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FLAT FEE CHARGES ILLLEGAL FOR LANDLORDS?

The New Jersey Supreme Court is scheduled to hear the case of Green v. Morgan Properties, Superior Court of New Jersey, Appellate Division (A-323-10), to decide whether a lease provision in which tenants are charged a flat legal fee constitutes illegal fee splitting with a non-attorney. In Green, the Plaintiffs were tenants of apartments owned by the Defendant/Landlord. In each lease, the tenants were charged a $400.00 flat fee to pay for the services of the Landlord's in-house lawyer in eviction actions, whether or not litigation was commenced. However, the fee was reduced to $200.00 if the tenant paid their arrears before the scheduled court date. The Plaintiffs alleged that Defendants actions were a violation of the Consumer Fraud Act. The Appellate Court explained that fee-shifting provisions which set fixed amounts are sometimes allowable, but are subject to court review for their reasonableness. In this case, the Court determined it was improper for the Landlord to charge the flat fee when the actual amount of costs they incurred was much less than $400.00. 

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