LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 399

STATE OF NEW JERSEY

222nd LEGISLATURE

 

DATED: MARCH 18, 2026

 

 

SUMMARY

 

Synopsis:

Requires limited liability company to disclose ownership information when submitting deed for recording and establishes penalty.

Type of Impact:

Annual municipal revenue increase.

Agencies Affected:

Municipalities.

 

Office of Legislative Services Estimate

Fiscal Impact

Annual

 

Local Revenue Increase

Indeterminate

 

 

·         The Office of Legislative Services (OLS) finds that the bill would result in an increase in local revenue from the penalties imposed on limited liability companies in violation of the provisions of the bill.  The OLS cannot estimate the number of companies that will violate the bill’s provisions, or for how long the violation will persist.  Therefore, the amount of the annual revenue increase is indeterminate.

·         The OLS concludes that there is a potential for an additional local revenue increase from municipal liens issued pursuant to a municipal ordinance authorized pursuant to the bill.  The number of properties that will be subject to municipal liens because of the bill in each municipality is unknown.  Therefore, the potential increase in revenue from this source is indeterminate.

 

BILL DESCRIPTION

 

      This bill would require an affidavit identifying the registered agent, or a member of the company, and the beneficial owner of the company be appended to the deed, as recorded in office of any county recording officer, of a real property intended for residential rental purposes transferred to the ownership of a limited liability company.  The bill provides that an affidavit required for a domestic or foreign limited liability company includes: (1) the name and business address of the registered agent, or that of at least one member of the company is the registered agent is not a member; (2) the full legal name, date of birth, current business street address, and identification umber of the beneficial owner.  A limited liability company in violation of the bill’s provisions would be subject to a fine of $5,000 per violation payable to the municipality where the property is located, with each month that the violation persists constituting a separate violation.  The bill further authorizes a municipality to direct by ordinance that any charge, as defined in the bill, issued to a domestic or foreign limited liability company for real property intended for residential rental purposes pursuant to certain codes become a municipal lien on the property.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS finds that the bill would result in an increase in municipal revenue through fines imposed on limited liability companies in violation of the provisions of the bill.  The fine is $5,000 per violation payable to the municipality where the property is located and each month that the violation persists constitutes a separate violation.  The number of limited liability companies that will violate the provisions of the bill in any individual municipality, and how long each violation persists, is unknown.  Therefore, the amount of the increase in annual municipal revenue is indeterminate.

      The OLS also notes that the bill may result in an additional increase in municipal revenue due to liens that may be issued pursuant to municipal ordinances authorized by the bill.  The number of municipalities that will adopt ordinances, how many buildings will be issued municipal liens, the impact of those liens on payment of charges due, and the value of any property obtained by the municipality due to a lien imposed pursuant to an ordinance authorized by the bill are unknown.  Therefore, the amount of the possible additional increase in municipal revenue is indeterminate.  The enforcement of any lien issued pursuant to this bill would result in additional indeterminate local government and State court costs.

      For informational purposes, Rutgers University estimated that Statewide roughly 80 percent of one- to four-unit properties were likely owner-occupied in 2022, a rate that has remained stable since 2012. While the overall share of investor-owned properties (18 percent) did not change significantly over the decade, corporate investors accounted for a larger share in 2022 at nearly four percent of all properties or roughly 20 percent of all investor-owned homes.  Other categories of ownership included properties owned by banks, nonprofits, and trusts.

 

Section:

Local Government

Analyst:

Grace Ahlin

Associate Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).