A bill moving rapidly through Trenton would give municipalities a new weapon against landlords: reporting suspected activity at rental properties directly to the property owner's insurance company, FAA News reports.
The Senate Community and Urban Affairs Committee on Thursday advanced S3703, legislation sponsored by Democratic State Senator John Burzichelli that would authorize municipalities to establish a system for notifying insurance companies when local officials suspect that activity occurring at a rental property violates the terms of the property's insurance policy.
The proposal could be particularly significant in communities such as Lakewood, where renting portions of owner-occupied homes — including basement apartments — is commonplace.
And unlike ordinary code enforcement, the legislation would potentially bring an entirely different player into disputes between municipalities and property owners: the homeowner's insurance company.
Under S3703, a municipal governing body could enact an ordinance establishing criteria for when the town may contact the insurer of a rental property based upon activity that is "reasonably observable without entering and inspecting the premises" and is suspected of violating the general terms of the insurance policy.
The bill specifically lists examples including excessive ongoing noise violations, "visible, dangerous overcrowding," underage drinking or illegal drug use, vandalism, fighting or violence, and reckless behavior endangering neighboring people or property.
Notably, however, that list is not exhaustive. The legislation says municipal criteria "may include, but not be limited to" those activities.
That wording potentially gives individual municipalities considerable discretion in determining what other observable conduct warrants contacting a property owner's insurer.
The municipality would be required to designate an official responsible for making the reports, but the bill leaves the "time and manner" of those notifications to the municipal governing body. The threshold is not a criminal conviction, court judgment, or even necessarily an adjudicated municipal-code violation. The statutory language speaks instead of observable behavior that is "suspected to violate" the insurance policy.
The bill goes another step.
It expressly authorizes municipalities to request a copy of the terms of a rental property's insurance policy from the property owner.
Senate Democrats included S3703 in a press release Thursday touting a package of bills aimed at fire prevention, building safety and what they termed "RENTAL PROPERTY AND LANDLORD RESPONSIBILITY."
The release described S3703 as addressing when municipalities may notify insurers about activity suspected of violating a rental property's insurance policy. Committee Chairman Senator Troy Singleton said the day's legislation reflected the committee's broader responsibility to "protect residents, strengthen municipalities," and ensure property owners remain accountable to their communities.
But S3703 itself is considerably broader than simply allowing municipalities to enforce their own housing or safety ordinances.
It creates a mechanism through which municipal government can potentially place a property owner's private insurance coverage into the equation based upon suspected activity at the property.
For Lakewood homeowners who rent out portions of their homes, that distinction could prove important. A municipal investigation that once might have resulted in a summons or code-enforcement proceeding could, in a municipality that adopts such an ordinance, also potentially result in communication with the company insuring the property.
What happens after such a notification would ultimately depend upon the policy and the insurer; S3703 itself does not direct an insurance company to cancel a policy, increase a premium, deny coverage, or take any other particular action. That is an important limitation of what the legislation actually says.
Nevertheless, the bill would expressly authorize the municipality to initiate that communication.
The legislation is not merely beginning its journey through Trenton.
An identical bill, A4641, already passed the full State Assembly on June 30. Among the lawmakers voting in favor was Assemblyman Avi Schnall, whose district includes Lakewood — a community where the legislation could be particularly consequential given the prevalence of homeowners renting portions of their homes.
Thursday's Senate committee action therefore moves the legislation another step toward final passage, with S3703 now positioned for consideration by the full Senate.
The Senate version was introduced March 2 by Burzichelli, while the identical Assembly legislation was sponsored by Assemblywoman Heather Simmons and Assemblyman David Bailey Jr., with Assemblyman Vincent Kearney joining as a co-sponsor.
If ultimately enacted, the law would take effect immediately.
FAA News will continue monitoring the legislation as it advances through the Senate.
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