A3314

An Act limiting certain annual charges for unit owners in planned real estate development and supplementing chapter 22A of Title 45 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. As used in this section:

"Association dues" means assessments and other charges, authorized by the governing documents of the association, and lawfully assessed by the executive board of the association, which, for the exclusive purposes of P.L. , c. (C. ) (pending before the Legislature as this bill), shall not include late fees or interest on unpaid assessments.

"Executive board" means the executive board of an association, as provided for in section 3 of P.L.1993, c.30 (C.45:22A- 45).

b. Except as provided in subsections e. and f. of this section, an executive board or board member shall not, over the course of a 12-month period, increase association dues for unit owners, whether severally or in the aggregate, by more than 10 percent of the amount charged during the prior 12-month period.

c. In addition to any other relief that may be available by law, if a person has reason to believe that an executive board or board member has violated subsection b. of this section, the person may:

(1) request an investigation from the Director of the Division of Consumer Affairs in the Department of Law and Public Safety, and the director may investigate the alleged violation. If the director determines that a violation has occurred, the director may:

(a) declare void any action of the executive board or board member related to the violation;

(b) report the violation to the association members; and

(c) grant any other relief that the director deems proper under the circumstances, based upon the severity of the violation;

(2) file an action in a court of competent jurisdiction against the executive board or board member, who, if an individual board member, shall be personally liable for a violation of subsection b. of this section, or if more than one board member or officer, shall be personally, jointly and severally liable for a violation of subsection b. of this section. If the court determines that a violation of subsection b. of this section has occurred, the executive board or board member shall be liable to a penalty of $1,000 per violation, payable to the plaintiff; the court shall also order that an amount, equal to the moneys paid to the association exceeding the limitation set forth in subsection b. of this section, be paid to the plaintiff from the association. The court may also:

(a) declare void any action of the executive board or board member related to the violation;

(b) report the violation to the association members; and

(c) grant any other relief that the court deems proper under the circumstances, based upon the severity of the violation; or

(3) exercise the person’s right to alternative dispute resolution pursuant to subsection c. of section 2 of P.L.1993, c.30 (C.45:22A-44), for which the entity with jurisdiction to render a decision to resolve the dispute may:

(a) declare void any action of the executive board or board member related to the violation;

(b) report the violation to the association members; and

d. A determination by the Director of the Division of Consumer Affairs in the Department of Law and Public Safety pursuant to paragraph (1) of subsection c. of this section, or by the entity with jurisdiction to render a decision to resolve the dispute pursuant to paragraph (3) of subsection c. of this section, that a violation of subsection b. of this section has occurred, shall establish a rebuttable presumption, in an action pursuant to paragraph (2) of subsection c. of this section, that a violation of subsection b. of this section has occurred.

e. An executive board or board member may petition the Commissioner of Community Affairs to request approval to increase the association dues, in an amount specified by the executive board or board member, in excess of 10 percent. The commissioner may, after a hearing, grant the executive board or board member’s request. If the commissioner fails to act within 90 days after the executive board or board member submits the petition, the increase in the amount requested shall be deemed approved. The commissioner shall promulgate procedural rules related to consideration of a petition received pursuant to this subsection.

f. P.L. , c. (C. ) (pending before the Legislature as this bill) shall not apply to:

(1) increases in association dues that are directly related to compliance with sections 6 and 7 of P.L.2023, c.214 (C.45:22A-44.2 and C.45:22A-44.3);

(2) increases in association dues that are subject to an exception established by the commissioner pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), which the commissioner determines to be necessary and in the public interest; or

(3) an association subject to an exemption granted by the commissioner pursuant to subsection e. of this section.

2. The Commissioner of Community Affairs shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), including but not limited to, rules and regulations that establish exceptions to subsection b. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), which the commissioner determines to be necessary and in the public interest.

3. This act shall take effect on the first day of the fourth month next following the date of enactment, except that the Commissioner of Community Affairs shall take anticipatory action necessary to effectuate the provisions of this act.

STATEMENT

This bill prohibits the executive board of an association of a planned real estate development (executive board) from increasing association dues, as defined in the bill, by more than 10 percent, with limited exceptions.

Specifically, the bill prohibits an executive board or board member from, over the course of a 12-month period, increasing association dues for unit owners, whether severally or in the aggregate, by more than 10 percent over the amount charged during the prior 12-month period. In addition to any other relief that may be available by law, the bill authorizes certain persons to request an investigation from the Director of the Division of Consumer Affairs in the Department of Law and Public Safety (director), who may investigate the alleged violation; file a court action against the executive board or board member; or exercise the person’s right to alternative dispute resolution.

The bill authorizes the director, court, or entity with jurisdiction to render a decision to resolve the dispute, upon finding that a violation has occurred, to: (1) declare void any action of the executive board or board member related to the violation; (2) report the violation to the association members; and (3) grant any other relief that deemed proper under the circumstances, based upon the severity of the violation. If an action is filed in a court of competent jurisdiction, the executive board or board member is to be personally liable for a violation of the bill; board members or officers are to be personally jointly and severally liable. The executive board or board members are liable to a penalty of $1,000 per violation, payable to the plaintiff. Further, the bill authorizes the court to order that an amount, equal to the moneys paid to the association exceeding the limitation set forth in the bill, be paid to the plaintiff from the association.

A determination under the bill that the executive board or board members have violated the bill, would establish a rebuttable presumption that a violation of the bill has occurred for the purposes of an action filed by a unit owner against the executive board or board members alleging a violation of the bill.

The bill permits an executive board or board member to petition the Commissioner of Community Affairs (commissioner) to request approval to increase the association dues by an amount in excess of 10 percent. The bill permits the commissioner, after a hearing, to grant the executive board or board member’s request. If the commissioner fails to act within 90 days, the increase in the amount requested is to be deemed approved.

The bill would not apply to:

(1) increases in association dues that are directly related to compliance with sections 6 and 7 of P.L.2023, c.214 (C.45:22A-44.2 and C.45:22A-44.3);

(2) increases in association dues that are subject to an exception established by the commissioner; or

(3) an association subject to an exemption pursuant to a petition to the commissioner.

The bill requires the commissioner to adopt rules and regulations as necessary to effectuate the provisions of the bill.

The bill would take effect on the first day of the fourth month next following the date of enactment, except that the Commissioner of Community Affairs is to take anticipatory action necessary to effectuate the provisions of the bill.