New Jersey Assembly Bill A3856

New Jersey 2022-2023 Regular Session

• Introduced: 5/9/22
• Refer: 5/9/22

Caption

Expands liability of certain individuals associated with limited liability companies and other commercial entities, when acting as residential landlord.

Impact

If enacted, this legislation would modify existing liability laws under the 'Revised Uniform Limited Liability Company Act' in New Jersey. By imposing joint and several liabilities, the bill intends to hold individuals accountable for risky property management practices that lead to repeated code violations. This could incentivize better management among commercial landlords and improve housing conditions for tenants, potentially reducing the number of code violations.

Summary

Assembly Bill A3856 aims to expand the liability of individuals connected with limited liability companies (LLCs) and other commercial entities when they act as residential landlords. The bill allows courts to hold LLC members, managers of LLCs, and corporate directors and officers jointly and severally liable for housing, building, or health code fines if certain conditions are met. Specifically, there must be at least three code violations on the property, and these must remain unpaid for over a year.

Contention

However, the bill has sparked debate concerning its potential impact on small landlords and property management. Critics argue that increasing liability may discourage individuals from entering the rental business or investing in residential properties, particularly smaller landlords who may lack the resources to manage multiple properties effectively. There are concerns that the bill could inadvertently lead to higher rental prices as landlords adjust to cover increased risks associated with their liabilities.