07/18/2017

Client Alert

Written by: Jonathan H. Katz

On July 13, 2017, New Jersey Governor Chris Christie signed into law P.L. 2017, Ch. 106 (S-2492/A-4091). The new law makes significant changes to the Planned Real Estate Development Full Disclosure Act (“PREDFDA”), N.J.S.A. 45:22A-43 et seq., with respect to procedures for board elections and voting participation rights. Although the legislation comes in direct response to complaints over a specific association – the Radburn Association in Fair Lawn – it will affect most, if not all, of the estimated 7,000 community associations located in New Jersey.

As outlined in a January 2017 article , the historic Radburn was established in 1929 as a “Town for the Motor Age.” The Radburn boasts 18 acres of internal parks, a shopping plaza, an elementary school, and “other remnants of the founders’ ambitious attempt to create a self-sufficient community.” However, for the past decade, pressure has been increasing from residents seeking to change what they considered to be an outdated and secretive process that the Raburn utilizes to elect its Board of Trustees. Specifically, not every owner in the Radburn was granted the right to either run for or vote for its Board. These issues led to litigation and caused so much uproar that State Senator Robert Gordon (D-Fair Lawn) introduced this legislation to make the election/voting process more inclusive and transparent.

Now that this legislation has been signed into law, it will change not only the Radburn’s elections, but will also have implications for most of New Jersey’s condominiums and homeowners associations. In fact, most of these newly enacted provisions will trump the every association’s current by-laws. The most relevant provisions of the new legislation are as follows:

1.The new law mandates that all owners shall be members of the association and, if in good standing, shall “have the right to nominate, run for, freely elect, and be elected to” the board that governs the association (meaning that members must be in good standing to either run for or be elected to the board);

2. The new law requires that elections shall be held in (at least) at two year intervals if the governing documents do not otherwise set a specific time period for elections;

3.      The new law requires that a term of a board member shall not be for more than four (4) years, although nothing shall prevent a board member from running for re-election (if allowable pursuant to the governing documents) or continuing to serve until his or her successor is elected;

4.      The new law mandates that the association shall provide written notice to all association members of the right to nominate themselves or other association members in good standing for candidacy to serve on the board, and the period for submitting nominations shall not be less than fourteen (14) days from the mailing of the request for nominations;

5.      The new law requires that the association shall provide all association members written notice of an election by personal delivery, mail, or electronic means no less than fourteen (14) days nor more than sixty (60) days prior to the scheduled election (the notice may only be sent electronically if the governing documents permit electronic notices or the member agreed in writing to accept notice by electronic means). So, even if an association’s current by-laws provide for less than fourteen (14) days notice of an election meeting, this new law takes precedence and at least fourteen (14) days notice must be given prior to any such meeting;

6.      The new law allows the use of proxies and absentee ballots (it cannot use proxies without making absentee ballots available), and it also requires that all proxies may be revoked at any time before the proxy holder casts a vote;

7.      The notice of the election discussed above shall include a proxy ballot/absentee ballot (unless prohibited by the governing documents), and all ballots are required to list the names of all candidates nominated in alphabetical order by last name;

8.      The new law allows for associations to utilize electronic voting when the board determines to allow voting by such means and when the association member consents to casting a vote electronically;

9.      If an association’s by-laws do not provide for amendment by vote of the members or only allow members to amend through a majority vote exceeding a two-thirds majority, the new law requires that amendments to the by-laws may be adopted by “an affirmative vote of a majority of the total authorized votes in an association.” Also, a board can no longer unilaterally amend an association’s by-laws (even if permitted by the governing documents) without a vote of the association members or to the extent necessary to render the by-laws consistent with the law; and

10. The provisions discussed above as well as others in this new law takes effect immediately, and, as noted above, most of these newly enacted provisions will trump every association’s current by-laws.

You can read the full text of this legislation here.

For more information on this legislation or any other issue concerning your community association, please contact one of our Community Associations attorneys. For breaking news or updates on new blog posts, follow us on Twitter at: @njcondolaw.