A2528

An Act concerning common interest community associations and amending P.L.1993, c.30.

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

1. Section 4 of P.L.1993, c.30 (C.45:22A-46) is amended to read as follows:

4. The bylaws of the association, which shall initially be recorded with the master deed shall include, in addition to any other lawful provisions, the following:

a. A requirement that all meetings of the executive board, except conference or working sessions at which no binding votes are to be taken, shall be open to attendance by all association members, and voting-eligible tenants where applicable, and adequate notice of any such meeting shall be given to all association members, and voting-eligible tenants where applicable, in such manner as the bylaws shall prescribe; except that the executive board may exclude or restrict attendance at those meetings, or portions of meetings, dealing with (1) any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer, or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. At each meeting required under this subsection to be open to all association members, and voting-eligible tenants where applicable, the participation of unit association members, and voting-eligible tenants where applicable, in the proceedings or the provision of a public comment session shall be at the discretion of the executive board, minutes of the proceedings shall be taken, and copies of those minutes shall be made available to all association members, and voting-eligible tenants where applicable, before the next open meeting.

b. The method of calling meetings of association members, and voting-eligible tenants where applicable, the percentage of association members, and voting-eligible tenants where applicable, or voting rights required to make decisions and to constitute a quorum. The bylaws may, nevertheless, provide that an individual association member, and a voting-eligible tenant where applicable, may waive notice of meetings in writing, or may act by written agreement without meetings. The executive board or association shall cause to be delivered, through regular or electronic mail, or personal delivery, a meeting notice to the homeowners not less than seven days prior to any meeting.

c. The manner of collecting from owners their respective shares of common expenses and the method of distribution to the owners of their respective shares of common surplus or such other application of common surplus as may be duly authorized by the bylaws.

d. (1) The method by which the bylaws may be amended, provided that no amendment shall be effective until recorded in the same office as the then existing bylaws. The bylaws may also provide a method for the adoption, amendment and enforcement of reasonable administrative rules and regulations relating to the operation, use, maintenance and enjoyment of the units and of the common elements, including limited common elements.

(2) If association bylaws provide for no method of their amendment by a vote of the association members open to all association members, or only allow association members to amend the bylaws through a majority vote exceeding a two-thirds majority, then the association members may amend the bylaws by an affirmative vote of a majority of the total authorized votes in the association. If the bylaws do not provide for a method by which the association members may call a meeting of the association members to conduct a vote to amend the bylaws or do not contain provisions concerning the subject matter of subparagraphs (a) through (f) of this paragraph, then a vote concerning an amendment to the bylaws shall be conducted as follows:

(a) fifteen percent of the association members may request a meeting of the association's membership by executing a document requesting that a special meeting of the association membership be held, or if the annual meeting of the association membership is scheduled to occur within 60 days of the date of the request, then the amendment vote shall be held at the annual meeting;

(b) if the vote is not scheduled to take place at the annual meeting of the association, the executive board shall schedule the special meeting of the association membership to occur within 60 days of the receipt of the request. Notice of the meeting shall be provided to the association members and voting-eligible tenants, where applicable, at least 14 days prior to the date of the meeting. The special meeting shall be held at a reasonable time that is likely to permit most association members to attend;

(c) the language of the proposed amendment shall be unambiguous and consistent with applicable law and with the provisions of the bylaws that are not proposed to be amended, and if not in such condition shall be revised to satisfy that requirement. Upon satisfaction of this requirement, the amendment shall be mailed, hand-delivered or, if the bylaws permit, electronically delivered, together with the notice of the meeting to the association membership at least 10 days prior to the meeting;

(d) if permitted by the association's bylaws, the notice of the meeting shall include a proxy ballot or absentee ballot with instructions for the return of same, which instructions shall permit facsimile or electronic mail delivery of the proxy ballot or absentee ballot to the association and shall not require receipt of the proxy or absentee ballot more than one business day prior to the meeting;

(e) if a sufficient number of ballots or proxies are not received at the special or annual meeting to conclusively determine that the proposed amendment has been approved or rejected, the meeting shall be adjourned for a period of 30 days, or such longer period as approved by the association membership by approval of a motion to extend the vote concerning the amendment, but in no event for longer than 11 months from when the notice of the meeting was sent, and all proxies or ballots received prior to the extended date shall remain valid if otherwise valid under the terms of the bylaws; and

(f) when an amendment is approved, a copy of the approved amendment shall be provided to all association members, and the association shall promptly record the amendment in the county recording office where the bylaws were recorded.

(3) Paragraph (2) of this subsection shall not be construed to require a vote to be held on an amendment to the bylaws that has been voted on in the preceding 12 months of the initial meeting request, made pursuant to subparagraph (a) of paragraph (2) of this subsection.

(4) For the purposes of paragraph (2) of this subsection, the number of total authorized votes in the association shall be based on the whole number of units owned by someone entitled to association membership after subtracting those association members who are ineligible to vote because they are not in good standing.

(5) An executive board shall not amend the bylaws of an association without a vote of the association members open to all association members, as provided in the association's bylaws, or where the bylaws provide for no method of their amendment by a vote of the association members, or only allow association members to amend the bylaws through a majority vote exceeding a two-thirds majority, then an association shall only amend the bylaws pursuant to paragraph (2) of this subsection, except an executive board may amend the bylaws under the following circumstances:

(a) to the extent necessary to render the bylaws consistent with State, federal or local law; or

(b) after providing notice to all association members of the proposed amendment, which notice shall include a ballot to reject the proposed amendment. Other than an amendment to render the bylaws consistent with State, federal, or local law, if at least 10 percent of association members vote to reject the amendment within 30 days of its mailing, the amendment shall be deemed defeated.

e. A requirement that an executive board or association shall provide, upon request by a unit owner, the following information: the roster of current board members; contact information for each current board member, consisting of a private electronic mail address by which a board member can be contacted directly by unit owners; board election dates and application forms for candidacy; the most recently adopted annual budget; and insurance information for any policy held by an association, including the names of insurance companies, the name of the broker or provider of the insurance policy, and any applicable policy numbers. The association shall provide the information to the homeowner electronically within one business day of the submission of the request, or, if the homeowner requests a paper copy, within two business days of the submission of the request. When inspection of an insurance policy is requested by a unit owner, an association shall provide the homeowner with an electronic copy of the insurance policy within 24 hours of the submission of the request, or, if the homeowner requests a paper copy, within two business days of the submission of the request.

f. A requirement that any contract for maintenance, management, or operation services entered into by the executive board or association shall provide for 24-hour emergency maintenance or management services, as applicable, which shall include a 24-hour emergency maintenance or management telephone hotline for use by unit owners.

g. A requirement that an executive board or association shall maintain financial records in accordance with generally accepted accounting standards and principles. The records shall be open to inspection by unit owner or their authorized representatives at reasonable times, and written summaries of such records shall be supplied at least annually to the unit owners or their authorized representatives. The failure of the association to permit inspection of its financial records by unit owners or their authorized representatives entitles any persons prevailing in an enforcement action to recover reasonable attorney's fees from the person in control of the books and records who, directly or indirectly, knowingly denied access to the books and records for inspection. The records shall include, but not be limited to (1) a record of all receipts and expenditures; and (2) an account for each unit owner, designating the name and current mailing address of the unit owner, the amount of each assessment, the dates on which and amounts in which the assessments come due, the amount paid on the account, and the balance due.

h. Any amendment, revision, modification, or replacement of any existing bylaws of the association, after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), shall include the provisions required under each subsection of this section, even when the original bylaws were adopted prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

(cf: P.L.2017, c.106, s.7)

2. This act shall take effect immediately.

STATEMENT

This bill establishes additional requirements on homeowners’ associations subject to "The Planned Real Estate Development Full Disclosure Act," N.J.S.A. 45:22A-21 et seq., concerning management companies and public inspection of certain association documents. The bill also requires an association to provide certain annual accounting information to unit owners and modernizes the requirements to allow for the inspection of the association’s records by unit owners.

Specifically, the bill requires that an association provide, upon request by a unit owner, the following information:

(i) roster of current board members;

(ii) contact information for each current board member, consisting of a private electronic mail address by which a board member can be contacted directly by association members;

(iii) board election dates and application forms for candidacy;

(iv) the most recently adopted annual budget;

(v) insurance information for any policy held by an association, including the name of insurance companies, the name of the broker or provider of the insurance policy, and any applicable policy numbers.

Regarding contracts with management companies, the bill requires that any contract for maintenance, management, and operation services entered into by the association provide for 24-hour emergency maintenance or management services, as applicable, which must include a 24-hour emergency maintenance or management telephone hotline for use by association members.

Finally, the bill establishes that, when inspection of an insurance policy is requested by an association member, an association shall provide the unit owner with an electronic copy of the insurance policy within 24 hours of the submission of the request. If the unit owner requests a paper copy, an association must provide the policy to the requester within two business days of the submission of the request.

This bill is applicable to condominiums, cooperatives, and generic homeowners’ associations while having no effect on residential home or apartment owners that do not belong to a common interest community. The bill is not retroactive, but the new requirements outlined in the bill must be adopted by associations the next time any change is made to the existing bylaws, or when new bylaws are adopted.