By Ronald L. Perl, Esq., CCAL & Jonathan H. Katz, Esq.
On April 29, 2019, Governor Murphy signed into law a package of foreclosure bills, all of which were all passed by the New Jersey Legislature on March 25, 2019. Among these new laws are provisions lawmakers promise will help owners keep their homes, shorten the time a house sits vacant, and prevent abandoned properties from becoming eyesores.
The big news for community associations, however, is that the new law expands the scope of lien priority for community associations. This new provision will create for the first time a lien priority for homeowner associations, and will provide both condominium associations and homeowner associations a six (6) month “rolling” lien priority. This means that instead of having a priority for six months of assessments once every five years, associations will have a six month priority once each year.
Prior to today, only condominiums in New Jersey were able to claim limited lien priority. As previously enacted, the lien priority statute entitled a condominium association to six (6) months of “aggregate customary assessments” following a mortgage lender’s Sheriff’s sale so long as the association has a lien recorded prior to the mortgage lender’s initiation of the foreclosure process. Put simply, even though this limited priority existed, it could only be exercised once every five years. So in most cases associations were forced to write off years of unpaid assessments, which increased the assessment burden for the paying owners and adversely affected associations’ budgets and the ability to make necessary repairs and/or capital replacements. Of course, homeowners associations were not even entitled to those six months of fees.
Community Associations Should Take Advantage of New, Increased Lien Priority Legislation
