Our Thoughts

As Billy Joel so famously sang, Pennsylvanians love to spend their weekends at the Jersey Shore. But what effect will the Coronavirus have on the Summer of 2020 at Stone Harbor or OCNJ? For week-long renters, initial deposits 

were due in January, with additional payments required in May and June. As of today (April 13th) as I write this, the Governors of Pennsylvania and New Jersey have both "shut down" the two states to almost all personal and business activity. While the constitutionality of these measures is beyond the scope of this short article, some state governors have shown themselves willing to exercise the police power in a manner that affects personal travel and private contractual dealings. This could be a huge problem for both beach house owners and renters.

So, what do you need to know? First of all, go to the original source document.

What Does Your Contract Say?

If you have a reservation to spend a week or two at the Shore, chances are that you signed a lease. A lease is a simple contract between the owner of the property and you, the tenant, allowing you to occupy the property for a period of time for a specified price. Leases of this type are almost always in writing. 

I reviewed the lease provisions in a 2020 summer lease used by one of the largest real estate agencies on the Jersey Shore. It says this, under the section on "Travel Insurance":

"Refunds will not be given for cancellations or occupancy delays due to deaths in the family, medical emergencies, travel cancellations or delays, weather related events or evacuations, or other events that would be considered Acts of God or that are out of the control of the Landlord. The Tenant may purchase travel insurance through an independent insurance agency to cover these events. If the Tenant chooses not to purchase travel insurance, the Tenant may be forfeiting their ability to receive a refund in any of the above events occur." 

Get your contract out and read it. It determines what your rights are. If you bought travel insurance, get that policy out and read it.

Should You Send More Money?

If you send in your second or final payment and are unable to use the beach house for whatever reason, you are likely going to lose that money. But if you don't pay on schedule, you are in breach of the lease and will lose your time as well as be subject to being sued for the rest of the money you owe.

For the owners, this uncertainty is even worse, because many have mortgage loans that, given the $1 million and up cost of beach houses, require big monthly payments that are paid with rental income.

Between a Rock and a Hard Place

There's no easy answer here because there is risk from the uncertainty caused by the virus and by our government. It's important that you know what your individual contract says, so that you can start thinking about this and determine what your course of action is going to be. Don't rely on what the realtor or other people say: read your original document.

We are in mid-April now, so there is still time to wait and see. If travel and rental restrictions are lifted soon, this issue may be moot and we'll be enjoying sand between our toes this summer.

 

CAVEAT: This article is for educational and informational purposes only and does not constitute legal or tax advice, which you should obtain from your attorney.

© Copyright 2020 Kevin F. Danyi, JD, LLM