Meadowlands Disaster Assistance Information Session

Kenneth A. Porro, Esq.,Partner and member of the Meadowlands Regional Chamber of Commerce will be presenting information on Municipal Disaster Property Tax Relief at the Meadowland Regional Chamber of Commerce’s upcoming event on Disaster Assistance. The event will be held on Monday, December 3, 2012 from 12:00 p.m. to 2:00 p.m. at the Holiday Inn – Hasbrouck Heights, 283 Route 17 South, Hasbrouck Heights, NJ 07604. This is a FREE event, however, registration is mandatory and can be made here: http://tinyurl.com/ctkz6og. Ken would like to remind everyone that the deadline to request property tax relief due to damage from Hurricane Sandy is BEFORE JANUARY 10, 2013. If you are unable to attend and still require information and assistance, Ken has offered to provide a FREE analysis of New Jersey Property Tax Assessments for those suffering significant property damage as a result of Hurricane Sandy and he can be contacted at: http://www.wellslaw.com/porro.html.

Project Engage – Innovation that Will Strengthen Democracy

Tom Wells is pleased to announce that WJL’s client, American Civix Technologies, L3C is quickly achieving its crowdfunding goal for Project Engage. Project Engage is seeking funding to develop apps to engage citizens on a variety of issues and topic affecting them directly. It will give citizens direct contact with their various representatives. More information on Project Engage and its crowdfunding efforts can be obtained here: http://www.indiegogo.com/projectengage. You can follow American Civix Technologies via their facebook page here: http://www.facebook.com/AmericanCivixTechnologiesL3C. For more information on the purposes and benefits of a benefit corporation (a/k/a/ an L3C entity), you can read Tom Wells  prior blog item here: http://tinyurl.com/cuy7tbj.

Reprieve for Storm Victims

With many individuals and businesses experiencing various degrees of loss due to the recent hurricane, from minor interruptions to total devastation, the IRS and New Jersey Division of Taxation are providing relief in the form of filing deadlines.  For example, the IRS has postponed many filing and payment deadlines until February 1, 2013.  More details of these filings are available on the IRS website (see below). Further, Governor Christie approved relief for tax filing deadlines for businesses still reeling from the impact of the storm.  Specifically, any tax filings due on October 30, 2012 and October 31, 2013 are now due on November 14, 2012. The relief applies to all New Jersey counties.  The following links may be of assistance to you:

• http://www.irs.gov/uac/Newsroom/IRS-Provides-Tax-Relief-to-Victims-of-Hurricane-Sandy;-Return-Filing-and-Tax-Payment-Deadline-Extended-to-Feb.-1,-2013
• http://www.njscpa.org/news/topics/sandy/article/2012/11/01/governor-christie-extends-tax-deadline-for-businesses-disrupted-by-storm
• http://lwd.dol.state.nj.us/labor/ui/aftrfile/dua.html
• http://www.tax.ny.gov/

 Please also remember that many companies are willing to provide credits for loss of service during the storm.  However, many of those companies are requiring that you call and ask for such a credit.  Please remember to call your utility company as well as your cable/internet provider to see if you can receive such a credit.

We are hopeful that our clients and their families are safe after this monumental storm. However, we are well aware that there are many individuals/businesses that are suffering insurmountable losses and who may be left thinking how they can recover after such a devastating loss to their homes and/or businesses.  A good starting point is insurance policies which should be reviewed for coverage assistance (including business interruption coverage, if applicable), as well as any leases, contracts and other documents which may provide guidance in a situation like this.   If you did not have this type of coverage before the storm, we need to be sure that you have it now.  We are here to assist you with any of your needs.  Do not hesitate to call any of our attorneys to help guide you through any needs after the storm.  

Please feel free to contact us with any questions on Hurricane Sandy relief or otherwise.

How much interest can I be charged?

Parties in New Jersey are permitted to charge relatively high rates of interest in many transactions.  In the state, there are two separate types of usury, civil and criminal.  The levels of interest rates constituting civil and criminal usury, and the exceptions thereto, are governed by separate statutes.

Civil usury rates in New Jersey are governed by N.J.S.A. 31:1-1 et Seq.  N.J.S.A. 31:1-1(a) provides that civil usury is any rate above 6% for an agreement that is not in writing, and any rate above 16% where there is a written contract specifying the interest rate.  Pursuant to N.J.S.A. 31:1-3, when a lender charges a higher rate of interest than what is permitted by the statute, the only amount that may be recovered by the lender is “the amount or value actually lent, without interest or costs of the action . . . If any premium or illegal interest shall have been paid to the lender, the sum or sums so paid shall be deducted from the amount that may be due as aforesaid, and recovery had for the balance only.” 

There are many exceptions to these civil usury rates.  First, it should be noted that federal law preempts all state usury law (see Depository Institution Deregulation and Monetary Control Act “DIDAMCA” – 12 U.S.C. 3803).  Accordingly, financial institutions may make loans at any rate of interest up to criminal usury limits, and other lenders, such as mortgage companies who are funded by federal programs, also are not subject to the New Jersey caps.  New Jersey courts have also carved out other transactions, holding that purchases under revolving credit accounts, installment loan purchases, and purchases under credit card accounts are exempted from the civil usury statute under what is known as the “time-price differential” doctrine.  The doctrine creates the legal fiction that extending credit is not a loan, but merely an adjustment in price for the privilege of delaying payment.  See, e.g. Steffenauer v. Mytelka & Rose, Inc.,87 N.J. Super. 506, 510-517 (App. Div. 1965),aff’d per curiam, 46 N.J. 299 (1966).  In yet another exception, pursuant to  N.J.S.A. § 31:1-1(e)(1), loans or forbearances of $50,000 or more, except for loans secured by a first lien on residential real property, are also exempt from the civil usury statute.

Where loans made to business entities are concerned, N.J.S.A. 31:1-6 provides, in pertinent part, that “No corporation, limited liability company or limited liability partnership shall plead or set up the defense of usury to any action brought against it to recover damages or enforce a remedy on any obligation executed by said corporation, limited liability company or limited liability partnership.”  It has been noted that the application of this section to corporations should be restricted in order to afford “sympathetic sweep” to the State’s policy against usury. Lesser v. Strubbe, 56 N.J.Super. 274 (Ch.1959), remanded on other grounds 67 N.J.Super. 537, certification granted 36 N.J. 140, affirmed 39 N.J. 90.  Nevertheless, the statute has been applied to protect those that have made loans of money and have taken paper or bonds of a corporation. Fine v. H. Klein, Inc., 10 N.J.Super. 295 (1950).  

In the Fine case, corporate promissory notes containing acceleration-on-default clauses providing for attorney’s collection fees and in part secured by a chattel mortgage were found to be “obligations” irrespective of whether the notes remained in the hands of the original creditor or came into the hands of the public on the market. Id.  The Fine court granted Plaintiff’s motion to strike Defendant’s usury defense, and noted that “Since the defense of usury cannot be pleaded by the corporate maker of the notes, it is likewise unavailable to the individual endorsers on the notes.” Id. at 300. (citing Commercial Funding Corp. v. Melroy Const. Co. , 106 N.J. Eq. 11 (Ch. 1930); Liebers v. Plainfield, &c., Bldg. Co. , 108 N.J. Eq. 391 (Ch. 1931)). 

In addition to the above civil usury limits and exceptions, another important consideration is New Jersey’s criminal usury statute.  Pursuant to N.J.S.A. 2C:21-19, the criminal usury limitations apply to all loans subject to State of New Jersey law. The maximum permissible rate is 50% for corporations and 30% for non-corporate borrowers.  The language of the statute outlines the different degrees of criminal usury, and notes that criminal usury is a crime in the second degree when an interest rate charged on a loan is more than 50% per year.      

While the state of New Jersey takes a relatively liberal approach to the issue of usury, given the foregoing case law and statutes, individuals and businesses must tread carefully when making loans that are in excess of the above referenced limits. 

Spencer J. Rothwell, Esq. is an Associate Attorney practicing in the firm’s Land Use, Litigation and Real Estate departments