New Jersey-2010-S1482-Introduced

An Act concerning planned real estate developments and amending and supplementing P.L.1977, c.419.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 15 of P.L.1977, c.419 (C.45:22A-35) is amended to read as follows:

15. a. The agency shall adopt, amend, or repeal such rules and regulations as are reasonably necessary for the enforcement of the provisions of this act in accordance with the provisions of the Administrative Procedure Act, P.L. 1968 c. 410 (C.52:14B-1 et seq.). The rules may provide for, but are not limited to: provisions for advertising standards to insure full and fair disclosure; disclosure provisions relating to conversions; provisions relating to nonbinding reservation agreements; provisions for adequate bonding or access to some escrow or trust fund not otherwise required by the municipal governing body to be located within this State, so as to insure compliance with the provisions of this act, and to compensate purchasers for failure of the registrant to perform in accordance with the terms of any contract or public statement, including, without limitation, failure of the registrant to satisfactorily complete all promised common elements, such as streets, drainage, and recreational facilities; provisions that require a registrant to deposit purchaser down payments, security deposits or other funds in an escrow account, or with an attorney licensed to practice law in this State, until such time as the agency by its rules and regulations deems it appropriate to permit such funds to be released; provisions to insure that all contracts between developer and purchaser are fair and reasonable; provisions that the developer must give a fair and reasonable warranty on construction of any improvements; provisions that the budget for the operation and maintenance of the common or shared elements or interests shall provide for adequate reserves for depreciation and replacement of the improvements; provisions for operating procedures; provisions establishing a transition procedure to ensure that associations that are no longer under the control of the developer have the benefit of an engineering survey of all common elements provided by the developer, have all necessary corrections made by the developer, and have a full financial accounting of association activities during the period of developer control provided by the developer; provisions authorizing board members elected by the unit owners
prior to transition to represent the interests of the unit owners when such interests are adverse to those of the developer and to delegate such authority to committees of unit owners; and such other rules and regulations as are necessary and proper to effectuate the purposes of this act, and taking into account and providing for, the broad range of development plans and devises, management mechanisms, and methods of ownership, permitted under the provisions of this act.

b. If it appears that a person has engaged, or is about to engage, in an act or practice constituting a violation of a provision of this act, or rule or order hereunder, the agency, with or without prior administrative proceedings, may bring an action in the Superior Court to enjoin the acts or practices and to enforce compliance with this act or any rule or order hereunder. Upon proper showing, injunctive relief or temporary restraining orders shall be granted, and a receiver may be appointed. The agency shall not be required to post a bond in any court proceeding.

c. The agency may intervene in a suit involving any planned real estate development. In any such suit, by or against the developer, the developer shall promptly furnish the agency with notice of the suit and copies of pleadings.

(cf: P.L.1977, c.419, s.15)

2. (New section) In the case of any defect in the common elements, or other property administered by the association, a claim under "The New Home Warranty and Builders' Registration Act," P.L.1977, c.467 (C.46:3B-1 et seq.), may be filed by an association at any time within one year following the date of termination of developer control of the association, in accordance with section 5 of P.L.1993, c.30 (C.45:22A-47), or, during the period prior to termination of developer control of the association may be filed in the name of the association, not later than 45 days after expiration of the applicable warranty period, by the members of the board who are elected by the unit owners, or a committee appointed by such members pursuant to rules adopted by the Department of Community Affairs. Additionally, an owner or group of owners of a unit or units in a planned real estate development may, not later than 45 days after the expiration of the applicable warranty period, file a claim in the name of the association with regard to any defect in the common elements or other property administered by the association that affects only the units belonging to such owner or owners.

3. This act shall take effective immediately.

STATEMENT

The bill would implement recommendations contained in the State Commission of Investigation's March, 2005 report entitled "The Good, the Bad and the Ugly: New Home Construction in New Jersey" concerning planned real estate developments, i.e., housing developments in which some parts of the property are under common ownership and control.

The bill would enhance the protections afforded under current law to purchasers of units in planned real estate developments by authorizing the Division of Codes and Standards in the Department of Community Affairs to adopt rules requiring developers to: provide bonds or other security to ensure proper completion of common elements, including streets, drainage facilities, and recreational facilities, provide new boards elected by the unit owners, after transition from developer control, with an engineering survey of the common elements and make all necessary corrections, provide full financial accounting for the association during the period of developer control, and authorize the minority of the board that is chosen by unit owners, during the period of developer control, to act on behalf of the unit owners, either directly or through a committee appointed by the unit owner-elected board members, in any matter in which the interest of the unit owners is adverse to that of the developer.

At present, there is no mechanism whereby unit owners can act to prevent an association that is still under developer control from taking actions that may be detrimental to the current or future interests of the unit owners.

The bill would also establish procedures allowing homeowner's associations and unit owners to file claims arising under "The New Home Warranty and Builders' Registration Act" for defects affecting the common elements.