Navigating the Impact of Executive Orders on Shore Rentals and Hotels

With prom season and summer approaching, the COVID-19 pandemic has created challenges and confusion for shore rentals and hotels. Unlike the regulation of most other businesses during the pandemic, the regulation of short-term lodging and hotels has been delegated to municipalities and counties by the state. As a result, there now exists a patchwork of varying regulations on a county-by-county and town-by-town basis. Those who own hotels or rental properties, and thwarted travelers looking for remedies, must undertake a careful evaluation of municipal and county directives in effect for the relevant locations.

Executive Orders No. 107 and No. 108 and Administrative Order No. 2020-8

Executive Order No. 107, entered March 21, 2020, expressly closed all “non-essential retail businesses” and all recreational and entertainment businesses. In an effort to standardize restrictions throughout the state, Executive Order No. 108, entered on the same day, invalidated any existing or future restriction by a county or municipality that “in any way will or might conflict with any of the provisions of Executive Order No. 107, or which will or might interfere with or impede its achievement, or the achievement of Administrative Orders issued as authorized by [the Governor’s] Executive Orders.”

Executive Order No. 108, however, had an exception for the lodging industry. Specifically, the Governor granted the Superintendent of the State Police the authority to make additions, amendments, clarifications, exceptions, and exclusions for “online marketplaces for arranging or offering lodging.”

On April 4, 2020, the Superintendent of the State Police issued Administrative Order No. 2020-8, which allowed counties and municipalities to impose additional restrictions on the “ability of hotels, motels, guest houses, or private residences, or parts thereof, to accept new transient guests or seasonal tenants,” provided such restrictions did not prevent establishments from serving (i) individuals housed under the non-congregate shelter program; (ii) individuals receiving temporary government housing assistance; or (iii) healthcare workers taking temporary residence.

The Administrative Order has allowed municipalities and counties to issue their own orders, which vary from one location to the next, most notably in shore communities.

Local Examples

Cape May County

Cape May County has adopted a unified approach for all municipalities within the County. The Board of Chosen Freeholders adopted Resolution 250-20 on April 7, 2020, which prohibited hotels, motels, guest houses, and other seasonal, short-term rental businesses from lodging any new transient guest or seasonal tenant until the state or the Board of Chosen Freeholders determines that the restriction is no longer necessary. The resolution explicitly allowed lodging businesses to accept reservations, take deposits, and sign leases for future dates. The resolution included the three exceptions referenced in the State Administrative Order. The County amended Resolution 250-20 by the adoption of Resolution 256-20 on April 14, 2020, to allow for lodging of governmental and military employees.

The County’s FAQs state that the Resolution will be in effect until at least May 11, 2020, the date on which the State’s current Emergency Order will expire, unless extended.

Ocean County Municipalities – A Patchwork of Regulations

Unlike Cape May County, Ocean County has so far allowed its municipalities to adopt their own regulations for both short-term rental and hotels.

Some municipalities, like Seaside Heights, have issued orders banning both hotel lodging and short-terms rentals. Seaside Heights’ order specifically applies to “lodging of any kind” and requires cancellation of all reservations during the State of Emergency. The order recognizes the exceptions in Administrative Order 2020-8 and expands those exceptions to include active duty military personnel, first responders, and construction workers engaged in public sector projects occurring in Ocean County.

Other municipalities, like Ship Bottom, have issued orders restricting only short-term rentals, and not restricting hotels and motels. Ship Bottom’s order even declared that rental agreements subject to the terms of the local order were “hereby declared terminated.”

Both Monmouth and Atlantic Counties are experiencing similar issues from municipality to municipality.

Conclusion

Whether you are in the lodging business or your travel plans have been impacted by the current State of Emergency, your rights and remedies may vary on a county-by-county or even a town-by-town basis. Presuming all orders have been validly issued, a hotel in Ship Bottom, at least for now, can operate, but the owner of a short-term rental may not. A hotel in Seaside Heights can house certain construction workers, whereas a hotel in Cape May County may not.

New Jersey attorneys can help navigate this maze of local regulations to evaluate the validity and scope of certain orders and the remedies available to those who have been impacted.

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