More than one Union City purchase agreement has died quietly at attorney review over the past several years, and the reason never shows up on the listing sheet.
A buyer runs the numbers on a three-family walk-up. Purchase price, projected rent roll, a return that pencils out because the building is small enough to sit outside rent control, the way small multi-family buildings in Union City have for decades. Then the attorney pulls the file and finds a 2019 rewrite of the city's rent stabilization ordinance that changed what counts as small enough, and when. The projected return depended on rents the new owner may not be allowed to charge. The deal gets renegotiated, or it doesn't survive.
What the Ordinance Actually Says
Union City's rent stabilization code has long carved out an exemption for the smallest buildings: properties of three units or fewer, and buildings of up to six units if the owner lives there. The stated goal, written into the ordinance itself, was to encourage owner-occupancy in a city where much of the housing stock is small multi-family.
The 2019 revision to Chapter 334 added a condition that catches buyers who assume the old rule still works the way it used to. For a three-family building that becomes owner-occupied after April 1, 2018, the other units in that building do not automatically fall outside rent control. They stay covered until the tenant who was living there before the new owner moved in vacates the unit. Until that happens, the seller's low, rent-stabilized income on that unit is not a temporary quirk. It is the building's legal ceiling.
The four-to-six-unit owner-occupancy exemption carries its own condition, and it is the one that trips up buyers most often. A five- or six-unit building that was owner-occupied on July 18, 2017 keeps its exemption only as long as that same person continues to live there. A four-unit building keeps its exemption only as long as the owner who occupied it on April 3, 2018 stays in place. The exemption is written to a specific person named in the city's records as of a specific date, not to the building or to whoever happens to occupy it next.
The Exemption Doesn't Transfer With the Deed
This is the detail that kills deals. A buyer who plans to move into one unit of a currently-exempt four-family building often assumes they inherit the same exempt status the seller had, since they'll be an owner-occupant too. The ordinance doesn't work that way. The day the qualifying owner sells and moves out, the building drops onto the covered roll, whether or not the new owner also lives there.
| Unit count | Historical exemption | Post-2018 condition |
|---|---|---|
| 1 to 2 units | Exempt | No change |
| 3 units | Exempt | If it becomes owner-occupied after April 1, 2018, covered units stay under rent control until the prior tenant vacates |
| 4 units | Exempt if owner-occupied | Exemption tied to the specific owner occupying as of April 3, 2018. Ends when that owner sells |
| 5 to 6 units | Exempt if owner-occupied | Exemption tied to the specific owner occupying as of July 18, 2017. Ends when that owner sells |
| 7+ units | Covered | No change |
A rent roll built on the seller's exempt status is a rent roll that expires at closing.
A 2023 Ruling Adds a Second Layer
Even inside buildings that are unambiguously covered by rent control, there's a separate question worth asking: was the current legal rent calculated correctly in the first place. In September 2023, a Hudson County Superior Court judge ruled on a challenge brought by a Union City landlord over how the city redetermines rent after a violation is found.
the court found that a lack of pre-deprivation notice renders the ordinance unconstitutional as applied
Judge Kimberly Espinales-Maloney's ruling, reported by Hudson County View, found that landlords were entitled to notice and a hearing before the city recalculated their rent, something the process hadn't always provided. NJ.com covered the same ruling as a rare procedural win for landlords in a state where rent control law generally favors tenants. The city has said it intends to keep defending the ordinance and pursue appellate relief if needed, so the underlying rules remain in force. What changed is the paper trail a buyer should ask for. A "current legal rent" figure on a listing sheet, if it was set through a redetermination made without proper notice, is not necessarily the number a new owner can rely on going forward. The fix is simple: ask for the actual determination history from the Rent Control Office, not just the current bill.
The Segment Paying the Premium Is the Segment Carrying the Risk
Union City's own numbers make this worth getting right. Closed MLS sales through August 2026 put the median sold price at $660,000, up from $653,000 in June and $644,500 in July. Active inventory sat around 153 listings at month's end, which at the current sales pace works out to roughly 11.8 months of supply, more breathing room for buyers than either Hoboken or Weehawken offer right now. Days on market roughly doubled from a brisk 19 in July to 34 in August, a sign that early-summer competition has cooled.
The part that matters for this discussion: two- and three-family properties anchored the month's largest transactions, closing at roughly double the typical condo price, while condos clustered lower, with a median around $450,000. Multi-family is where the premium sits. It's also exactly the segment where the ownership-history question above concentrates. A comp drawn from a building that traded on the strength of an owner-occupancy exemption tells you what that seller was able to charge. It doesn't tell you what the next owner will be legally permitted to charge, unless the exemption transfers with the specific person, not just the deed.
No Furnished-Rental Workaround
Investors in Jersey City or Hoboken sometimes offset a shaky long-term rent roll with a furnished monthly rental, since New Jersey doesn't tax a stay until it passes 90 consecutive days, giving a 31-to-89-night product some room to work. Union City closed that door in December 2015, when it banned renting any dwelling unit for 30 consecutive days or less, full stop, whether or not the owner lives there. The ban is still enforced in 2026, with fines starting at $250 per violation and accruing daily. There's no furnished-rental lever to pull if a covered unit's rent-stabilized income falls short of the pro forma. The only number that matters is what an ordinary annual lease can legally command.
What to Verify Before You Write an Offer
- Ask whether the building has ever been owner-occupied, by whom, and since what date, not just whether it's currently owner-occupied.
- If a four-, five-, or six-unit exemption is in place, confirm the seller is the same person named in city records as of April 3, 2018 or July 18, 2017. If not, the exemption may not be what it appears.
- For a three-family building that became owner-occupied after April 1, 2018, ask the Rent Control Office directly whether the prior tenant has vacated. Get it in writing rather than relying on the seller's word.
- Request the actual rent determination history for any covered unit, not just the current bill, given the 2023 ruling on notice requirements.
- Underwrite the deal as if the building is fully covered by rent stabilization, then treat any surviving exemption as upside, not the base case.
- Because a furnished short-term rental isn't a legal fallback here, model income on ordinary annual leases only.
Union City's inventory and pricing still make it one of the more approachable multi-family markets in Hudson County. The ordinance just means the real underwriting happens after the accepted offer, not before it.
If you're weighing a multi-family purchase in Union City and want a second set of eyes on what a specific building's ownership history actually allows, Hudson Realty Group can walk through the deal with you before you're locked into a contract that depends on rents the ordinance won't let you charge.
