Effective May 18, 2020, the Department of Community Affairs (“DCA”) published new regulations for community associations to follow to implement the legislative initiatives set forth in the Radburn Amendment to the Planned Real Estate Development Full Disclosure Act. The regulations are codified in the New Jersey Administrative Code and begin at N.J.A.C 5:26-1.1. The focus of the amendment was membership voting, election procedures and bylaw amendment. As such, the most significant new regulations focus on voting and election procedure and bylaw amendment.
GOOD STANDING: N.J.A.C. 5:26-8.8(c) explains that an association member shall be considered to be in good standing with respect to eligibility to vote in executive board elections, vote to amend bylaws and nominate or be a candidate for a position on the executive board when the association member is current or in compliance with a judgment or settlement agreement in the payment of common expenses, late fees, interest on unpaid assessments, legal fees or other charges lawfully assessed, or has requested or is participating in Alternative Dispute Resolution (ADR) in a court proceeding for a dispute over a matter that affects the owner’s good standing.
TENANT VOTING: N.J.A.C. 5:26-8.8(d) provides that the bylaws may allow tenants to vote in executive board elections and may allow tenant membership in the association but to do so, the bylaws must provide that the tenant can vote or be a member in the association only with the consent of the owner of the unit the tenant is leasing. The designation must be in writing. An owner who is not in good standing is not allowed to empower a tenant or any other person to vote in his or her stead.
BOARD ELECTIONS: Voting – N.J.A.C. 5:26-8.9 requires, among other provisions, that the association must verify the eligibility of the voters and count the ballots in a non-fraudulent and verifiable way. Any depository for physical ballots must be secured. All ballot tallying must occur publicly and the ballots must be open to inspection by any member of the association for a period of 90 days from the date of the election. All ballots must be cast in an anonymous manner. If electronic voting is permitted and the association member consents, a ballot may be cast electronically if it is administered by a neutral third party and anonymity is maintained.
Ballots and write-ins – Associations with 50 or more units must, among other requirements, comply with the following. Nominations of members in good standing shall be deemed valid until one business day prior to the mailing of the notice of election. A notice of election must be sent to all association members following the nomination period. The notice must be in writing and may be made by personal delivery, by mail, or electronically if the member has agreed in writing to accept notice by electronic means or when the governing documents permit electronic notices, provided another form of voting by absentee balloting or proxy is available. The notice must be sent not fewer than 14 days and not more than 60 days prior to the date of the election. The notice must contain a copy of the ballot. Candidates must be listed in alphabetical order by last name, may not indicate an incumbent, and must be in the same font size and color. The ballot must also include a space for write-in candidates for as many seats as are up for election. If a write-in candidate receives enough votes to be elected but is ineligible, the candidate will not be deemed elected. The eligible candidate receiving the next highest number of votes will be deemed to have been elected.
Notice Regarding Good Standing – Associations with 50 or more units must also notify residents who are not in good standing a minimum of 30 days prior to the election of their status including the reason the member is not in good standing. The notice must also state that the resident has the right to contest the board’s determination by requesting ADR. Residents shall be allowed to rectify their standing up until five business days prior to the election.
REPRESENTATION; AFFORDABLE UNITS: N.J.A.C. 5:26-8.10 provides that when affordable units represent a minority of units in the development, the bylaws must reserve a seat or seats on the executive board for election by owners of affordable units. Also, not more than one resident from a single unit may serve on the executive board simultaneously with another resident of the same unit.
REMOVALS: N.J.A.C. 5:26-11 provides that a board member may be removed only in accordance with the bylaws or by the board for good cause directly impacting the member’s ability to serve. The board may not remove an elected member for disagreeing with the majority or for violating any confidentiality agreement without affording the elected member ADR in which the ADR provider concludes from substantial credible evidence that there was a breach that adversely affected the interests of the association members as opposed to that of the executive board.
APPOINTMENTS: In associations with 50 or more units, N.J.A.C. 5:26-8.11 provides that an extension of an existing term by the board shall be deemed equivalent to an appointment and shall be prohibited. The board may not appoint and a designee may not accept an executive board position by appointment except if it is to fill a vacancy created by resignation, death, or failure to maintain reasonable qualification, including maintaining good standing or following a vote in favor of removal open to all association embers in accordance with the terms of the bylaws. Any executive board position filled by an appointee in such instances must be subject to election within a year following such appointment.
OPEN MEETINGS; N.J.A.C. 5:26-8.12: Bylaws of the association must include a requirement that meetings of the executive board where a binding vote of the executive board is to be taken must be open to attendance by all association members and voting-eligible tenants.
Must Include Explanation – The board must provide a brief explanation of the basis for and cost entailed in the matter that is the subject of any binding vote and include the explanation in the minutes for the meeting.
Must Post Schedule – The association musts post and maintain throughout the year, an open meeting schedule of the board. It must be posted at the place or places that notices are typically posted and be filed with the board member designated for administering association business. It must contain the time, date and location of such meetings. Any changes to the schedule shall be made at least seven days prior to the scheduled date and posted and maintained in the same manner as the original schedule.
Must Also Provide Notice – In addition to the posted open meeting schedule, adequate notice of at least seven days prior to any such meeting must be given to all members including posting in at least one place on the property accessible to all owners at all times, posted on the association’s website and included in any association newsletter, provided to each member by mail, hand-delivery, or electronic means. The notice must be filed with the board member designated as responsible for administering association business and be maintained by the board for a period of two years.
Must Include Agenda Items Known – Specifically, the notice of open board meetings must include the time, date, and location of the meeting. The agenda items to the extent known, including items for discussion, items for action and reoccurring items, such as passage of a budget. A member may provide written notice to the board waiving any personal delivery of meeting notices and may also rescind any such waiver at any time by written notification.
Closed Meeting – The board may exclude attendance of all members at meetings or portions of meetings where discussion of any of the following matters occur: 1) where disclosure would constitute an unwarranted invasion of individual privacy; 2) pending or anticipated litigation or contract negotiations; 3) those involving employment, promotion, discipline, or dismissal of a specific employee or officer of the association; and/or 4) those falling within the attorney-client privilege, to the extent confidentiality is required for the attorney to exercise his or her ethical duties as a lawyer. However, a vote taken at a closed meeting shall not be binding. If the matter requires a binding vote, it must be taken at a subsequent open meeting in a manner that does not disclose any confidences. If the closed meeting is to be part of an open meeting, it must be convened either before or after the open portion or at the end of the open meeting portion of the agenda.
Minutes – Minutes for the open sessions of meetings must be taken for each meeting. Minutes should include, among other things, clear identification of any matters addressed, voted on and a record of the votes and a brief explanation of the basis for and cost entailed in the matter subject to the vote. The minutes must be made available to association members in a timely manner before the next meeting and may be identified as “draft” or “unapproved.” If a meeting is recorded electronically, a written record shall be taken of the matters addressed and the matters voted on. Association members shall have access to the electronic recording, as well as the written record, including the right to make a copy of the electronic or written records.
Emergency Meetings – When an emergency board meeting is required it must be to deal with matters of such urgency and importance that delay for the purpose of providing seven days advance notice would be likely to result in substantial harm to the interests of the association and provided that the meeting is limited to discussion of, and acting with respect to, such matters of urgency and importance, notice of the emergency meeting shall be deemed to be adequate if it is provided as soon as possible following the calling of the meeting by posting in accordance with the requirements of this regulation. The board must maintain on the record, the facts establishing the emergency and any prior knowledge of the condition. Minutes must be taken and made available to the members.
Canceled Meetings – If a scheduled open meeting is canceled, notice must be posted of the cancellation at the meeting site by the time the meeting is scheduled to begin. The notice must be promptly posted at the location on the property where notices are posted and, if applicable, its website. The notice must state when the meeting will be held and the reason for the cancellation. If the start time is delayed, notice of the new time must be posted at the meeting site.
COMPLAINTS AND PENALTIES: N.J.A.C. 5:26-8.14 provides that any unit owner may file a complaint with the DCA concerning any matter subject to the rules at N.J.A.C. 5:26-8.8 through 8.13. The complaint must be submitted at least ten business days prior to any scheduled upcoming election in order for the Department to issue any relief as to that election. The Department will make a determination as to whether relief may be enacted for the immediate upcoming election or will apply to prospective elections. The Department can levy fines and issue penalties as set forth in N.J.A.C. 5:25-11.
The above is a summary of the most relevant sections of the new regulations and changes. Some of the regulations pose a real interpretation challenge, especially until the DCA and the courts provide rulings on issues presented for guidance.
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.