A3163

An Act concerning homeowners’ associations and supplementing P.L.1993, c.30 (C.45:22A-43 et seq.).

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

1. An association shall be deemed to have amended its governing documents upon the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) to provide that:

a. A member of the executive board may be recalled and removed from office, with or without cause, by the vote of, or agreement in writing by, a majority of the executive board members present and eligible to vote at a meeting called for that purpose, provided that any vote to recall shall be initiated only upon a petition of at least five percent of all unit owners. A special meeting of the unit owners to vote for the recall of a member or members of the executive board may be called by 10 percent of the members giving notice of the meeting as required for a meeting of the unit owners, and the notice shall state the purpose of the meeting.

b. The form of administration of the association, which shall consist of an executive board, is described in the governing documents, specifying the powers, duties, manner of selection and removal, and compensation, if any, of the officers, directors, or trustees of the executive board. Unless otherwise provided in the bylaws, the executive board shall consist of five members, but if the number of housing units in the community is less than 11, the executive board shall consist of no more than three members, notwithstanding the governing documents. The executive board shall elect from among its members a president, vice president in the case of communities with more than 10 units, secretary, and treasurer, who shall perform the duties of those offices customarily performed by officers of nonprofit corporations. The executive board may appoint and designate other officers and assign them such duties as it deems appropriate.

2. a. All unit owners shall be permitted to be candidates for elected positions on the executive board excepted as provided by subsection b. of this section. Elections shall be held at least every two years, and shall be conducted with strict adherence to democratic principles and fairness.

b. An association shall conduct elections under the auspices of a committee of unit owners, none of the members of which shall be current board members or candidates for the board. The committee shall function independently of the executive board, and may use the services of a qualified independent individual or organization that is qualified in election monitoring services. The committee or independent individual or organization, as the case may be, shall be responsible for determining the eligibility of unit owners to vote or to be candidates for membership on the executive board, for counting ballots, and for verifying results. A unit owner may only be disqualified from being a candidate for membership on the executive board for the reason of delinquency in the payment of assessments. An association shall give all unit 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 may only be disqualified from voting in an election for the reason of delinquency in the payment of assessments.

c. A unit owner shall be allowed to cast a ballot anonymously for the election of executive board members. A unit owner shall also be allowed 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 purposes of determining a quorum for the meeting at which the election is conducted. A non-directed proxy ballot may be counted only in an election in which there are not as many listed candidates as there are positions to be filled. 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 unit owners who are eligible to vote and, after the voting has started, to any list of unit owners who have voted that the association may maintain.

d. A challenge to the validity of an election shall be submitted to the executive board and to the agency 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.

e. Ballots, envelopes, registration records, eligibility lists, proofs of mailing, and other voting materials shall be subject to inspection by all unit 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 agency 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.

3. This act shall take effect immediately.

STATEMENT

This bill sets standards for election and recall of executive board members of homeowners’ associations, which are formed to manage commonly-owned elements in condominiums, cooperatives, and certain planned communities with common elements. The bill would limit the size of executive boards of such communities comprised of less than 11 homes, to three members. The bill would also provide a default size of five members for the executive board of all other communities unless the bylaws provide otherwise. The bill requires that associations permit owners to vote anonymously for executive board members, and establishes fair election procedures. Violations of these procedures could be appealed to the State entity having oversight of planned communities, which currently is the Department of Community Affairs. The bill also establishes standard procedures for recall votes of executive board officers or trustees, and provides that any member of the executive board may be recalled and removed from office, with or without cause, by the vote of, or agreement in writing by, a majority of the executive board members present and eligible to vote at a meeting called for that purpose, provided that any vote to recall shall be initiated only upon a petition of at least five percent of all association members. The bill provides that a special meeting of the association membership to vote for the recall of a member or members of the executive board may be called by 10 percent of the members giving notice of the meeting as required for a meeting of members.