04/09/2020

Client Alert

Written by: Ronald L. Perl

A bill has been introduced in the New Jersey Legislature that would impose a moratorium on the collection of delinquent assessments in condominium and homeowner associations as well as cooperatives. The bill is known as the “COVID-19 Financial Security for Consumers Act”, S-2330 and can be found here. As you will see, this legislation, while having good intentions, will create more financial distress than it relieves and puts associations in the position that they might not be able to pay their bills.  It is imperative that volunteer leaders, managing agents and all members of common interest communities contact their legislators to tell them that this legislation is ill-advised. To find your legislator, you can perform a search on the NJ Legislature’s website: https://www.njleg.state.nj.us/members/legsearch.asp

Ideas for email or call to your legislator:

I am a [volunteer leader] of my [condominium]. I am opposed to a moratorium on debt collection activity because it would be devastating for common interest community associations and those who reside in them. I am writing on my behalf and that of my co-owners, who would be negatively impacted by this legislation.

First of all—condominiums, cooperatives and homeowners’ associations are not businesses. They are groups of homeowners who each contribute their share to maintain a property that they jointly own. Assessments are the way they contribute their portion of the cost of cutting the lawns, fixing roof leaks, paying for utilities and the like. Our association is not a business operation that makes a profit. It only collects enough to maintain our properties. So by suspending our ability to collect everyone’s share, the burden falls to the other members, who then have an increased burden and in turn may find themselves in financial trouble. Then no one can get their lawns cut, roofs fixed, or electric bills paid. How does this do anything except create greater hardship for our community? There is no other source of funding for these communities. 

Secondly—community associations are in fact communities. My community has already taken steps to make arrangements with co-owners who are suffering financially because of the pandemic. We are waiving late fees and making payment plans. But making it illegal to purse payments from everyone will just make the pain worse, because there just won’t be enough money to literally keep the lights on or cut the grass. This won’t relieve our suffering, it will just make it worse.

Third—this would have hurt the workers who cut the grass, remove the garbage, clean the hallways and otherwise maintain the property. When associations can’t pay their bills, there is a further impact on the economy.

This proposed legislation does nothing more than allow any co-owners to stop paying his or her share of expenses, whether or not they have good reason to do so, because the legislature is taking away the incentive to pay assessments. Unitl our towns stop collecting taxes, we should not be stopped from collecting our assessments.

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