N.J. Supreme Court Rules In Key Case On Lease Provisions Setting Fixed Attorney’s Fees

On Tuesday, September 17, the New Jersey Supreme Court issued a ruling in Green v. Morgan Properties. NJAA has been participating in this case as amicus curiae in order to highlight the importance of fixed attorney’s fee provisions in residential leases.

These fixed-fee provisions create certainty for both landlords and tenants and reduce the burden on the court system of determining actual legal fees in each and every summary dispossess action. In an opinion for a unanimous court, Justice Helen Hoens wrote that a lease provision for attorney’s fee is not liquidated damages which are presumptively reasonable, and is not a form of damages at all, but rather is an additional rent term that the landlord must demonstrate as being reasonable.

The case now returns to the trial court. This decision continues the uncertainty created by the appellate court over the permissibility of lease provisions establishing fixed attorney’s fees that do not directly reflect the actual legal costs.

NJAA members with such lease provisions should have them reviewed by counsel.

Click here for a copy of the decision.