ASSEMBLY HOUSING COMMITTEE

 

STATEMENT TO

 

[Second Reprint]

SENATE, No. 271

 

with committee amendments

 

STATE OF NEW JERSEY

 

DATED: MAY 1, 1997

 

      The Assembly Housing Committee reports favorably and with committee amendments Senate Bill No. 271 (2R).

      This bill, as amended, would prohibit, with certain exemptions, cooperative agreements from containing provisions that would unreasonably prohibit the rental of unit. 

      As amended, the bill's prohibition against bylaws which inhibit rental of a unit in a cooperative would not apply in those cooperatives in which the bylaws have contained provisions restricting rental from the time of the transfer of control of the association to the holders of proprietary leases, and such provisions have been consistently and strictly enforced since that time.

      Under the bill's provisions, even for those cooperatives which have bylaws prohibiting rental, if the building contains more than ten units under one roof, a holder of a proprietary lease must be permitted to rent his unit for such a period of time until prevailing market conditions permit a sale which will allow recoupment of his investment in the unit. Associations may require a reasonable minimum lease term in such a situation, and other reasonable rules to protect the health safety and interest of all shareholders. A cooperative association which elects to screen prospective tenants must do so within seven days of the submission of the tenant's name to the association. In addition, any tenants renting pursuant to the bill's provisions must comply with the properly adopted rules of the association which are applicable to other unit owners, including, but not limited to, rules relating to such matters as parking, pets, noise, and the number of permitted occupants per unit.

      The committee amended the bill to provide that the bylaws exempted from the general provision of the bill that renting of a unit may not be prohibited need only have to be in existence from the time the cooperative association is controlled by holders of proprietary leases, and not from the time of the offering statement. In addition, the amendments specify that rules adopted related to rental must be reasonable, and a board must interview prospective tenants within seven days of the date of submission of the tenant's name. The requirement of a 180 day minimum lease term was replaced with the requirement of a reasonable lease term.