lawmakers said.

“Safe, secure, and decent housing should not be a luxury, yet for many renters, especially those in urban areas, they are living in deplorable conditions because landlords are neglecting their properties and hiding behind a corporate veil to avoid their responsibilities to maintain their properties,” said Senator Shirley K. Turner (D-Mercer/Hunterdon). “Making the landlord registration process more transparent will provide our municipalities with the tools they need to not only protect tenants, but also to eliminate existing blight and prevent further blight in our communities.”

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When registering as a landlord, the bill would require those organized as any other legal or commercial entity to submit the name and address of a registered agent. In addition, a landlord organized as a LLC, or any other legal or commercial entity would be required to submit the name and address of the members of the LLC who possess at least a 10 percent interest in the business, and the officers and directors in the case of a corporation, when registering as a landlord.

The entity could be held liable if they had been notified of charges and at least three charges remained unpaid for 13 months after they were due.

The bill was released from the committee by a vote of 3-2.