New Jersey HOA fine rules

What this means for homeowners

• New Jersey has no statute governing fines by a homeowners association in a non-condominium planned real estate development. No section of the Planned Real Estate Development Full Disclosure Act (PREDFDA), from N.J.S.A. 45:22A-21 through 45:22A-48.5, requires notice before a fine, sets a cure period, guarantees a hearing, or caps the amount of a fine. Neither do the Department of Community Affairs rules at N.J.A.C. 5:26-8, whose sections cover formation of the association, association powers and responsibilities, administration and control, termination of agreements, assessments for common expenses, developer budgets, membership, executive board elections, representation, appointments and removals, open meetings, amendments to the bylaws, and complaints and penalties. Whether an association may fine at all, and what procedure it must follow, is set by the recorded master deed or declaration of covenants and restrictions and by the bylaws.
• New Jersey does have an act covering planned real estate developments, and this entry still records the state as having no HOA fine or enforcement statute, because PREDFDA regulates disclosure, association formation and governance rather than fines. The closest it comes is the duty that an association "shall provide a fair and efficient procedure for the resolution of disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation" (N.J.S.A. 45:22A-44(c)); no section of the Act sets a fine, notice, cure or hearing procedure.
• What PREDFDA does require is a dispute-resolution alternative, framed around disputes generally rather than around fines. "The association shall provide a fair and efficient procedure for the resolution of disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation" (N.J.S.A. 45:22A-44(c)); the rule at N.J.A.C. 5:26-8.2(c) restates the same duty in nearly identical words. Section 45:22A-44 carries the history line "L. 1993, c. 30, § 2" and has never been amended.
• The Act's association provisions reach older developments. "The application of P.L.1993, c.30 (C.45:22A-43 et seq.) to the association of an existing planned real estate development shall not be limited by: (1) whether the developer has been subject to, or exempted from, the registration requirements of section 6 of P.L.1977, c.419 (C.45:22A-26); or (2) the development's date of establishment" (N.J.S.A. 45:22A-43(a)). Separately, PREDFDA's formation and registration provisions do not apply to any portion of a development that already held its building permit, or final municipal approval of its site plan or subdivision plat, on the effective date of P.L.1977, c.419 (N.J.S.A. 45:22A-42).
• PREDFDA covers both housing types, but the fine rules do not. Its definition of "Planned real estate development" "shall specifically include, but shall not be limited to, property subject to the 'Condominium Act,' P.L.1969, c.257 (C.46:8B-1 et seq.), any form of homeowners' association, any housing cooperative or to any community trust or other trust device" (N.J.S.A. 45:22A-23). New Jersey condominiums then get a layer that single-family HOAs do not, in the Condominium Act at N.J.S.A. 46:8B-15(f): "If authorized by the master deed or bylaws, the association may impose reasonable fines upon unit owners for failure to comply with provisions of the master deed, bylaws or rules and regulations, subject to the following provisions:"; "A fine for a violation or a continuing violation of the master deed, bylaws or rules and regulations shall not exceed the maximum monetary penalty permitted to be imposed for a violation or a continuing violation under section 19 of the 'Hotel and Multiple Dwelling Law,' P.L.1967, c.76 (C.55:13A-19)."; "On roads or streets with respect to which Title 39 of the Revised Statutes is in effect under section 1 of P.L.1945, c.284 (C.39:5A-1), an association may not impose fines for moving automobile violations."; and "A fine shall not be imposed unless the unit owner is given written notice of the action taken and of the alleged basis for the action, and is advised of the right to participate in a dispute resolution procedure in accordance with subsection (k) of section 14 of P.L.1969, c.257 (C.46:8B-14). A unit owner who does not believe that the dispute resolution procedure has satisfactorily resolved the matter shall not be prevented from seeking a judicial remedy in a court of competent jurisdiction." Those four paragraphs are the whole of N.J.S.A. 46:8B-15(f), and none of it applies to a non-condominium homeowners association.
• The closest PREDFDA comes to the subject is to hand it to the bylaws. Section 45:22A-46 lists what the bylaws of an association must contain, and subsection d.(1) provides that "The bylaws may also provide a method for the adoption, amendment and enforcement of reasonable administrative rules and regulations relating to the operation, use, maintenance and enjoyment of the units and of the common elements, including limited common elements." That is a permission granted to the bylaws, not a statutory procedure: it fixes no notice, no cure period, no hearing and no cap. Section 45:22A-45, which sets out the executive board's powers, is equally silent — subsection b. simply provides that "Subject to the master deed, declaration of covenants and restrictions, bylaws or other instruments of creation, subsection d. of this section, and the laws of the State, the executive board may act in all instances on behalf of the association."
• Caution about secondary sources: a number of widely circulated HOA-law summaries state that PREDFDA itself requires a New Jersey homeowners association to give written notice and an opportunity to cure before imposing a fine. Every section of the Act from N.J.S.A. 45:22A-21 through 45:22A-48.5 was checked and no such requirement exists. Those summaries appear to be carrying the condominium rule in N.J.S.A. 46:8B-15(f) across to homeowners associations, where it does not apply.