Newark Law Will Shine Light On Anonymous Corporate Home Buyers

NEWARK, NJ — Almost half of the homes in Newark are owned by corporations, with many of them purchased by “completely anonymous investors,” a bombshell report revealed last year. And that’s one of the main reasons why the Newark City Council is taking a whack at the problem with a new ordinance, officials say.

During their April 5 meeting, the municipal council gave the green light to a local law that will require landlords to register all rental units with the city’s department of economic and housing development (watch the video below).

The law requires every currently rented unit in Newark to be registered within 120 days its adoption. It’s a big change, as a “substantial number of units” are currently not subject to registration by the city, according to a statement from the office of Mayor Ras Baraka.

Last year, the Rutgers Center on Law, Inequality and Metropolitan Equity made a startling claim about home ownership in New Jersey’s largest city: nearly half of Newark’s residential properties are owned by corporations. Researchers said the phenomenon is one of the leading reasons behind the rising cost of rental housing in the area (read the full study here).

Many of the properties were bought by “completely anonymous investors,” researchers said. This lack of transparency among buyers can make it much harder for residents to keep track of who actually owns the building they live in.

But the city’s latest ordinance is expected to put a big dent in the problem, according to Baraka.

“This ordinance not only helps streamline interaction between tenants and property owners towards solutions, but is also part of our strategy to counter corporate investors who buy up owner-occupied homes, convert them to rentals, and then fail to maintain them,” the mayor said.

The ordinance also thwarts “attempts to hide behind anonymous LLCs that can’t be contacted by their tenants or by the city,” he added.

“We want to ensure that Newark residents have affordable, quality housing, a direct process to address emergencies and repairs, and the peace and security of a stable residence that allows them to enjoy other aspects of life in our great city,” Baraka said.

• See Related: Corporations Own Most Of Newark's Homes. New Laws Are Pushing Back

THE LAW

Here’s what the new law does, according to the mayor’s office:

CONTACT INFO - “Under this legislation, the city will gain up-to-date contact information for landlords and tenants to have on hand. The data will facilitate communications among the landlords, their tenants and the city to remedy code violations, address property neglect, and provide timely responses for emergencies, including unsafe situations and utility problems. The ordinance requires landlords to supply the city and tenants with contact information for themselves, for those responsible for regular maintenance, as well as those providing fuel and 24/7 emergency service for each unit in their buildings. Landlords located outside of Essex County must supply contact information of a party in the county authorized to accept notices from a tenant and receive legal service on the owner.”

INSPECTIONS – “The property owner must also permit the city to inspect each rental unit at least once every three years or upon a change in occupancy to ensure that the property complies with all state and local laws and regulations. In this inspection process, EHD will work in conjunction with other departments including the Department of Engineering, Department of Health and Community Wellness, Department of Public Safety, Office of the City Clerk, and others.”

Baraka’s office added:

“To offset the cost of inspections, owners will be required to pay an inspection fee of $50 per unit, a fee that must be renewed every three years and upon a change of tenant. Failure to comply will result in an increased fee of $100 per unit, and there will be a re-inspection fee of $50 if a unit is not in compliance upon first inspection. There is no fee for owner-occupied units. When in compliance, the landlord receives a certificate of habitability which permits the property to be rented. Once a rental unit is registered and a certificate of habitability issued, the registration is effective so long as the occupancy of the rental unit and the information necessary to obtain the certificate has not changed. In the event of an unsatisfactory inspection, the property will not receive a certificate of habitability and must not be leased until the conditions have been corrected. In addition, the certificate can be suspended or revoked if the rental unit is occupied by more than the maximum number of tenants allowed by law or if the property is in a dangerous condition.”

Each violation of the ordinance is punishable in municipal court by a fine of as much as $1,250, officials noted.

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