Bill Text: NJ S2816 | 2018-2019 | Regular Session | Introduced
Bill Title: Concerns membership and management of homeowners' associations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-07-01 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S2816 Detail]
Download: New_Jersey-2018-S2816-Introduced.html
District 33 (Hudson)
Senator RONALD L. RICE
District 28 (Essex)
SYNOPSIS
Concerns membership and management of homeowners' associations.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the administration and management of planned real estate developments, amending P.L.2017, c.106, and amending and supplementing P.L.1993, c.30.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1993, c.30 (C.45:22A-43) is amended to read as follows:
1. a. For the purposes of P.L.1993, c.30 (C.45:22A-43) et seq., "owner" or "unit owner" means any person owning a unit, or an "owner" or holder of a "proprietary lease," as those terms are defined under subsections i. and k. of section 3 of "The Cooperative Recoding Act of New Jersey," P.L.1987, c.381 (C.46:8D-3) if the development is a cooperative..
A developer subject to the registration requirements of section 6 of P.L.1977, c.419 (C.45:22A-26), or the entity charged with the management of a planned real estate development as that term is defined pursuant to section 3 of P.L.1977, c.419 (C.45:22A-23), regardless of the date of formation of the association or whether the developer thereof was subject to the registration requirements, shall organize or cause to be organized an association whose obligation it shall be to manage the common elements and facilities. The association, if not formed prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be formed on or before the filing of the master deed or declaration of covenants and restrictions, and may be formed as a for-profit or nonprofit corporation, unincorporated association, or any other form permitted by law. If the planned real estate development will not be or is not formed as a condominium or a cooperative, the title to the common elements and facilities may be, but are not required to be, placed in the name of the association, provided that the association's governing documents comport specifically with the provisions of P.L.1977, c.419 (C.45:22A-21 et seq.) and P.L.1993, c.30 (C.45:22A-43 et seq.). The fact that the common elements and facilities of a planned real estate development may be titled in the name of the association shall not be construed as diminishing the ownership interests of the unit owners in those common or shared elements and facilities.
The application of P.L.1993, c.30 (C.45:22A-43 et seq.) to the association of an existing planned real estate development shall not be limited by:
(1) whether the developer has been subject to, or exempted from, the registration requirements of section 6 of P.L.1977, c.419 (C.45:22A-26); or
(2) the development's date of establishment.
b. Nothing in subsection a. of this section shall be construed to require the registration of a planned real estate development that is not otherwise required to register pursuant to section 6 of P.L.1977, c.419 (C.45:22A-26).
c. Membership in the association of a planned real estate development shall be comprised of each owner within the planned real estate development, and [may] shall include the developer if the development contains unsold lots, parcels, units, or interests. the declaration shall state clearly words to the effect that every owner of a unit or lot subject to the declaration shall be a member of the association.
If not stated otherwise in the declaration, the ownership interests of an individual unit owner in the common elements or facilities shall be deemed to be in the same proportion as the portion of the common property maintenance expenses attributed to that unit owner, provided that the total of all common property interests shall not be greater than 100%, or one, if determined on a fractional basis. Any governing documents of an association not in compliance with this section, as amended by P.L. , c. (C. ) (pending before the Legislature as this bill), shall be deemed amended to be in compliance.
An association may permit tenant participation in executive board elections, tenant membership in the association, or both. A voting-eligible tenant shall have only the same voting rights as the owner of the unit that the tenant leases, and such voting rights shall be in place of and not in addition to the rights of the owner of the leased unit, except as permitted under paragraph (9) of subsection c. of section 6 of P.L.2017, c.106 (C.45:22A-45.2). Pursuant to paragraph (9) of subsection c. of section 6 of P.L.2017, c.106 (C.45:22A-45.2), the votes associated with a unit shall not be altered by the participation of voting-eligible tenants.
d. The provisions of P.L.1993, c.30 (C.45:22A-43 et seq.) shall apply to all associations formed to manage the common property of planned real estate developments, and shall be construed broadly to supplement the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.), and shall control over that act whenever the provisions of that act require less accountability to owners or less transparency in the actions of associations than required under P.L.1993, c.30 (C.45:22A-43 et seq.).
e. The Legislature declares that the provisions of P.L.1993, c.30 (C.45:22A-43 et seq.) shall be construed as the enabling act for the formation and operation of associations created to manage the common elements and facilities of planned real estate developments, notwithstanding the fact that condominiums shall also be subject to the provisions of the "Condominium Act," P.L.1969, c.457 (C.46:8B-1 et seq.).
(cf: P.L.2017, c.106, s.4)
2. Section 3 of P.L.1993, c.30 (C.45:22A-45) is amended to read as follows:
3. a. (1) The form of administration of an association organized pursuant to section 1 of P.L.1993, c.30 (C.45:22A-43) shall provide for the election of an executive board elected by the association members, and voting-eligible tenants where applicable, or governing board, elected by and responsible to the members of the association pursuant to section 4 of P.L.1993, c.30 (C.45:22A-46), which board shall be comprised of at least three members and through which the powers of the association shall be exercised and its functions performed.
(2) Any power granted to, or restriction placed on, a condominium association or developer pursuant to the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.) shall be inferred as equally applicable to a homeowners' association as defined in section 1 of P.L.1993, c.30 (C.45:22A-43), or developer thereof, regardless of the lack of specific provisions in P.L.1993, c.30 (C.45:22A-43 et seq.) based on the intent of the Legislature that all types of planned real estate development associations should have uniform powers, standards of operations, and protections for the property interests of homeowners. This shall include, but not be limited to, the power of an association to adopt, amend, and enforce reasonable administrative rules and regulations, including the imposition of fines and late fees which may be enforced as a lien if such powers are contained in the bylaws, and incorporating by reference the authority of sections 14, 15, and 21 of P.L.1969, c.257 (C.46:8B-14, C.46:8B-15, and C.46:8B-21) to a homeowners' association, relating to the operation, use, and maintenance of the common elements, including limited common elements. The Legislature declares that the rights of owners living in these communities to transparency and fairness in actions from their respective associations, and their elected governing boards, is granted through the provisions of P.L.1993, c.30 (C.45:22A-43 et seq.), and shall not be distinguished or diminished on the basis of the type of planned real estate development that has been formed by the developer.
b. Subject to the master deed, declaration of covenants and restrictions, bylaws or other instruments of creation, [subsection d. of this section] the provisions of P.L.1993, c.30 (C.45:22A-43 et seq.), and the laws of the State, the executive board may act in all instances on behalf of the association.
c. The members of the executive board appointed by the developer shall be liable as fiduciaries to the owners for their acts or omissions. The members of the executive or governing board elected by the members of the association shall be liable as fiduciaries to the owners for their acts or omissions.
d. (1) During control of the executive board by the developer, copies of the annual audit of association funds shall be available for inspection by owners or their authorized representative at the project site.
(2) An owner shall be entitled to inspect the business and financial records of the association upon written request at reasonable times and a reasonable location, if not on-site. "Business records" means and includes notices, agendas and minutes of meetings, governing documents, including copies of the declaration and bylaws, and governmental orders. "Financial records" means and includes a record of all receipts and expenditures, invoices, cancelled checks, and an account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due, and any interest in common surplus. The financial records of the association shall be kept in accordance with generally accepted accounting principles. Business and financial records of the association, which shall be kept separately from the developer's business and financial records, shall be deemed presumptively non-confidential for the purposes of disclosure to members of the association; the executive board of the association, however, shall redact any clearly personal identifying information contained in association business or financial records, such as social security numbers or personal addresses, in order to facilitate disclosure to requesting members of the association. The provisions of this paragraph shall be deemed applicable to condominiums, notwithstanding the language of subsection (k) of section 14 of P.L.1969, c.257 (C.46:8B-14), and shall be construed broadly for the purpose of providing transparency in the management of common property and facilities, and the assessment of common expenses.
(cf: P.L.2017, c.106, s.5)
3. Section 6 of P.L.2017, c.106 (C.45:22A-45.2) is amended to read as follows:
6. a. An association shall hold executive board elections in accordance with the provisions of its governing documents, including validly-adopted executive board rules, that do not conflict with the provisions of this section. If such documents do not set a specific time or interval, the elections shall be held at two-year intervals. If an association has not held an election in compliance with its governing documents in two or more years, it shall hold an election within 90 days of the submission to any current executive board member of a petition signed by 25 or more percent of association members in good standing, but in no event less than the number of association members required to meet the quorum requirements set forth in the governing documents. If an association has no executive board members and association members fail to act on petition or by majority, any association member or group thereof, at common expense and, upon written notice to all owners, may petition a court of competent jurisdiction for authority to act temporarily in the interests of the association and to organize and hold an election within 90 days of the date of the court order. Any proxies used by an association must contain a prominent notice that use of the proxy is voluntary on the part of the granting owner, that it can be revoked at any time before the proxy holder casts a vote, and that absentee ballots are available. An association may not use proxies for an executive board member election without also making absentee ballots available.
b. An association of a development with fewer than 50 units shall ensure an executive board election system that includes: (1) the provision of election notice, (2) the provision of the ability to nominate and vote for any association member in good standing, (3) the provision of an opportunity to review any candidacy qualifications such that the owner is permitted to be a candidate for election to the board, (4) the provision of ready access to information on when and how to vote, and (5) the counting of ballots and verification of eligibility to vote, all of which shall be conducted in a non-fraudulent manner. Such association shall also be subject to the requirements of paragraphs (9) and (10) of subsection c. of this section.
c. In order to ensure open and fair executive board elections, the following provisions of this subsection shall apply to all associations of developments with 50 or more units, except for paragraphs (9) and (10), which shall apply to associations of all developments.
(1) An association shall not provide for a term of an executive board member to be for more than [4 years] 1 year, provided that nothing shall prevent an executive board member from continuing to serve until his or her successor is duly qualified and elected.
(2) An association shall not prohibit a voting-eligible tenant, where applicable, from casting a vote allocated to a unit if the bylaws otherwise permit tenant participation in an election of executive board members nor prohibit an individual acting pursuant to a valid power of attorney or proxy from casting a vote.
(3) An association shall provide written notice to all association members no later than 30 days prior to the date for the mailing of the notice of the meeting set forth in paragraph (5) of this subsection that informs association members of the right to nominate themselves or other association members in good standing for candidacy to serve on the executive board.
(4) An association, subject to the exceptions under subsection f. of this section, shall not prohibit an association member in good standing from nominating himself or herself, or any other association member in good standing as a candidate for any membership position on the executive board, so long as the nomination is made prior to the mailing of ballots or proxies to the association members, which mailing shall occur no earlier than: (a) the day following the expiration of the time period within which candidates must be nominated, or (b) where no expiration date is set forth for nomination of candidates, then the business day prior to the mailing of the notice of the election, required pursuant to paragraph (5) of this subsection. The period for submitting nominations shall not be less than 14 days from the mailing of the request for nominations.
(5) An association shall provide association members written notice of an election by personal delivery, mail, or electronic means, no less than 14 nor more than 60 days prior to the meeting at which an election of executive board members is scheduled. This notice shall include a proxy ballot and an absentee ballot, unless prohibited by the bylaws, which ballots shall list in alphabetical order by last name the names of all candidates nominated pursuant to paragraph (4) of this subsection. In the case of mailing, the notice shall be effective when deposited in the mailbox with proper postage. The notice may only be sent by electronic means if either (a) the affected association member, or voting-eligible tenant where applicable, has agreed in writing to accept notice by electronic means; or (b) the governing documents permit electronic notices, provided another form of voting by absentee balloting or proxy voting is available.
(6) An association shall use ballots, whether paper ballots or electronic ballots, that contain the names of all persons nominated as a candidate for the executive board, and shall comply with the requirements of subsection c. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(7) An association shall not prohibit any association member in good standing, or voting-eligible tenant where applicable, subject to the exceptions under subsection f. of this section and any limitation on the number of votes per unit permitted under paragraph (9) of this subsection, from voting for any nominated candidate in an executive board election.
(8) An association shall not prevent voting for an executive board member by electronic means where the executive board determines to employ voting in such manner and an association member, or voting-eligible tenant where applicable, consents to casting a vote in such manner.
(9) An association shall not provide for an allocation of votes other than one vote for each unit, or such larger number of equal votes per unit as may be set forth in the governing documents of the association, except (a) where the bylaws or other governing document provide for the voting interest to be proportional to a unit's value or size, (b) where the governing documents permit more than one vote to be cast by each unit on an equal basis or a basis consistent with each unit's value or size, or (c) where the governing documents do not set forth the number of votes that may be cast by each unit, then in accordance with a rule adopted by the executive board that allows more than one vote to be cast by each unit, provided such rule assigns an equal number of votes to each unit.
(10) Election procedures shall not be established or administered in any way to prohibit participation by the residents of low or moderate income housing units.
d. Initial executive board elections in condominium associations, governed under the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.), shall follow the notice timeline under subsection b. of section 2 of P.L.1979, c.157 (C.46:8B-12.1), and shall not be subject to this section.
e. Whether or not formed as a nonprofit corporation, associations of developments of 50 or more units shall conform to the requirements of the "New Jersey Nonprofit Corporation Act," P.L.1983, c.127 (N.J.S.15A:1-1 et seq.) regarding the counting of ballots.
f. (1) It shall be permissible for the bylaws of the association to provide:
(a) for the association members, and voting-eligible tenants where applicable, of a planned real estate development with units of different use types to nominate and vote for some members of the executive board and, pursuant to the mixed-use development's governing documents, have other members of the executive board nominated and elected by association members and voting-eligible tenants of units of a different use type;
(b) for the association members, and voting-eligible tenants where applicable, of a planned real estate development to nominate and vote only for some members of the executive board based upon a distribution that allocates votes with approximate proportionality to the number, value, or size of units located in certain geographical areas within the development;
(c) for a limitation on the number of executive board members nominated and elected by only certain association members, and voting-eligible tenants where applicable, if that limit is based upon a classification intended to further the election of one or more executive board members by the association members, and voting-eligible tenants where applicable, of affordable housing units that represent a minority of the units in a planned real estate development;
(d) for the association members, and voting-eligible tenants where applicable, of a planned real estate development to nominate and vote for some members of the executive board and, pursuant to the governing documents, have other members of the executive board nominated and elected by the association members, and voting-eligible tenants where applicable, of one or more separate developments, so long as each development's voting weight is approximately proportional, based on the number, value, or size of the units; and
(e) that, except for executive board members serving as representatives of the developer during the period prior to surrender of control to the owners pursuant to section 5 of P.L.1993, c.30 (C.45:22A-47), not more than one owner, entity-owner representative, or voting-eligible tenant where applicable, from a single unit may serve on the governing board simultaneously;
(2) The executive board of an umbrella or master association that does not directly contain units need not be elected by individuals who are association members, and voting-eligible tenants where applicable, with units within the geographical area of the umbrella or master association, provided the members of the executive board serve as executive board members of another planned real estate development executive board, and have been nominated and elected by the association members, and voting-eligible tenants where applicable, with units in that planned real estate development, in compliance with this section.
(3) Except with regard to a planned real estate development containing fewer than 50 units, and any appointment by the developer permitted pursuant to section 5 of P.L.1993, c.30 (C.45:22A-47), an association shall:
(a) not allow a person to take an executive board position through appointment, provided that nothing herein shall prevent the executive board members of an association from filling a vacancy in the executive board created by resignation, death, failure to maintain any reasonable qualification, including maintaining good standing, to be an executive board member or by removal following a vote in favor of removal open to all association members in accordance with the terms of the bylaws; and
(b) ensure that, in order to serve on the executive board, a person shall be elected through a process that does not conflict with the provisions of this section.
(cf: P.L.2017, c.106, s.6)
4. Section 4 of P.L.1993, c.30 (45:22A-46) is amended to read as follows:
4. The bylaws of the association, which shall initially be recorded with the master deed shall include, in addition to any other lawful provisions, the following:
a. A requirement that all meetings of the executive board[, except conference or working sessions at which no binding votes are to be taken,] shall be open to attendance by all association members, and voting-eligible tenants where applicable, and adequate notice of any such meeting shall be given to all association members, and voting-eligible tenants where applicable, in such manner as the bylaws shall prescribe; except that the executive board may exclude or restrict attendance at those meetings, or portions of meetings, dealing with (1) any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer, or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. At each meeting required under this subsection to be open to all association members, and voting-eligible tenants where applicable, the participation of unit association members, and voting-eligible tenants where applicable, in the proceedings or the provision of a public comment session shall be at the discretion of the executive board, minutes of the proceedings shall be taken, and copies of those minutes shall be made available to all association members, and voting-eligible tenants where applicable, before the next open meeting.
b. The method of calling meetings of association members, and voting-eligible tenants where applicable, the percentage of association members, and voting-eligible tenants where applicable, or voting rights required to make decisions and to constitute a quorum. The bylaws may, nevertheless, provide that an individual association member, and a voting-eligible tenant where applicable, may waive notice of meetings in writing, or may act by written agreement without meetings.
c. The manner of collecting from owners their respective shares of common expenses and the method of distribution to the owners of their respective shares of common surplus or such other application of common surplus as may be duly authorized by the bylaws.
d. (1) The method by which the bylaws may be amended, provided that no amendment shall be effective until recorded in the same office as the then existing bylaws. The bylaws may also provide a method for the adoption, amendment and enforcement of reasonable administrative rules and regulations relating to the operation, use, maintenance and enjoyment of the units and of the common elements, including limited common elements.
(2) If association bylaws provide for no method of their amendment by a vote of the association members open to all association members, or only allow association members to amend the bylaws through a majority vote exceeding a two-thirds majority, then the association members may amend the bylaws by an affirmative vote of a majority of the total authorized votes in the association. If the bylaws do not provide for a method by which the association members may call a meeting of the association members to conduct a vote to amend the bylaws or do not contain provisions concerning the subject matter of subparagraphs (a) through (f) of this paragraph, then a vote concerning an amendment to the bylaws shall be conducted as follows:
(a) fifteen percent of the association members may request a meeting of the association's membership by executing a document requesting that a special meeting of the association membership be held, or if the annual meeting of the association membership is scheduled to occur within 60 days of the date of the request, then the amendment vote shall be held at the annual meeting;
(b) if the vote is not scheduled to take place at the annual meeting of the association, the executive board shall schedule the special meeting of the association membership to occur within 60 days of the receipt of the request. Notice of the meeting shall be provided to the association members and voting-eligible tenants, where applicable, at least 14 days prior to the date of the meeting. The special meeting shall be held at a reasonable time that is likely to permit most association members to attend;
(c) the language of the proposed amendment shall be unambiguous and consistent with applicable law and with the provisions of the bylaws that are not proposed to be amended, and if not in such condition shall be revised to satisfy that requirement. Upon satisfaction of this requirement, the amendment shall be mailed, hand-delivered or, if the bylaws permit, electronically delivered, together with the notice of the meeting to the association membership at least 10 days prior to the meeting;
(d) if permitted by the association's bylaws, the notice of the meeting shall include a proxy ballot or absentee ballot with instructions for the return of same, which instructions shall permit facsimile or electronic mail delivery of the proxy ballot or absentee ballot to the association and shall not require receipt of the proxy or absentee ballot more than one business day prior to the meeting;
(e) if a sufficient number of ballots or proxies are not received at the special or annual meeting to conclusively determine that the proposed amendment has been approved or rejected, the meeting shall be adjourned for a period of 30 days, or such longer period as approved by the association membership by approval of a motion to extend the vote concerning the amendment, but in no event for longer than 11 months from when the notice of the meeting was sent, and all proxies or ballots received prior to the extended date shall remain valid if otherwise valid under the terms of the bylaws; and
(f) when an amendment is approved, a copy of the approved amendment shall be provided to all association members, and the association shall promptly record the amendment in the county recording office where the bylaws were recorded.
(3) Paragraph (2) of this subsection shall not be construed to require a vote to be held on an amendment to the bylaws that has been voted on in the preceding 12 months of the initial meeting request, made pursuant to subparagraph (a) of paragraph (2) of this subsection.
(4) For the purposes of paragraph (2) of this subsection, the number of total authorized votes in the association shall be based on the whole number of units owned by someone entitled to association membership after subtracting those association members who are ineligible to vote because they are not in good standing.
(5) An executive board shall not amend the bylaws of an association without a vote of the association members open to all association members, as provided in the association's bylaws, or where the bylaws provide for no method of their amendment by a vote of the association members, or only allow association members to amend the bylaws through a majority vote exceeding a two-thirds majority, then an association shall only amend the bylaws pursuant to paragraph (2) of this subsection, except an executive board may amend the bylaws under the following circumstances:
(a) to the extent necessary to render the bylaws consistent with State, federal or local law; or
(b) after providing notice to all association members of the proposed amendment, which notice shall include a ballot to reject the proposed amendment. Other than an amendment to render the bylaws consistent with State, federal, or local law, if at least 10 percent of association members vote to reject the amendment within 30 days of its mailing, the amendment shall be deemed defeated.
e. Notwithstanding the provisions of any law to the contrary, a homeowners' association shall be deemed to have amended its governing documents, including its bylaws, upon the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to provide that:
(1) Any member of the governing board may be recalled and removed from office, with or without cause, by the vote of, or agreement in writing by, a majority of all owners in the planned real estate community, provided that any vote to recall shall be initiated only upon a petition of at least five percent of all owners. A special meeting of the association membership to vote for the recall of a member or members of the governing board shall thereafter be held, giving notice of the meeting as required for a meeting of members, and the notice shall state the purpose of the meeting.
(2) Any member of an association shall be permitted to request a hearing before the State agency charged with the oversight of planned real estate developments whenever a petition for a recall vote has been presented to a governing board in accordance with paragraph (1) of this subsection, and the board has failed to call for a special meeting of the association within 20 days of the receipt of the petition. Under such circumstances, the governing board shall be barred from expending resources to delay the holding of a special meeting, but shall be permitted to expend such funds as are necessary to confirm the validity of the petition. Notwithstanding this paragraph, if there are less than 45 calendar days until the next scheduled election, the holding of a special meeting shall not be required.
(cf: P.L.2017, c.106, s.7)
5. (New section) a. All members of a homeowners' association, which pursuant to section 1 of P.L.1993, c.30 (C.45:22A-43) shall mean all unit owners in a planned real estate development, shall be permitted to be nominated for, run for, and be elected to serve in positions on, the governing or executive board of the association. Elections shall be held at least every year, and shall be conducted with strict adherence to democratic principles and fairness. Other than the initial election required to be held pursuant to section 5 of P.L.1993, c.30 (C.45:22A-47), if an association has not held an election which complies with the provisions of this section prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), then an election shall be held, to be monitored by the State entity charged with administering "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), in accordance with regulations to be promulgated pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) by that State entity.
b. An association shall conduct elections under the auspices of a committee of unit owners, provided that none of the members of such committee shall be current board members or candidates for the board. The committee shall function independently of the governing board, and may use the services of an independent individual or organization that is qualified in election monitoring services. The committee, independent individual, or organization, as the case may be, shall be responsible for determining the eligibility of unit owners to vote or to run for office, for counting ballots, and for verifying results. No unit owner shall be disqualified from running for office except for reason of nonpayment of assessments. An association shall give all owners at least 60 days advance notice of the election so as to allow all eligible persons who might be interested in filing as candidates a reasonable opportunity to do so. A unit owner in good standing shall not be disqualified from voting in an election.
c. All elections shall be conducted in a manner requiring secret ballots to be cast by owners for the election of governing board members, utilizing such safeguards as perforated, pull-off tabs from the ballot sheet, or other devices, to ensure correct counting of the votes cast. Allocating numbers to owners on ballots shall not be permitted. An owner shall be allowed, at his or her option, to cast a ballot by mail, in person, or if the association permits, by electronic ballot. A mailed ballot or an electronic ballot shall be deemed to be a proxy for the purposes of determining a quorum for the meeting at which the election is conducted. All candidates shall be afforded the opportunity to observe the entire process of counting and tabulation of the ballots, either in person or through a designated representative, and shall have access to lists of persons who are eligible to vote and, after the voting has started, to any list of persons who have voted that the association may maintain. Any challenge to the validity of an election shall be submitted to the governing board and to the "State entitiy" administering "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.) within 30 days following the date on which written notice of the results of the election is given to members of the association. Pending the outcome of any such challenge, the persons declared to be elected by the committee, individual, or organization responsible for conducting the election shall serve as de facto officers or trustees, as the case may be. Ballots, envelopes, registration records, eligibility lists, proofs of mailing, and other voting materials shall be subject to inspection by all owners at the time of the election and shall be sealed after the election and kept unopened, in the custody of a licensed certified public accountant or the organization that conducted the election, for not less than 30 days following the election, or until such later time as any challenge to the election brought within that 30-day period has been resolved and the documents are no longer required. Voting materials and procedures shall at all times be subject to inspection and review by the "State entitiy" administering "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.). The parties to any dispute shall be allowed the opportunity to be present or to be represented at any such inspection and review.
6. Section 6 of P.L.1993, c.30 (C.45:22A-48) is amended to read as follows:
6. a. The Commissioner of Community Affairs shall cause to be prepared and distributed, for the use and guidance of associations, executive boards and administrators, explanatory materials and guidelines to assist them in achieving proper and timely compliance with the requirements of P.L.1993, c.30 (C.45:22A-43 et al.) and the new requirements added to that law by P.L. (C. ) (pending before the Legislature as this bill). Such guidelines may include the text of model bylaw provisions suggested or recommended for adoption. Failure or refusal of an association or executive board to make proper amendment or supplementation of its bylaws prior to the effective date of P.L.1993, c.30 (C.45:22A-43 et al.) or P.L. , c. (C. ) (pending before the Legislature as this bill), as applicable, shall not, however, affect their obligation of compliance therewith on and after [that] those effective [date] dates.
b. The Commissioner of Community Affairs shall promulgate any rules and regulations that may be necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), not later than the first day of the third month next following the enactment of P.L. c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.1993, c.30, s.6)
7. This act shall take effect immediately but, except for subsection b. of section 6 of P.L.1993, c.30 (C.45:22A-48) regarding promulgation of rules and regulations, shall remain inoperative until the first day of the fourth month next following enactment.
STATEMENT
This bill makes several modifications to the laws of the State that regulate planned real estate developments and the homeowners' associations formed to manage the commonly-owned property in such communities. Recent New Jersey court decisions indicated a need for the Legislature to clarify and adjust the laws in this area. This bill clarifies the intent of the Legislature that P.L.1993, c.30 (C.45:22A-43 et seq.) be viewed as an enabling act for homeowners' associations of non-condominium types of planned real estate developments, and it specifies that homeowners' associations, other than those managing condominium property, may hold title to the common property in the association's name. The bill prohibits the mere titling of common property in the name of the association to be construed as diminishing the ownership interests of unit owners in the common or shared elements and facilities of a planned community. This is because purchasers in all types of planned communities are sold by the developer as a proportional interest in the common elements upon their purchase of an individual home or dwelling unit, in exchange for restrictive covenants in their individual deeds obligating them to maintain those common elements. The bill requires that the common property ownership interest be proportionately equal to the obligation of each unit owner to pay for the maintenance of the common property, and that the sum of the common property interests in the community is not to exceed 100%, or one if computed fractionally.
In light of the shared ownership interests, the bill requires that the declaration of a planned real estate development state that membership in the homeowners' association is inherent for a purchaser of a home in such a planned community. The bill provides standards for homeowners' associations concerning access to records and elections of members to the governing boards of associations. The bill eliminates closed-meeting working sessions of an association's governing board to reflect the similar law currently applicable to public governing bodies. The bill also provides a recall procedure which will authorize the removal of elected governing board members. The bill requires the State entity charged with the oversight of the "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), to assist associations and owners in meeting the provisions of the bill. Currently this oversight is placed within the Department of Community Affairs.
The bill also requires the Commissioner of Community Affairs to distribute guidelines on the election procedures and to promulgate, within 60 days or so, any rules or regulations that may be necessary to effectuate the provisions.
