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).
Prior to this legislation, only condominiums were entitled to lien priority, which was for a total of six months of “customary assessments” so long as the association recorded a lien and provided notice to the mortgage lender prior to initiation of the lender’s foreclosure. So in most cases, associations were forced to write off years of unpaid assessments once a Sheriff’s sale finally occurred. Of course, under the old law, homeowners associations were not entitled to any priority payment at all.
The new law helps to level the playing field. As noted above, homeowners associations are now also eligible to claim lien priority. Most importantly, however, is the fact that this legislation increases the possible lien priority for all community associations to 6 months for every year that the association has a recorded lien (up to a total of 5 years). This leads us to the reason for this letter; namely, to recommend that associations record amended liens on a yearly basis to secure each year’s additional 6 months of assessments. If you have any questions regarding this legislation or how to take advantage of this additional lien priority, we are here to assist you.
For more information on this 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, on Facebook at: njcondolaw, and on LinkedIn at: Hill Wallack Community Association Attorneys.