SENATE, No. 1608

STATE OF NEW JERSEY

212th LEGISLATURE

 

INTRODUCED MARCH 6, 2006

 


 

Sponsored by:

Senator SHIRLEY K. TURNER

District 15 (Mercer)

Senator RONALD L. RICE

District 28 (Essex)

 

 

 

 

SYNOPSIS

     The “Owners’ Rights in Common Interest Developments Act.”

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning rights of homeowners living in common interest communities, supplementing P.L.1993, c.30 (C.45:22A-43 et seq.) and amending P.L.2001, c.404 and P.L.2005, c.155.

 

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

 

     1.  (New section)  This act shall be known and may be cited as the “Owners’ Rights in Common Interest Developments Act.”

 

     2.  (New section)  This act is intended to supplement the law on community associations, including, but not limited to, the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.), “The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), P.L.1993, c.30 (C.45:22A-43 et seq.), and any other law hereinafter enacted regulating community associations.  To the extent that any other law conflicts with the provisions of P.L.    , c.    (C.          ) (pending before the Legislature as this bill), the laws shall be harmonized to the extent possible; however, in the event of any unreconciled conflicts, the provisions of P.L.    , c.    (C.          ) (pending before the Legislature as this bill) shall control.

 

     3.  (New section)  As used in this act:

     “Association” means a homeowners’ or community association required to be formed by a developer pursuant to section 1 of P.L.1993, c. 30 (C.45:22A-43), or pursuant to the “Condominium Act,” P.L.1969, c.257 (C.46:8B-1 et seq.), or any association formed for the purpose of managing common elements and facilities of a common interest community.

     “Common interest community” means a development with commonly-owned property, such as a condominium, cooperative or planned real estate development subject to the requirements of P.L.1993, c.30 (C.45:22A-43 et seq.), or a lake community with maintenance obligations imposed as covenants running with the land on which the community is located through the various deeds of the owners.

 

     4.   (New section)  The Legislature finds and declares:

     a.  The New Jersey courts, in several recent decisions, have recognized the rights of homeowners living in common interest communities to be treated fairly by their homeowners’ association governing boards, particularly when fundamental or constitutional rights of the owners are at issue.  The appellate court held in Comm. for a Better Twin Rivers v. Twin Rivers Homeowners' Ass'n, __ N.J.Super. __  (2006 N.J.Super. LEXIS 29) (App.Div. 2006) that the business judgment rule, which had been widely accepted as the only standard applicable to actions of association boards, is not the only standard by which board actions will be judged.  The business judgment rule permits a presumption of validity for a board action based upon the contractual agreement of the parties to be governed by the board.  The court held that when fundamental or constitutional rights of owners are involved, such as broad issues of governmental and public policy consequence, or matters of general interest to the association, those interests take precedence over the homeowners’ association’s private property interests.  The court also held in this case that all associations fall under the authority of the provisions of P.L.1993, c. 30 (C.45:22A-43 et seq.).  The Legislature hereby confirms and codifies these holdings.

b.  The very nature of a homeowners' association is to provide governance over and maintenance of the real property of a common interest community that is owned in common by all of the residents.  Homeowners' associations are technically the functional equivalent of neighborhood governments.  Accountability measures are needed to ensure that such quasi‑governmental entities are operating democratically and guided by principles of fairness that benefit all of the owner‑members of these communities.

c.  Accordingly, the Legislature finds it in the public interest that:

(1) common interest community associations be held to standards of due process, open governance, democracy, and fundamental fairness, similar to those to which governmental bodies are held, in all areas of governance, including elections, access to records, open meetings, alternate dispute resolution, and any other areas delineated by the New Jersey courts as requiring a heightened standard of review of a board’s actions beyond the business judgment rule;

(2) the powers of the Commissioner of Community Affairs to ensure compliance by community associations with the provisions of “The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), P.L.1993, c.30 (C.45:22A-43 et seq.), the “Condominium Act,” P.L.1969, c.257 (C.46:8B-1 et seq.), and P.L.    , c.    (C.      ) (pending before the Legislature as this bill) shall encompass regulation of all associations, regardless of the date of their formation, consistent with the court’s holding in Comm. for a Better Twin Rivers v. Twin Rivers Homeowners' Ass'n, __ N.J.Super. __  (2006 N.J.Super. LEXIS 29);

(3) a uniform, low‑cost, fair, and efficient system for resolving certain disputes or providing assistance regarding board actions which impact all owners similarly within a common interest community be implemented by the State, to be established within agencies or bureaus currently established and equipped for providing such assistance.

d.  It is the purpose of this legislation to provide for specific guidance and limitations regarding the powers and responsibilities of all types of homeowners' association boards, in line with relevant New Jersey court decisions concerning the rights of homeowners living in such communities.

 

     5.  (New section)  Notwithstanding any bylaws or governing documents of a homeowners’ association, or any other law to the contrary, on or after the effective date of P.L.    , c.    (C.       ) (pending before the Legislature as this bill):

     a.  An association which maintains insurance on the common elements of the community may be liable in any civil action brought by or on behalf of a unit owner to respond in damages as a result of bodily injury to the unit owner occurring on those common elements.

     b.  No capital improvement with an estimated cost greater than $200,000, or more than 10 percent of the annual budgeted expenditures, whichever is less, shall be undertaken to the common or limited common elements by an association unless there is obtained a prior vote or agreement of unit owners of units to which at least 75 percent of the votes in the association are allocated, or any larger percentage specified in the declaration, approving any action to make such an improvement.  For the purposes of this subsection, "improvement" means any construction, reconstruction or improvement within the common interest community which is not listed in the declaration, and does not involve repair or replacement using substantially the same materials as the original construction to existing common or limited common elements, and does not mean any repair undertaken pursuant to a governmental or court order.

     c.  (1) An association shall not charge a fee to an owner for viewing or copying association records which exceeds the cost permitted to be charged to a requester under section 6 of P.L.2001, c.404 (C.47:1A-5).

     (2) A requesting owner who is denied access to an association record by the custodian of the record, at the option of the owner, may:

     (a) institute a proceeding to challenge the custodian's decision by filing an action in Superior Court which shall be heard in the vicinage where it is filed by a Superior Court Judge who has been designated to hear such cases because of that judge's knowledge and expertise in matters relating to access to records; or

     (b) in lieu of filing an action in Superior Court, file a request for assistance with the Government Records Council established pursuant to section 8 of P.L.2001, c.404 (C.47:1A-7).

     d.  An association shall not collect from its members as part of the customary association assessment, or pay from association funds, dues or contributions to any private trade or industry organization concerning community associations, or make contributions for charitable or political purposes.  Any solicitations for dues, or charitable or political contributions by an association shall be conducted separately from the billing for customary monthly maintenance charges, and clearly designated as voluntary.  A contribution to any private trade or industry organization through a property management company or property manager is prohibited.  An association violating this subsection shall be subject to the maximum penalty set forth in section 18 of P.L.1977, c.419 (C.45:22A-38), and the members of the governing board shall be subject to removal from office by the commissioner.

     e.  An owner of more than one unit shall not have attributed to him or her more than 50 percent of all of the votes in the association.

 

     6.  (New section)  No master or umbrella association shall be formed or authorized to conduct business within this State if all of the powers and rights of the membership of a sub-association have been irrevocably delegated to an umbrella organization.  Any umbrella association’s bylaws which go beyond the regulation of roads, facilities and services shared by all or several of the communities within the master community are void.  The right of an owner to vote to elect a representative of the member’s immediate community association shall not be diluted, assigned or delegated to an umbrella association.

 

     7.  (New section)  All associations shall be required to hold elections at regular intervals, which in no event shall be longer than three years.  An association, upon the first election of a unit owner representative to the board, shall conduct elections either under the auspices of a committee of homeowners, none of whom shall be current board members, candidates for the board, or their immediate family members, and which shall function independently of the governing board and shall be fairly representative of the membership of the association, or by using the services of a recognized entity that regularly conducts elections for membership organizations, such as the New Jersey League of Women Voters.  Elections, including the obtaining of proxy votes, shall not be conducted by a property manager or other employee hired by the association.  No person shall be disqualified from voting in an election for any reason other than not being an owner.  Homeowners shall be allowed to cast ballots anonymously or otherwise by mail or by proxy or in person, but proxies authorizing an agent to vote for persons not specified by the homeowner shall not be recognized as valid, but nonetheless may be counted for the purposes of determining a quorum.  Ballots, signed envelopes, registration records, eligibility lists, proofs of mailing, and other voting materials shall be subject to inspection by all homeowners at the time of the election and for three hours afterwards; after such time they shall be sealed and kept unopened, in the custody of the chairperson of the election committee or the organization that conducted the election, until the next election.  Voting materials and procedures shall at all times be subject to inspection and review by the Department of Community Affairs.

     Upon the written request of any candidate, and upon a determination by the commissioner that a reasonable basis exists, the commissioner may appoint one or more persons to monitor an election to ensure fairness and accuracy.

     A candidate may also request, within a 30-day period following an election, the Public Advocate to investigate any allegations of fraud or abuse in election proceedings.  The Public Advocate shall have the power to invalidate any election in which the Public Advocate finds there to have been fraud or any other abuse of the electoral process, including, but not limited to, denial of equal access to all eligible voters for all candidates.  In the event that any association fails or refuses to conduct a fair and open election at such time as elections are required for such association, the Public Advocate shall order that the election be conducted at such time and under such supervision as the Public Advocate shall direct, or the Public Advocate, or a designee of the Public Advocate, shall conduct the election directly.

 

     8.  (New section)  a.  In addition to annual operating expenses, the budget of an association shall include reserve accounts for capital expenditures and deferred maintenance.  These accounts shall include, but are not limited to, roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000.  The amount to be reserved shall be computed by means of a formula which is based upon estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item.  The association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance.  This section does not apply to an adopted budget in which the members of an association have determined, by a majority vote at a duly called meeting of the association, to provide no reserves or less reserves than required by this subsection.

     b. Reserve funds and any interest accruing thereon shall remain in the reserve account or accounts, and shall be used only for authorized reserve expenditures unless their use for other purposes is approved in advance by a majority vote of all of the members.

     c. In a multi-association community, only the voting interests of the units subject to assessment to fund the reserves in question shall be eligible to vote on questions that involve waiving or reducing the funding of reserves, or using existing reserve funds for purposes other than purposes for which the reserves were intended.

      d. The budget, account balances and reserve accounts shall be disclosed to owners in an annual financial statement, and to prospective purchasers upon the signing of a contract for sale.  Associations shall have audits performed by a certified public accountant at least once every three years.  The audit reports shall be filed with the Local Finance Board within the Department of Community Affairs.

 

     9.  (New section)  The Legislature finds that the current statutory framework places a burden on owners concerning the funding of litigation or alternatives to litigation, in that owners whose interests are impacted by board actions must finance their own litigation, as well as finance the defense of the association board against their claims.  The trial and appellate courts in Twin Rivers held that owners are not entitled to alternative dispute resolution when litigating claims which could be viewed as derivative in nature, a term meaning that a board’s actions could be viewed as impacting upon all of the members of the association.  The Legislature finds, contrary to this ruling, that owners need specialized alternative dispute resolution when a board’s actions negatively impact the interests of all of the members of the association.  Therefore, on and after the effective date of P.L.    , c.    (C.         ) (pending before the Legislature as this bill), the following shall apply:

     Whenever a claim against a board is derivative in nature, an owner in a common interest community shall be entitled to file a claim with the Department of the Public Advocate for alternative dispute resolution.  The Public Advocate shall establish a procedure and assign a neutral mediator or arbitrator to resolve the issues involved.  The procedure shall not require payment by an owner or owners for dispute resolution on derivative matters, and any cost assessed by the department shall be borne by the association as a common expense.  Should any issues not be resolved in favor of the association under the Public Advocate’s procedure, the provisions concerning appeal rights under section 11 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) shall apply.

     Nothing in this section shall limit the ability of a homeowners’ association from providing alternative dispute resolution for matters which are not derivative in nature, or shall anything in this section bar the filing of a claim with a court of competent jurisdiction.  The Office of Public Advocate may, however, require that claims be suspended until matters pending in the court are adjudicated.

     10.  (New section)  a.  The Commissioner of Community Affairs shall cause to be prepared and distributed in written form and on the Internet, a booklet, which shall be made available to the general public, to associations and to homeowners in common interest communities, and which shall serve as a general guide to community associations.  The booklet shall be distributed free of charge by the association to each homeowner and by each developer to prospective purchasers prior to the signing of a sales contract; it shall be the duty of each seller of a unit to provide a copy of the booklet to a purchaser of the unit before the time of signing of the sales contract.  The booklet shall include at least the following:

     (1) An explanation of the nature of home ownership in a common interest community and a glossary of relevant terms, including, but not limited to, "master declaration," "bylaws," "master deed," "covenants and restrictions," "common elements," "liens," "fines," "rules," "alternative dispute resolution," "fees," and "governing board;"

     (2) A description of the rights and responsibilities of homeowners, including reference to applicable statutes and rules;

     (3) A description of the duties and powers of, and restrictions on, governing boards, including reference to any applicable statutes and regulations.  The booklet shall include information concerning conflict of interest requirements applicable to governing board members, officers and to professionals hired by associations and shall also include reference to any other sources of information that may be recommended by the commissioner as being of assistance to governing board members and officers in the discharge of their duties;

     (4) A description of the statutory and regulatory requirements for association bylaws or rules and such other material as the commissioner shall deem useful; and

     (5) A listing of documents and other information that a potential purchaser of a unit in a common interest community should obtain before entering into a contract to purchase a unit, including, but not limited to: copies of the association's governing documents; a copy of the latest capital reserve study, if any, showing the condition, life expectancy and replacement costs of major mechanical systems and other common elements; any litigation pending against the association; any pending notices or orders issued by the Department of Community Affairs or any other governmental entity; the association's procedures for alternate dispute resolution and an explanation of statutory and regulatory requirements, process of adopting rules, providing access to records, approval of budgets, and review of homeowners' applications to do work on their units; delinquency and foreclosure rates; the association's insurance coverages; and governmental and non-governmental remedies available in the event of violation of the rights of unit owners.  These documents and this information shall be made available to prospective purchasers upon written request and copies shall be provided, for a charge not exceeding the reasonable cost of copying or printing, to any person who has contracted to purchase a unit within the common interest community.

     b.  The commissioner shall establish a program and materials for the training of owners who are elected to serve on the governing boards of common interest communities.  At least two hours of training shall be mandatory on the part of board members, which shall be completed no later than 60 days prior to the expiration of the member’s term of office.  The program shall provide guidance on record keeping, the holding of open meetings, the making of a budget and maintaining reserve accounts, and information on various State entities available to assist the board.  The commissioner shall have the authority to remove a board member who does not complete the training required pursuant to this section.

 

     11.  (New section)  Unit owners may be subject to reasonable fines or other sanctions imposed by the governing board for failure to comply with the bylaws or rules adopted by the common interest community, which fines or sanctions may be imposed only subsequent to alternative dispute resolution proceedings authorized by law.  An owner individually, a group of owners, or the association may maintain an action for the recovery of damages, or for injunctive relief, or a combination thereof, for the failure to comply with the rules or bylaws, or the failure to uphold the rules or bylaws in the case of an association.  The prevailing party on the majority of issues litigated in an action for recovery of damages or injunctive relief, whether a unit owner or owners, or the association, shall be entitled to reasonable expenses, including attorneys fees, that may be incurred by it in connection with such action.

     Whenever there is litigation between an association and one or more of its members which could be viewed as derivative in nature, the association shall not be permitted to appeal a ruling on an issue on which it did not prevail unless it has first obtained the approval to appeal such decision of at least 75 percent of the members of the association to which votes are allocated.

 

     12.  (New section)  No lien shall be recorded by an association for a fine imposed after the effective date of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) without judicial or administrative review as provided under  P.L.    , c.    (C.      ) (pending before the Legislature as this bill) or any other law hereinafter enacted.

 

     13.  (New section)  a.  There is established in, but not of, the Department of Community Affairs, the Advisory Council on Common Interest Communities.  The council shall consist of nine voting members appointed by the Governor, and shall include two representatives of the New Jersey Common-Interest Homeowners' Coalition, two representatives of the Community Associations Institute, one representative from the New Jersey League of Women Voters, and one representative of the Center for Government Studies, Rutgers University.  The other three members shall be persons who own units in common interest communities, not more than two of whom serve, or have served within the immediately preceding 48 months, on the governing boards of their respective associations.  The Commissioner of Community Affairs shall serve, ex officio, as a nonvoting member of the council.

     Within 60 days of the effective date of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), and at least one month prior to the expiration of the term of a member nominated by an organization listed above, that organization shall submit to the Governor three nominees for consideration, from which the Governor shall choose.  If any organization does not submit three nominees for consideration at any time required, the Governor may appoint a member of the Governor's choice.

     For the purpose of complying with the provisions of Article V, Section IV, paragraph 1 of the New Jersey Constitution, the Advisory Council is allocated within the Department of Community Affairs, but, notwithstanding that allocation, the council shall be independent of any supervision or control by the department or by any board or officer thereof.

     Members shall be appointed to two-year terms; however, of the three unit owner members appointed, two shall be appointed initially to a one-year term.

     b.  Members of the council shall serve without compensation, but are entitled to receive reasonable per diem and travel expenses while on official business.

     c.  The functions of the advisory council shall be to:

     (1) Self-initiate and receive from the public input regarding issues of concern with respect to common interest communities and recommendations for changes in the law concerning common interest communities.  The issues that the council shall consider include, but are not limited to, the rights and responsibilities of the unit owners in relation to the rights and responsibilities of the association, with particular emphasis on relevant developing case law;

     (2) Review, evaluate, and advise the Department of Community Affairs concerning revisions and adoption of rules affecting common interest communities; and

     (3) Recommend improvements, if needed, in the education or other programs required to be established pursuant to P.L.    , c.    (C.    ) (pending before the Legislature as this bill).

     d.  The council may elect a chair and vice chair and such other officers as it may deem advisable.  The council shall meet at the call of its chair, at the request of a majority of its membership, at the request of the Ombudsman or the commissioner, or at such times as it may prescribe.  A majority of the members of the council shall constitute a quorum.  Council action may be taken by vote of a majority of the voting members who are present at a meeting where there is a quorum.

 

     14.  (New section)  The Commissioner of Community Affairs shall promulgate the rules and regulations necessary to effectuate sections 4 through 8, section 10, and sections 13 through 15 this act, and the Public Advocate shall promulgate such rules as are necessary to effectuate sections 9 and 12, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.).

 

     15.  (New section)  The Commissioner of Community Affairs shall have all of the powers necessary to enforce the provisions of P.L.    , c.    (C.      ) (pending before the Legislature as this bill), including the powers granted under section 18 of P.L.1977, c.419 (C.45:22A-38) and shall, in addition, have such powers as are necessary to enforce the provisions of the "Condominium Act,"  P.L.1969, c.257 (C.46:8B-1 et seq.), “The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), and P.L.1993, c.30 (C.45:22A-43 et seq.), as those provisions relate to community associations.  The commissioner shall exercise such authority as is necessary over individuals, corporations, associations, trusts, or any entity determined by the commissioner to have violated statutory law, including the imposition of penalties and sanctions against associations, board members, or individual owners, and also including the removal of board members for flagrant violations of an order of the department.  Any person or entity for which a sanction or penalty is proposed shall be afforded the opportunity to appear before the commissioner or his designee and be heard personally or through counsel on the alleged violations.

 

     16.  Section 8 of P.L.2001, c.404 (C.47:1A-7) is amended to read as follows:

     8.  a.  There is established in the Department of Community Affairs a Government Records Council.  The council shall consist of the Commissioner of Community Affairs or the commissioner's designee, the Commissioner of Education or the commissioner's designee, and three public members appointed by the Governor, with the advice and consent of the Senate, not more than two of whom shall be of the same political party.  The three public members shall serve during the term of the Governor making the appointment and until the appointment of a successor.  A public member shall not hold any other State or local elected or appointed office or employment while serving as a member of the council.  A public member shall not receive a salary for service on the council but shall be reimbursed for reasonable and necessary expenses associated with serving on the council and may receive such per diem payment as may be provided in the annual appropriations act.  A member may be removed by the Governor for cause.  Vacancies among the public members shall be filled in the same manner in which the original appointment was made.  The members of the council shall choose one of the public members to serve as the council's chair.  The council may employ an executive director and such professional and clerical staff as it deems necessary and may call upon the Department of Community Affairs for such assistance as it deems necessary and may be available to it.

     b.  The Government Records Council shall:

     establish an informal mediation program to facilitate the resolution of disputes regarding access to government records;

     receive, hear, review and adjudicate a complaint filed by any person concerning a denial of access to a government record by a records custodian;

     issue advisory opinions, on its own initiative, as to whether a particular type of record is a government record which is accessible to the public;

     prepare guidelines and an informational pamphlet for use by records custodians in complying with the law governing access to public records;

     prepare an informational pamphlet explaining the public's right of access to government records and the methods for resolving disputes regarding access, which records custodians shall make available to persons requesting access to a government record;

     prepare lists for use by records custodians of the types of records in the possession of public agencies which are government records;

     make training opportunities available for records custodians and other public officers and employees which explain the law governing access to public records; and

     operate an informational website and a toll-free helpline staffed by knowledgeable employees of the council during regular business hours which shall enable any person, including records custodians, to call for information regarding the law governing access to public records and allow any person to request mediation or to file a complaint with the council when access has been denied;

     In implementing the provisions of subsections d. and e. of this section, the council shall: act, to the maximum extent possible, at the convenience of the parties; utilize teleconferencing, faxing of documents, e-mail and similar forms of modern communication; and when in-person meetings are necessary, send representatives to meet with the parties at a location convenient to the parties.

     c.  At the request of the council, a public agency shall produce documents and ensure the attendance of witnesses with respect to the council's investigation of any complaint or the holding of any hearing.

     d.  Upon receipt of a written complaint signed by any person alleging that a custodian of a government record has improperly denied that person access to a government record, the council shall offer the parties the opportunity to resolve the dispute through mediation.  Mediation shall enable a person who has been denied access to a government record and the custodian who denied or failed to provide access thereto to attempt to mediate the dispute through a process whereby a neutral mediator, who shall be trained in mediation selected by the council, acts to encourage and facilitate the resolution of the dispute.  Mediation shall be an informal, nonadversarial process having the objective of helping the parties reach a mutually acceptable, voluntary agreement.  The mediator shall assist the parties in identifying issues, foster joint problem solving, and explore settlement alternatives.

     e.  If any party declines mediation or if mediation fails to resolve the matter to the satisfaction of all parties, the council shall initiate an investigation concerning the facts and circumstances set forth in the complaint.  The council shall make a determination as to whether the complaint is within its jurisdiction or frivolous or without any reasonable factual basis.  If the council shall conclude that the complaint is outside its jurisdiction, frivolous or without factual basis, it shall reduce that conclusion to writing and transmit a copy thereof to the complainant and to the records custodian against whom the complaint was filed.  Otherwise, the council shall notify the records custodian against whom the complaint was filed of the nature of the complaint and the facts and circumstances set forth therein.  The custodian shall have the opportunity to present the board with any statement or information concerning the complaint which the custodian wishes.  If the council is able to make a determination as to a record's accessibility based upon the complaint and the custodian's response thereto, it shall reduce that conclusion to writing and transmit a copy thereof to the complainant and to the records custodian against whom the complaint was filed.  If the council is unable to make a determination as to a record's accessibility based upon the complaint and the custodian's response thereto, the council shall conduct a hearing on the matter in conformity with the rules and regulations provided for hearings by a State agency in contested cases under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), insofar as they may be applicable and practicable.  The council shall, by a majority vote of its members, render a decision as to whether the record which is the subject of the complaint is a government record which must be made available for public access pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.) as amended and supplemented.  If the council determines, by a majority vote of its members, that a custodian has knowingly and willfully violated P.L.1963, c.73 (C.47:1A-1 et seq.), as amended and supplemented, and is found to have unreasonably denied access under the totality of the circumstances, the council may impose the penalties provided for in section 12 of P.L.2001, c.404 (C.47:1A-11).  A decision of the council may be appealed to the Appellate Division of the Superior Court.  A decision of the council shall not have value as a precedent for any case initiated in Superior Court pursuant to section 7 of P.L.2001, c.404 (C.47:1A-6).  All proceedings of the council pursuant to this subsection shall be conducted as expeditiously as possible.

     f.  The council shall not charge any party a fee in regard to actions filed with the council.  The council shall be subject to the provisions of the "Open Public Meetings Act," P.L.1975, c.231 (C.10:4-6), except that the council may go into closed session during that portion of any proceeding during which the contents of a contested record would be disclosed.  A requestor who prevails in any proceeding shall be entitled to a reasonable attorney's fee.

     g.  The council shall not have jurisdiction over the Judicial or Legislative Branches of State Government or any agency, officer, or employee of those branches.

     h.  The council shall provide assistance to homeowners and associations seeking guidance on access to association records pursuant to P.L.    , c.    (C.          ) (pending before the Legislature as this bill), and for the purposes of the assistance, the association shall be deemed to be a governmental entity, and the records it is required to maintain under law shall be deemed public records, to be available to its members only.

(cf: P.L.2001,c.404, s.8)

 

     17.  Section 22 of P.L.2005, c.155 (C.52:27EE-22) is amended to read as follows:

     22.  Dispute Settlement Office; services.

     a.  The Dispute Settlement Office may provide, in the discretion of the Public Advocate, mediation and other third party neutral services in the resolution of disputes which involve the public interest and may enter into agreements or contracts to carry out any of the purposes or functions of this section.  The office may assist public or private parties in resolving disputes.  The office is authorized to: 

     (1) facilitate the resolution of disputes through the provision of mediation and other neutral dispute resolution services;

     (2) establish standards for the selection, assignment, and conduct of persons acting on behalf of the office in the resolution of disputes;

     (3) conduct educational programs and provide other services designed to reduce the occurrence, magnitude, or cost of disputes;

     (4) design, develop, or operate dispute resolution programs, or assist in improving or extending existing dispute resolution programs;

     (5) work with the business ombudsman or advocate in the New Jersey Commerce and Economic Growth Commission and take such other action as will promote and facilitate dispute resolution in the State; [and]

     (6) coordinate and cooperate with the Office of Administrative Law so as to avoid duplication of effort and to facilitate alternate resolution of disputes that would otherwise require administrative hearings; and

     (7) provide dispute resolution and other services, such as investigations of election fraud, to owners and common interest community associations, in accordance with the provisions of P.L.   , c.    (C.          ) (pending before the Legislature as this bill).

     b.  The Public Advocate may establish reasonable fees to be charged to public or private parties for the provision of the educational, consultation, dispute resolution, or other services authorized herein and may apply for and accept on behalf of the State any federal, local, or private grants, bequests, gifts, or contributions to aid in the financing of any of the programs or activities of the office.  The Public Advocate in the name of the State shall do all that is necessary and proper to receive or to collect all moneys due to the State, including such fees, grants, bequests, gifts, or contributions, by or reimbursement for services rendered pursuant to this section.

(cf: P.L.2005, c.155, s.22)

 

     18.  Sections 1 through 3 of P.L.1989, c.9 (C.2A:62A-12 through C.2A:62A-14) are repealed.

 

     19.  This act shall take effect immediately.

 

STATEMENT

 

     This bill, entitled the “Owners’ Rights in Common Interest Developments Act,” provides specific protections of the rights of owners living in common interest communities.  A recent appellate court decision has directed that the governing boards of such associations will have limits placed on their powers when dealing with the fundamental rights of owners.  The bill is intended to codify that decision, and other decisions favorable to homeowners.  The bill supplements current laws and provides guidance in the areas of elections, access to records, alternative dispute resolution concerning matters impacting all owners equally, and financial matters.  The bill requires two hours of training be completed by board members prior to the expiration of their term.

     The bill recognizes that, in light of the quasi-governmental activities of association governing boards, they will be subject to some State enforcement to ensure compliance with the laws.  Rather than creating new positions in one State department to assist owners and boards, the bill instead relies on currently existing agencies, such as the Government Records Council, for example, to assist in record access disputes.

     The powers of the Commissioner of Community Affairs to enforce the statutory law concerning homeowners’ associations are clarified under the bill, in line with the appellate court decision in Comm. for a Better Twin Rivers v. Twin Rivers Homeowners' Ass'n, __ N.J.Super. __  (2006 N.J.Super. LEXIS 29) (App.Div. 2006).

     The Public Advocate will be authorized under the bill to hear disputes involving matters impacting all members of a community (known as derivative matters) the cost of which will be borne by the association as a common expense.  An association will no longer be permitted to continue to litigate its defense in derivative matters affecting the owners once it has been held not to be the prevailing party on an issue affecting the owners’ interests, unless authorized to do so by 75 percent of the voting members of the community.  This should help limit unjustified enrichment of legal representatives of boards, who, under current law, have unlimited resources through the common monthly maintenance fees to persist in litigation, even if a majority of the owners in a community do not wish to litigate.  This limitation would not apply to routine association litigation, which does not involve the derivative rights of all of the owners, such as collection of unpaid common expenses, or fines against a particular owner.

     The bill also requires fair elections, and sets forth specific election and voting procedures.  The bill establishes an advisory council in the Department of Community Affairs to serve as an information gathering and consulting body to make recommendations to the commissioner on the training materials the board members will receive, as well as serve as a general advisory body to the department.