On January 10, 2022, Governor Murphy signed into law NJ-A4903/S396. This bill amends N.J.S. 2A:14-1 and adjusts the statute of limitations on damage claims for construction defects in common interest communities. Specifically, in a claim for damages resulting from a construction defect in a condominium, cooperative, or other planned real estate development, the new legislation requires the statute of limitations to begin running at the time of the transition from developer control, instead of substantial completion of the project. The statute of limitations for filing a claim for damages resulting from a construction defect currently runs for six years from the date of a project’s substantial completion, so long as the defect does not result in an unsafe condition. A developer retains the ability to control the majority of a common interest community’s executive board until the transition, which occurs sixty days after the conveyance of 75 percent of the units in the community. This transition from developer control can occur years after the project’s substantial completion, leaving little or no time within the six-year window for the owner-controlled board to decide to file a claim against a developer, even when legitimate defects exist. This bill intends to allow the owner-controlled board more time to file a construction defect claim by requiring the statute of limitations to begin running upon transition of developer control.
(A4903/S396) adjusts the Statute of Limitations on damage claims for construction defects in common interest communities in New Jersey. This is extremely important for newer common interest communities that are either in the process of transitioning control of their association from the developer/declarant to the homeowners or have recently completed that transition. The Statute of Limitations in this context is a law that requires a common interest community to file a damages lawsuit against a developer, builder or subcontractor for any design or construction defects within a certain time period from the date the damages were discovered or should have been discovered, or lose the legal right to do so. For many years until the NJ Supreme Court’s 2017 opinion in a case entitled Palisades at Fort Lee Condominium Association v. 100 Old Palisade LLC, the applicable time period (the “limitations period”) did not begin to run until the time the damages were discovered or should have been discovered or the date on which the homeowners took control of the association’s executive board by way of election, whichever occurred later. The Court’s opinion drastically changed that starting date, ruling that the limitations period began to run as soon as the damages were discovered or should have been discovered by the Association, regardless of whether or not the developer was still in control of the executive board. This ruling put associations at an extreme disadvantage in discovering and timely filing suit against the developer, the builder, and/or the contractors if the developer still controlled the executive board. This new law reverses that portion of the Court’s decision by restoring the previous law providing that the applicable limitations period does not begin to run until the date the damages were discovered or should have been discovered or the date on which the homeowners took control of the association’s executive board by way of election, whichever occurred later.
This information should not be considered legal advice and is not intended as a substitute for consultation with an attorney. This website is an advertisement by the law firm of Radom & Wetter. No aspect of this advertisement has been approved by the Supreme Court of New Jersey. Radom & Wetter is a law firm in the state of New Jersey and serves the following communities; Atlantic County, Bergen County, Burlington County, Camden County, Cape May County, Cumberland County, Essex County, Gloucester County, Hudson County, Hunterdon County, Mercer County, Middlesex County, Monmouth County, Morris County, Ocean County, Passaic County, Salem County, Somerset County, Sussex County, Union County and Warren County.