ASSEMBLY HOUSING COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5424

STATE OF NEW JERSEY

DATED:  MARCH 20, 2025

      The Assembly Housing Committee reports favorably Assembly Bill No. 5424.

     This bill imposes a fee on an institutional investor that holds, acquires, or purchases any ownership interest in residential properties that are abandoned or vacant and which qualify as a subject property, as defined in the bill.

     Specifically, the bill imposes a fee on an institutional investor that holds, acquires, or purchases any ownership interest, whether directly or indirectly, or through any combination of an institutional investor’s constituent persons or entities, in a subject property in the amount equal to the product of $30,000 and the number of subject properties, as defined in the bill, owned by the institutional investor as of the last day of the calendar year.  The fee would be paid to the Commissioner of Community Affairs (commissioner) in a manner prescribed by the commissioner pursuant to the bill.

     The bill defines the term "subject property" to mean real property, any part of which is zoned for residential use, which is unproductive real property that is purchased, owned, or acquired by an institutional investor, which has not maintained a continuous or seasonal occupancy for certain time periods specified in the bill.  The bill defines the term "unproductive real property" to mean real property, including raw land and structures, which qualifies as abandoned or vacant.

     The bill specifies that the term "unproductive real property" does not include predominantly agricultural land, or development or construction activities that have not yet begun, but will begin, in the subsequent 18 months to the 12-month period, demonstrated by criteria specified in the bill. 

     The bill would not apply to: (1) certain nonprofit organizations; (2) small institutional investors, as defined in the bill; (3) financial institutions owning or acquiring real property through foreclosure or through a secured transaction; (4) an institutional investor acting as a condemnor; (5) a governmental authority; or (6) other institutional investors excepted from the requirements of the bill by the commissioner, in consultation with the Director of the Division of Consumer Affairs in the Department of Law and Public Safety (director).  The bill requires all institutional investors to provide an annual report to the commissioner containing certain information, which is to be provided on a form established by the Department of Community Affairs (department).  An institutional investor that fails to provide the annual report would, in addition to the fee, be liable to a civil penalty of $500 for a first offense, and $1,000 for a second and any subsequent offense, to be collected as provided in the bill.  Each day that the commissioner is not in receipt of the annual report would constitute a separate and distinct offense. 

     The bill requires the commissioner to adopt rules and regulations to implement the provisions of the bill in consultation with the director.  The bill would take effect on the first day of the sixth month next following the date of enactment, and apply to an institutional investor that holds, acquires, or purchases any ownership interest in a subject property on or after the effective date, except that the commissioner and director would be permitted to take anticipatory action necessary to effectuate the provisions of the bill.