Here is the playbook a lot of small investors bring to Hudson County: buy a three-family, occupy one unit yourself, and treat the other two as a runway to market rent. Maybe the current tenants have been paying $1,400 a month for years while comparable units nearby list for $2,000. You underwrite the deal assuming that gap closes once you're the owner living on-site.
In Union City, that assumption can cost you the deal.
The city's rent stabilization ordinance, Chapter 334, was amended to set rules for three- and four-family buildings. Moving in does not, by itself, exempt the other units. The exemption only activates once the tenant who was already living in that unit before you occupied the building chooses to leave on their own. Until then, the unit stays under rent control no matter whose name is on the deed.
The Clause That Outlasts the Sale
The ordinance language is specific about timing and mechanism. For three-family buildings that become owner-occupied after April 1, 2018, the code states that rental units "shall only become exempt from the protections of the rent control ordinance, upon the tenant, who resided in one of the non-owner-occupied units in the building prior to the occupancy by the owner, vacating the unit."
The same structure applies to four-family owner-occupied buildings: the sitting tenant has to leave voluntarily before that unit exits rent control. You can occupy the building, register your ownership, and the tenant next door still pays what the rent board says they owe, not what the open market would bear.
Five- and six-unit buildings get a narrower carve-out. If the owner was already living there when the city adopted its 2017 and 2018 ordinance amendments, and that same owner keeps occupying the property, the exemption holds. But that grandfathering only protects owners who were there before the rule changed. A buyer purchasing a five- or six-unit building today and moving in for the first time doesn't inherit that exemption. The clock that matters is the ordinance's clock, not the closing date.
How the Ordinance Addresses Outside Precedent
The amending ordinance text explicitly addresses a 2009 Appellate Division case, Osoria v. West New York Rent Control Board, and states that its reasoning does not apply in Union City. That case had opened a path for owner-occupants in other towns to argue their way out of rent control obligations tied to non-owner units.
For a buyer, the practical takeaway is that this outside precedent does not change the ordinance's owner-occupancy requirements.
Two Deals That Didn't Survive the Math
Peter Cecinini, a Hudson County real estate attorney, has described the real-dollar consequences of this clause catching buyers off guard. When the 2018 amendment took effect, the searchable online ordinance text had not been updated, and buyers and even some listing agents didn't know a three-family they were underwriting had already become subject to rent control. He recounted two purchases that fell apart once the ordinance change surfaced during due diligence. In each case, the buyer's offer price had been built on rents they expected to collect years down the line, after reasonable annual increases from a market-rate starting point. Once it became clear the starting point was capped, not reset, the numbers no longer supported the price.
He also described the seller-side version of the same problem: an owner who had lived in a three-family for two decades, expecting a sale that would fund retirement, seeing the ordinance change reduce the property's value by tens of thousands of dollars because the buyer pool could no longer underwrite market rent on day one.
Whether you're buying or selling a three-family in Union City, the ordinance changes what the building is worth to whoever occupies it next. That's not a footnote. That's the deal.
The Rule Changes Once You Cross the River
Buyers who've shopped in Jersey City often bring an assumption that doesn't travel well. Jersey City's Chapter 260 exempts every building of four units or fewer from rent control outright, regardless of who lives there. Cross into Union City with that same four-units-and-under mental model and you'll misprice the deal.
|
Jersey City (Chapter 260) |
Union City (Chapter 334) |
| Buildings with 4 units or fewer |
Exempt from rent control entirely |
Not automatically exempt; owner-occupancy triggers a conditional exemption tied to the sitting tenant vacating |
| 5 to 6 unit buildings |
Governed by standard city rules |
Exempt only if owner occupied before the 2017/2018 amendment dates and continues to occupy |
| Owner moves in after purchase |
No bearing on exemption status since the unit count already exempts the building |
Does not exempt the other units until the pre-existing tenant leaves voluntarily |
Hoboken and Union City don't share identical rules either, so the safest approach for anyone shopping multi-family across Hudson County towns is to treat each town's ordinance as its own document, because that's exactly how each city treats it.
What You Can Actually Charge, Once the Unit Is Covered
For units that remain under Chapter 334, annual increases are capped. The city also sought legal support for administering the ordinance, putting out a request for proposals in November 2025 for general counsel to the Rent Stabilization Board for calendar year 2026.
Cap rates on Union City apartment buildings currently span a wide range, roughly 3.3 percent to 10 percent depending on the listing, and rent control exposure is one of the reasons that spread is so wide. A building where every unit can reset to market on turnover prices very differently than one where a long-tenured, protected tenant sits below market with no clear exit date.
Before You Write the Offer
A few questions belong in due diligence on any Union City three-, four-, five-, or six-family, before the number on the listing sheet becomes the number in your offer:
- Ask directly how long each current tenant has lived in the unit, and whether they were there before the current owner began occupying the building. That single fact determines whether the exemption clock has started.
- Confirm the unit count as recorded on the tax lot, not just what the listing calls it. The ordinance's thresholds run on that number.
- If the building relies on the owner-occupancy exemption, verify that status before closing, not after.
- Request a legal rent calculation from the city for any unit whose current rent looks unusually low. The advertised rent and the rent the board will actually enforce are not always the same figure.
- Run your offer price against the current legal rent, not the rent you hope to charge once you move in.
A Couple of Questions Worth Answering Directly
Does a two-family building avoid all of this? Two-family buildings sit outside Chapter 334's scope. The clause described here is specific to three-family and larger buildings.
Are rented condos exempt the way they usually are elsewhere in New Jersey? Not in Union City. The ordinance is explicit that condominium and cooperative units which are rented are not exempt from Chapter 334, regardless of how many units the landlord owns in the building.
Union City rewards buyers who read the actual ordinance before they read the rent roll. The building's income potential depends on a legal detail that a standard multi-family checklist won't surface on its own.
If you're evaluating a multi-family purchase or sale in Union City, Hoboken, Jersey City, or elsewhere in Hudson County, the Andrew Botticelli Team can walk through the building-specific and municipal details before you write an offer. Contact us to talk through what a specific property's numbers actually support.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
