Updated Lien Priority Legislation for NJ Community Associations Becomes Law
On April 29, 2019, Governor Murphy signed new legislation that will enhance and expand the lien priority for condominium associations. It also, for the first time, gives a statutory right of the lien priority to homeowners associations. Prior to this, only condominiums in New Jersey were able to claim limited lien priority. Pursuant to the original statute, condominiums were afforded a six months of “aggregate customary assessments” following a mortgage lender’s Sheriff’s sale, so long as the association had a lien recorded prior to the mortgage lender’s initiation of the foreclosure process.
Sorting Through Legal Requirements of Various Kinds of Association Meetings
The board of a homeowners association, cooperative, or a condominium association owes a fiduciary duty to its members to act in the best interest of the community as a whole. However, sometimes members have concerns over whether board members ignore this duty and act only with their own self-interests in mind. This is why state and local laws support and serve to enforce the governing documents that have been created for a community. The governing documents are created for each community and state the policies in place for that community. They allow for each member of the community to know the expected duties, procedures, and limitations of the board.
DCA Proposes New Association Regulations Including Changes to Fines, Penalties & Elections
On June 3, 2019, the New Jersey Department of Community Affairs (“DCA”) issued several proposed amendments to regulations under the Planned Real Estate Development Full Disclosure Act (“PREDFDA”). The regulations are intended to both carry out the 2017 amendments set forth by the “Radburn Act” and “to enhance resident voting participation rights” in community associations. Of particular importance is that several of these proposed regulations seek to implement obligations on Associations that exceed the obligations set forth under Radburn.
RESOLVING DISPUTES IN A HOMEOWNERS' ASSOCIATION COMMUNITY
During the course of a community’s administration, issues can arise between an individual homeowner and the governing board. The Association, represented by its Board of Directors or Trustees, may believe that the individual homeowner is not acting in accordance with the rules or restrictions set forth in the Association’s governing documents. The individual homeowner may feel that the Association’s Board of Directors has overreached the limit of its authority.
Community Associations are not required to Accommodate All “Emotional-Support” Animal-Related Requests
One issue that has been plaguing community associations with pet restrictions in recent years is the increasing frequency of requests by unit owners seeking to keep emotional support animals in the community. While few Boards question the right of an individual to keep a service animal in their home when they truly need one, some Boards believe that individuals are making requests for “emotional support” animals in order to circumvent the governing documents.
NEW JERSEY PASSES FORECLOSURE REFORM BILLS AIMED TO ASSIST COMMUNITY ASSOCIATIONS WITH HOMES IN FORECLOSURE
On April 29, 2019, New Jersey Governor Philip Murphy signed into law two new amendments that provide relief to community associations with homes in foreclosure. When a unit or a home in a community association is in foreclosure and does not pay assessments, it will ultimately be left for other owners in the community to pay them. Currently, the New Jersey Condominium Act allows condominium associations the right to collect up to 6 months of unpaid assessments when a condominium unit is foreclosed. The limited priority status of the lien allows the condominium association to collect the priority of its lien ahead of a mortgage lender and other lien holders.
FORECLOSURE REFORM IN NEW JERSEY
Two bills sit on Governor Murphy’s desk for signature that could alter the landscape of the current foreclosure process in New Jersey. Zombie Foreclosures are bank foreclosures on vacant units, which are stalled or delayed for years. Associations with units stuck in zombie foreclosures must deal with a lengthy foreclosure process. Associations have a strong interest in expediting these foreclosures because an abandoned unit does not pay maintenance fees. Associations lose less money when they expeditiously complete the foreclosure process.
Community Association Boards Can Make Bylaw Amendments Without Unit Owner Voting
In New Jersey, and elsewhere, community associations often find themselves at odds with unit owners when attempting to amend their bylaws so as to improve the effectiveness of the community association. Fortunately, New Jersey law has recognized the challenges facing community association boards and has provided an opportunity to move forward without a majority of unit owners voting in favor of the amendment. These rules empower community association boards to act, ensuring that they can operate more dynamically to serve the interests of the people in their community.
New York Laws on Disclosure Requirements
New York law has been revised to require cooperative and condominium boards to disclose contracts or transactions in which it or its directors have an interest. The New York Legislature enacted these proposed revisions to the New York Business Law and the New York Not-for-Profit Corporation Law.