New Regulations for Common Interest Communities Concerning Elections and Board Meetings

New Regulations for Common Interest Communities Concerning Elections and Board Meetings

The New Jersey Department of Community Affairs, Division of Codes and Standards (DCA) published new regulations under the Planned Real Estate Development Full Disclosure Act (PREDFDA) on May 18, 2020. These new regulations are intended to serve as an update to the Radburn Election Law (P.L. 2017, Ch. 106) and will have a significant effect on communities throughout the State. Although there has been a discussion of a possible judicial challenge to the regulations, unless they are stayed by court order or otherwise overturned, they represent the law applying to association elections and boards and association managers must comply with them, otherwise risking a challenge to the results of the election.

Below are some highlights from the new regulations:

• All ballots cast in an election must be anonymous.
• Tallying of ballots will be done publicly, presumably at the annual meeting, unless the counting is delayed to a date after the annual meeting, in which case the tallying must still be accomplished in a manner that is open to viewing by the members.
• Ballots must include space for as many write-in candidates as there are openings on the board.
• All members of an association will have the right to inspect the ballots from an election within 90 days from the date of the election.
• All election meeting notices must include a sample of the election ballot.
• The fact that a candidate for election is an incumbent board member may not be stated on the ballot.
• Board member terms are limited to four years following election, but shorter terms set forth in the bylaws will continue to prevail. This does not impose any limit on the number of terms that may be served.
• Associations with less than 50 units must notify members/residents who are not in good standing” a minimum of fourteen (14) days prior to the election of their status.
  • The notice must state the reason the member/resident is not in “good standing” and that the member/resident has the right to contest their standing by requesting Alternative Dispute Resolution (ADR).
• Associations with 50 or more units must notify members/residents who are not in “good standing” a minimum of thirty (30) days prior to an election of their status.
  • The notice must state the reason the member/resident is not in “good standing” and that the member/resident has the right to contest their standing by requesting Alternative Dispute Resolution (ADR).
  • Members/residents must be given five (5) days prior to the election to cure their standing.
• When a common interest community contains a minority of affordable units, as defined by the New Jersey Fair Housing Act, N.J.S.A. 52:27D-304, the bylaws shall reserve a seat or seats on the executive board for election by owners of affordable units. This seat will be voted on by owners of the affordable units. The regulations do not address those situations where the affordable housing restrictions sunset, in some instances 30 years after they were first imposed.

At the time of the publication of these new regulations some associations had commenced the annual meeting election process. For those election procedures undertaken prior to May 18, 2020, the effective date of the new regulations, so long as the procedures were consistent with the terms of the Radburn Election Law no further action to render them consistent with the regulations is required. But any portion of the election process that occurred following the May 18 effective date, must be consistent with the regulations.

Additional Regulations

In addition to the new election regulations, DCA decided to amend long-standing processes related to board meetings. Those regulations include the following:

• In order to approve agenda items, a brief explanation of the item being considered and the costs involved must be provided for all items subject to a vote. This explanation must be included in the minutes of the meeting.
• Meeting notices shall be prominently posted in at least one location on the community’s property which is accessible to all members/residents, posted on the community’s website, in the community’s newsletter if applicable, or personally delivered to each member/resident by mail, personal delivery, or electronically. Adequate notice of board meetings shall be given seven (7) days prior to the meeting, provided it is not an emergency meeting. Said notices must be preserved by the board for at least two (2) years.
• Votes that take place at a closed (executive) meeting will not be binding. All matters that require a binding vote must be taken up at an open meeting even if the matter is included under one of the existing four statutory exceptions to the taking of binding votes in open meetings, which include contract negotiations and litigation; personnel matters; matters of attorney-client privilege and matters of personal privacy.
  • For confidential matters, the board should use language that does not disclose any confidential information during the open meeting, such as matters concerning the approval of actions in collection cases, litigation strategies and the like.
• All electronic meeting recordings must include with it a written record of what matters were deliberated, what matters were voted on and the record of each vote. Members of the community must be afforded access to the association’s electronic recording and the written record.
• Minutes of each board meeting must be made available to association members in a “timely manner” before the next meeting and may be identified as “draft” or “unapproved.”

The new regulations set forth a process for the filing of complaints for non-compliance with the regulations and under the new regulations the DCA has the authority to levy fines against any party that does not adhere to these new rules, presumably including board members and managers. The fines may be up to $50,000 per violation, making it all the more important that associations are aware of the precise nature of what must be implemented. Common interest communities across New Jersey should reach out to their legal representatives to appreciate the full impact these new regulations will have on them and to receive guidance on adopting policies ensuring compliance.