Community Associations Should Take Advantage of New, Increased Lien Priority Legislation

On April 29, 2019, Governor Murphy signed into law a package of foreclosure bills designed to help owners keep their homes, shorten the time a house sits vacant, and prevent abandoned properties from becoming eyesores. Of specific interest to community associations was the expansion of the statutory “lien priority.” The new law now provides that both condominium and homeowner associations are eligible to receive a six-month “rolling” lien priority. This means that instead of having a priority for only six months of assessments, an association may be eligible to claim a six-month priority for every year that it has a recorded lien (up to five years).

By Ronald L. Perl, Esq., CCAL

On March 25, 2019, the New Jersey Legislature passed a bill that will enhance the lien priority for condominium associations and, for the first time, give the same lien priority to homeowners associations.

If this legislation is signed by Governor Murphy, both condominium and homeowners associations will enjoy a limited priority over all other liens (except for municipal liens or liens for federal taxes). The legislation would amend the lien priority provisions already contained in the Condominium Act and add the lien priority provisions in the Planned Real Estate Development Full Disclosure Act (PREDFA).

CAI-NJ’s Legislative Action Committee has issued a call to action for all New Jersey community associations.

Assembly Bill No. 3823 is scheduled for a vote before the New Jersey General Assembly on Thursday, January 4, 2018. This proposed legislation seeks to amend the law, which currently allows for an expedited mortgage foreclosure process (although not mandatory) for vacant and abandoned (“zombie”) properties. Specifically, this legislation proposes to allow community associations to either: (1) compel payment of association fees by the mortgage lender when the lender fails to proceed with the foreclosure process on a vacant and abandoned property in an expedited fashion; or (2) compel the appointment of a fiscal agent (receiver) over the abandoned property.

In the June 2015 edition of The New Jersey Cooperator, Ronald L. Perl, Esq., the partner-in-charge of Hill Wallack LLP’s Community Associations Group, was quoted in the article “New Jersey 2015 Legislative Update.”

The article discusses pending legislation relating to or touching upon community associations in New Jersey, and Mr. Perl’s comments focus specifically on the continued issues experienced by community associations in New Jersey (and in other states) with respect to mortgage foreclosures.

By Jonathan H. Katz, Esq.

In a move that may provide some relief for New Jersey’s community associations dealing with vacant and abandoned units, on May 15, 2014, New Jersey Governor Chris Christie signed into law P.L. 2014, Ch. 5 (A-347/S-288), which requires mortgage lenders pursuing residential foreclosures to provide notice to the municipality of the action and to maintain certain abandoned or vacated properties, including those properties in condominiums and homeowners associations.

The law requires that, if a residential property becomes vacant at any time after the mortgage lender files a foreclosure complaint, including matters that are currently pending as of the law’s enactment, the lender must rectify any code violations upon notice from the municipality. The law also authorizes municipalities to impose penalties on mortgage lenders who fail to timely remedy code violations for these properties within a certain time frame. The new law takes effect on July 14, 2014.

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.