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  • 05/18/2020

    "RADBURN" Regulations To Planned Real Estate Full Disclosure Act (PREDFDA)

    Client Alert


    Written by: George C. Greatrex, Jr.

    After a long wait, the much-anticipated regulations to PREDFDA have been adopted and published by the New Jersey Department of Community Affairs – Division of Codes and Standards (“DCA”). Find the full text here.

    Several amendments to PREDFDA were signed into law in July of 2017 by what was known as the “Radburn Election Law” (P.L. 2017, c. 106). Those amendments to PREDFDA (found at N.J.S.A. 45: 22A-43 et. seq.) primarily addressed procedures for elections of executive boards and voting participation rights in common interest communities, but also made other procedural changes to the governance of CICs.

    On June 3, 2019 the DCA proposed numerous regulations designed to implement and enforce the various new provisions imposed by the Radburn law. In accordance with New Jersey Administrative Law, a comment period was provided for all those wishing to comment on the proposed rulemaking before they were officially adopted. That comment period expired on August 2, 2019. Many comments were submitted, from board members, community managers, professionals (including Hill Wallack), builders, developers and most notably, the CAI Legislative Action Committee -NJ.

    The Rules Adoption publication notes that the proposed rules were adopted by the Commissioner of the DCA on January 6, 2020, filed on April 9, 2020, but not published to the general public until yesterday. In all there were 158 comments and responses published, followed by the full text of the rules adopted. Many of the comments were critical of the proposed rules and suggested appropriate revisions. Other comments were supportive of the proposed rules.

    Overall, few substantive changes were made to the proposed rules as a result of the comments submitted. The DCA notes that it will publish guidelines to assist CICs to implement and enforce these new rules, but it is unknown when such guidance will be provided.

    Some highlights of the regulations are:

    1. Adopts the definition of “good standing” contained in the Radburn Election Law—current in the payment of common expenses, late fees, interest on unpaid assessments, legal fees or other charges lawfully assessed. A person who is in compliance with a judgment or settlement agreement for common expenses is in good standing as well as a person who has requested, or is participating in, ADR or a judicial proceeding.
    2. In an election, the association must verify the eligibility of the votes and count the ballots in a non-fraudulent and verifiable way.
    3. Ballot tallying in an election must occur publicly and ballots shall be open to inspection by the members for 90 days.
    4. Ballots must be anonymous.
    5. Electronic voting is permitted if it is administered by a neutral third party and anonymity is maintained.
    6. Ballots may not indicate incumbent board members.
    7. Ballots must contain a space for write-in candidates.
    8. A board member shall be removed only in accordance with the bylaws or the board for good cause directly impacting the member’s ability to serve.
    9. A board member may not remove an elected member for disagreeing with the majority or for violating any confidentiality agreement without ADR, in which it is proven that there was a breach that adversely affected the interests of the members as opposed to that of the executive board.
    10. A board may not appoint a board member except to fill a vacancy created by resignation, death, failure to maintain reasonable qualifications, or removal by a vote of the members.
    11. The board must explain the basis for, and cost of, any binding vote taken in to open meeting and must include same in the minutes.
    12. Associations must hold an annual meeting and within a week thereafter must post or deliver an open meeting schedule for the year. The notice must include agenda items to the extent known. (For example, if the budget is always discussed at the October meeting, that should be on the notice.)
    13. A vote taken at a closed meeting shall not be binding. Any binding votes must be taken at a subsequent open meeting.
    14. If a meeting is recorded electronically a written record shall be taken of the matters addressed and the matters voted on. Both the recording and record have to be made available to the owners.
    15. The regulations also contain a complaint and review process by the DCA regarding election matters.

    It is important to note that these regulations provide for the imposition of significant fines and penalties against an Association found to be in violation of these new rules.

    Our law firm will closely analyze these new Radburn regulations and will be available to assist our clients in what will likely be a complex and labor-intensive process of learning and applying them.

    If you have questions about this or any other issues with your community association, please contact one of our community association attorneys.

    Ronald L. Perl
    Partner-in-Charge
    (609) 734-6349
    rperl@hillwallack.com
    Kenneth R. Sauter
    (973) 946-7021
    ksauter@hillwallack.com

    George C. Greatrex, Jr.
    (856) 616-8080
    ggreatrex@hillwallack.com
    Caroline Record
    (973) 946-7020
    crecord@hillwallack.com
    Michael S. Karpoff
    (609) 734-6376
    mkarpoff@hillwallack.com
    Jonathan H. Katz
    (609) 734-6393
    jkatz@hillwallack.com
    Gregg A. Shivers
    (856) 616-8080
    gshivers@hillwallack.com
    Catherine M. Brennan
    (609) 734-6353
    cbrennan@hillwallack.com
    Loren Rosenberg Lightman
    (609) 734-6323
    llightman@hillwallack.com
    Jennifer L. Webb
    (856) 616-8080
    jwebb@hillwallack.com
    Terry A. Kessler
    (609) 734-6350
    tkessler@hillwallack.com
    Jessica N. Baker
    (609) 734-6377
    jbaker@hillwallack.com
    Susan L. Swatski
    (609) 734-6318
    sswatski@hillwallack.com
    Alexandra C. Hayes
    (609) 496-5725
    ahayes@hillwallack.com

    ©2020 Hill Wallack LLP. All rights reserved. Please contact Hill Wallack for permission to reprint. Notice: The purpose of this Client Alert is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, accuracy and completeness of which cannot be assured. This Client Alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.