Last month’s issuance of Administrative Order 2020-8 authorized New Jersey counties and municipalities to impose restrictions on short-term residential rentals. A number of coastal towns, which typically experience population spikes during the Summer driven in large part by seasonal and short-term rentals, imposed restrictions on transient tenancies.

Some restrictions established an expiration date- for example, of the four Long Beach Island communities which adopted rental limits, two will have expired by May 15, and the others will end June 1.  Other towns, such as Brigantine, Avalon and Sea Isle City, adopted restrictions of indefinite duration as they monitored progress on the statewide response to the COVID-19 crisis.

Although the declared Public Health Emergency remains in effect (see, Executive Order 138, issued May 6, 2020),  the State is plainly focused on the safe and expeditious reopening of the economy. (See, Executive Orders 131 and 140, creating respectively the “Governor’s Restart and Recovery Commission” and “Advisory Council”). Consistent with that focus, Cape May and Atlantic Counties have recently presented Governor Murphy with comprehensive proposals to  reopen their businesses and public facilities. (See, attached links).

Both proposals address the full resumption of short-term rentals, with Cape May County suggesting that seasonal rentals be allowed beginning May 11, and short-term (under 30 days) rentals beginning June 1. Both proposals also recognize that social distancing, sanitation best practices and employee protection measures are essential to any rental program.  

It seems clear that the State and  counties agree on the principal concept that rentals should be opened up (in those places where restrictions remain in effect) as soon as can safely be done. Landlords and prospective tenants in those towns should assume that restrictions banning rentals will expire in the short term. Those parties should think about, discuss and incorporate in their rental agreements, a couple pandemic-specific provisions, to allow for a smooth commencement of occupancy once permitted.

The parties are free to negotiate and enter into agreements during a period of governmental rental restriction, as long as everyone understands-and the contract reflects-that actual occupancy depends on the lifting of those restrictions. The parties may also want to address the contractual implications if external conditions (e.g., a “second wave” of COVID-19)  result in a  resumption of restrictions or closures, either prior to or during the rental term.

All Landlords and tenants should assume, too,  that short-term rentals will be subject to a new class of operational requirements affecting sanitation and the safety of occupants and employees. If the particulars are known at the time of contracting, they should be included in the agreement. Otherwise, the agreement should include language incorporating any duly-adopted standards, procedures and practices that may be in effect at the commencement of the rental term.