COMMUNITY ASSOCIATION COLLECTION OF DELINQUENT MAINTENANCE FEES THREATENED BY NEW BILL
The New Jersey Legislature is meeting Monday, April 12th to consider more bills to act as relief for those impacted by the COVID-19 pandemic. The current bills being considered are numerous. There is one bill in particular which may severely impact community associations.
S2330 is titled “COVID-19 Financial Security for Consumers Act.” It is a bill that amends N.J.S.A. 2A:17-19 in an effort to provide financial security to New Jersey Residents. Section 3 of the Act prevents the initiating, filing or threatening to file a collection lawsuit, garnishment, seizure, attachment or withholding of wages, earnings, property, or funds for the payment of debt to a creditor. It covers more collection actions with respect to repossession of property and reporting debt.
This is a concerning bill because it prevents collection for 120 days after the date that a State of Emergency and Public Health Emergency has ended. This means that after the Governor decides that periods are over, you may not even threaten to collect against an individual for another 120 days.
There are various issues that result from such an action that impact your functioning as an Association. First, this bill will remove any motivation for a resident of an association to pay maintenance assessments for at least the 120-day period of the statute. This could cause a devastating a loss of income to an association. The association is likely already (1) increasing cleaning and sanitation work on common areas in order to combat the Coronavirus, (2) halting necessary maintenance, such as roof leaks, plumbing leaks, electrical issues and the like, which are resulting in safety and health challenges. Other ramifications could include the halting of payments on insurance policies, management personnel, utilities, prompt garbage removal and other activities necessary to the health and safety of the members of these communities. As a result, the associations may have to raise maintenance fees, which causes its own problems among residents.
Many associations are already taking action to separate those are suffering hardships from those who are perfectly able to pay. Instead, this bill would paint with a broad brush would therefore provide relief to those who are not in need of such relief and cause an imbalance in the association’s prior work in alleviating hardship, while sustaining economic viability.
Many aspects of the Proposed Bill, in particular those prohibiting threatening to visit the household of a debtor, threatening to visit a debtor’s place of employment, or confronting the debtor in a harassing manner, are already prohibited by the Federal Fair Debt Collection Practices Act.
To require this 120-day waiting period before even advising someone, especially someone who has experienced no hardship, that an action in Court, will put the community associations at the end of a long line of litigants who already filed lawsuits, greatly extending the time over which a community association will need to recover its lost income, and greatly extending the time over which services to the whole community will be diminished.
We understand that these times are tough and that Legislators are hard at work to alleviate the hardships that many have suffered. In this instance, however, painting with a broad brush could cause an entire community to suffer, as opposed to alleviate the hardship some face at this moment.
We are calling for the Legislature to exempt community associations from this bill. We have written an open letter to the Senators sponsoring this bill.
Please contact these Senators if you also believe that this bill could negatively impact New Jersey community associations. See our letter below:
The Honorable Nellie Pou
New Jersey State Senator
New Jersey Senate District 35
The Honorable Joseph P. Cryan
New Jersey State Senator
New Jersey Senate District 20
The Honorable Steven V. Oroho
New Jersey State Senator
New Jersey Senate District 24
The Honorable Joe F. Vitale
New Jersey State Senator
New Jersey Senate District 19
RE: BILL CONCERNING FINANCIAL SECURITY, AMENDING P.L.
2020, c7 and N.J.S. 2A:17-19 S2330 & A-3908
We have become aware of the above-captioned Bill, which we understand to be up for consideration before the Legislature commencing Monday, April 13, 2020. I am writing to comment upon Section 3 of the proposed Bill. This Bill, if passed as written, will negatively affect the vast majority of the approximately 7,000 community associations (condominiums, homeowner associations and co-ops) in New Jersey, housing approximately 1.5 million New Jersey Residents.
I am referring, in particular, to Section 3 of the Bill, which, if passed, will remove any motivation by any community association resident to pay maintenance assessments for at least the 120-day period of the statute. The loss of income could be devastating to many community associations, which may have to do such things as reduce the extra cleaning they are performing on common areas in order to combat the Coronavirus, halt necessary maintenance, such as roof leaks, plumbing leaks, electrical issues and the like, resulting in safety and health challenges. Other ramifications could include the halting of payments on insurance policies, management personnel, utilities, prompt garbage removal and other activities necessary to the health and safety of the members of these communities.
Because of the way community associations are administered, but don’t fit neatly into the interim business relief loans offered by PPP or EIDL. There is no way for the community associations to make up that money without raising maintenance fees and increasing the economic burdens on their entire communities.
In our view, it is important in this instance, not to paint with a broad brush. Our firm represents over 200 community associations in New Jersey. We have created a system that identifies those who really need help, and it separates them from those who are perfectly able to pay. It allows the person economically affected by the Coronavirus to explain their hardship and tell us the best they can do to address their obligations, and then we assist the Association in coming to a payment plan for those affected. This is a responsible procedure administered responsibly by professionals.
Respectfully, the government of this State has enough on its plate securing the health of its residents and assuring the recovery of the economy without a creating a broad legislative scheme that is not necessary for the vast majority of community association residents, and is already being administered responsibly.
The Community Associations Institute is a vast resource for legislative action that affects community associations. It has a Legislative Action Committee and is poised to provide guidance on legislative issues such as the one proposed here, so as to avoid consequences that the non-practitioner could not be expected to foresee.
As the proposed Bill does not limit itself to those affected by the Coronavirus, or just to community associations, it will serve to harm many who are justifiably entitled to collect their debts, many of whom have already suffered a hardship as a result of being unable to obtain access to the Courts.
Several aspects of Section 3 of the Proposed Bill, in particular those prohibiting threatening to visit the household of a debtor, threatening to visit a debtor’s place of employment, or confronting the debtor in a harassing manner are already prohibited by the Federal Fair Debt Collection Practices Act.
Further, the Fair Debt Collection Practices Act requires a 30-day notice to a debtor prior to accessing the Courts, and the Courts are not presently accessible. Section 3(a)(3) will serve to delay and already delayed process, as the Courts are not hearing such matters, and have made it clear that they will not reopen these mattes for some time to come. To require this 120-day waiting period before even advising someone, especially someone who has experienced no hardship, that an action in Court, will put the community associations at the end of a long line of litigants who already filed lawsuits, greatly extending the time over which a community association will need to recover its lost income, and greatly extending the time over which services to the whole community will be diminished.
We appreciate the fact that you are trying to reduce the stress of those who have suffered negative economic impact from the pandemic. But stress is not reduced by putting off addressing a problem and thereby creating hardship and stress on a quasi-governmental entity – not for profit community associations. Stress is reduced by solving the problem and working with the homeowners impacted to provide them assistance while permitting the community association to still function and provide the services to the unit owners that permit it remain a community. Allowing an affected person to discuss his or her hardship with a neighbor and work out a plan forges a better relationship. Communications and community reduce stress.
For all of these reasons, Section 3 of this Bill will not serve the public interest. It will result in reduced services to residents of community associations across the State which will impose a safety risk to individual unit owners and community associations as a whole. It will reduce commerce at a time when we need all the commerce we can get.
We again urge you to communicate with the Community Associations Institute, as a reasonable and efficient means of working through the issues associate with the proposed bill.
Thank you for your attention to this matter.
Very truly yours,
GRIFFIN ALEXANDER, P.C.
/s/ Robert C. Griffin, Esq.
cc: George Greatrex, Esq.
Legislative Action Committee Chair
New Jersey Community Association Institute