Tenant’s Counterclaim Barred On House Lease

In the recent reported Appellate Division decision in Raji v. Saucedo,  the trial court determination barring a tenant’s counterclaim against the landlord was upheld.  The facts were that the landlord filed an eviction action for non-payment of rent.  On the trial date, the parties negotiated an agreement that the tenant would make some rental payment in exchange for being allowed to remain in the house for a couple of months.  That agreement was entered by the court as a consent judgment.

The tenant failed to pay and was locked out.  Then the landlord filed a second lawsuit to recover the agreed rent payment due under the consent judgment.  The tenant filed a counterclaim against the landlord for the cost of replacing a pool liner.  Following a trial on the second lawsuit, the trial court rejected the counterclaim, finding that the parties had reached a settlement in the form of the consent judgment entered in the eviction case, and that the tenant could have, but did not, raise the counterclaim as a part of the consent judgment negotiation and therefore was barred from raising it in the second lawsuit.  The Appellate Division upheld this result.

There are serious due process concerns presented by this situation.   First, the Appellate Division acknowledges that neither the landlord nor the tenant is permitted to assert a claim for damages in an eviction action.  The landlord seeks possession of the property, usually for non-payment of rent.  It is entirely unclear to me how a tenant would understand at the time of an eviction trial that s/he would need to assert any monetary claim related to the tenancy or otherwise be barred.  This is particularly true where the tenant is not represented by counsel, which is usually the case.

This situation should be contrasted from that presented in a Marini habitability hearing, where upon posting of the rent due with the court, the tenant is entitled to present evidence as to whether s/he is entitled to a rent reduction because the property is not habitable.  In that regard, the tenant may have incurred expenses in curing the habitability condition and would be entitled to present that to the court as an offset to the rent.

In the context of an eviction case such as Raji, it is my experience that it is not so clear in the typical hectic process unfolding in the courtroom and mediation on the trial date that a tenant would know to assert its non-habitability claims against the landlord at that time or be forever barred from asserting them in the future.  That is particularly true where the tenant does not have an attorney, which is usually the case.  Consideration should be given to the inclusion of a provision in the form of consent judgment by the New Jersey Superior Court that the tenant expressly waives all monetary claims against the landlord.  At least the tenant would have clear written notice of what s/he is agreeing to when signing.

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