2013 Legislative Update What's Happening in Trenton

2013 Legislative Update

 The 2013 legislative session in Trenton is underway. As always, each session in  the Senate and the Assembly includes bills that relate to housing, including  some that impact the state’s condo developments and HOAs as well as a relatively small number of co-ops in  several New Jersey municipalities.  

 Of course, housing-related organizations—including those specifically dealing with condos and HOAs—are looking at these bills and deciding which ones are important enough to take  a stand on. What are some of these groups’ take on the current session?  

 Hot Issues

 In New Jersey, the most important organization representing the condo and HOA  community is Community Associations Institute of New Jersey (CAI-NJ). For  attorney Thomas Martin, chair of CAI-NJ’s Legislative Action Committee, the rising number or “orphaned” condo and HOA units—in which the bank has taken over the unit, but then doesn’t take control of it or does very slowly because the unit would be difficult to  sell in today’s real estate market—is of prime importance. It can be difficult, he says, particularly in an HOA, to  have an “abandoned eyesore” as your neighbor.  

 “We’re doing work on a bill to make sure that a mortgage holder has to maintain the  property of an abandoned unit,” says Martin.  

 Ronald Perl, a partner with Princeton-based Hill Wallack, LLP, has not only been  active in CAI-NJ but has been president of the national Community Associations  Institute. “CAI’s major initiative at this point,” he says, “is a manager licensing bill. The CAI bill recognizes that community management  differs from the management of commercial or rental properties, and is vastly  different from the practice of real estate sales or rentals.”  

 Perl also commented on A3373, and its companion bill in the Senate, S2312, which  makes a homeowners’ association in which the developer’s control of the executive board has not been surrendered a public body under  the Open Public Meetings Act. “I believe that while the underlying problem (with developer-controlled  associations) is a valid one, there is no need to subject private association  meetings to the open meetings law,” he says. “The meeting issue is part of a broader issue concerning extending development  periods and developing control during the long period of development.”  

 For the New Jersey Apartment Association (NJAA), which mainly represents the  interest of rental-apartment owners and managers but also represents some condo  managers, there are two priorities. One, according to Conor Fennessy, the  organization’s vice president of government affairs, is A3317/S2114, a bill dealing with all  multiple dwellings (including condos and co-ops), which “eliminates duplication and redundancy in the registration of apartments.”  

 Fennessy explains that since 1967, the state requires that buildings register  with the state, for a fee of about $10 per building. Now, he says, many  municipalities are beginning to have their own registration process, charging  $50 to $100 per unit—a cost that would drive up the costs for building owners and managers. “We raised this issue with the governor’s Red Tape Review Commission,” Fennessy said, “and the commission recommended that local registrations be eliminated.”  

 The second priority for NJAA is S1914, which “requires certain user fees for the provision of traditional municipal services  to be included within the 2% municipal and county property tax levy cap.” Fennessy explains that municipalities, searching for new sources of revenue,  are now beginning to charge fees for items that used to be covered under that  community’s property taxes. “You are now paying fees for the same services you used to get for free,” he says.  

 Yet another relevant organization for the housing community is the Institute of  Real Estate Management (IREM), which represents both commercial and residential  real estate managers.  

 More on Foreclosures

 Like CAI-NJ’s Martin, Scott Dalley, a property manager and senior vice president with Access  Property Management, who chairs the IREM-New Jersey Chapter 1 Legislative  Committee, also feels that the existence of units in HOAs or condos that have  been abandoned or where owners are no longer paying their mortgages causes a  terrible burden on those owners, who are paying their maintenance fees.  

 “The foreclosure process is often taking more than two years, and mortgage  holders are often slow to take over and get the foreclosed-upon property  marketable for a new owner.” It becomes a vicious cycle, he says, with more owners ending up underwater—owing more money on their mortgages than their home is worth.  

 Most of the activity in regard to foreclosure and the mortgage crisis, says  Perl, is on the federal level. “The most recent focus has been on the Consumer Financial Protection Bureau, the  purpose of which, according to its website, “is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using  any number of other consumer financial products.”  

 On the state level, he adds, there is a proposed bill—A3497, that would require certain documentation of the lender’s right to foreclosure and an expedited process for abandoned properties so they  can be put back on the market. This bill, however, does not really address the  issue of lenders, who do not complete foreclosures, says Perl.  

 Fannie, Freddie...and Sandy

 Turning from state issues for the time being, another matter of concern to the  condo/HOA community involves new Fannie Mae/Freddie Mac lending regulations.  Among these regulations are provisions stating that developments must have 10  percent or more of their funds set aside in a reserve fund, that no more than  15 percent of the units can be more than a month behind in maintenance or  common charges, that the budget must include provision for insurance  deductibles, and more.  

 These rules are making it harder to buy homes and/or get mortgages and loans,  and Dalley, for one, feels they will be toned down somewhat in the near future.  Martin adds that “the national CAI, is trying to have a realistic approach that can cut through  the morass of papers that have to be field every time a loan is filed by FHA.”  

 Finally, the focus of this year’s legislation, for obvious reasons, is Hurricane Sandy. Although the hurricane  affected 24 states, New York and New Jersey were hardest hit by the storm. More  than 72,000 homes were destroyed in New Jersey. Although the oceanfront beach  towns saw the most damage, Hoboken, was also the victim of devastating floods  from the Hudson River.  

 After the superstorm, hundreds of related bills were introduced, some of which  would affect housing. In areas that were dramatically affected by the storm,  there will probably be many new building codes designed to protect residents.  

 Other Sandy-inspired bills, says Perl, include A3706, which aims to prevent  enforcement of anti-pet restrictions if a resident is displaced as the result  of a disaster; A3479, which would require retirement communities to install an  electric generator in the clubhouse in case of emergency; and A3436, which  would establish a New Jersey Catastrophe Fund to help pay covered residential  damage claims in the event of a catastrophe—to serve as a backstop for the insurance companies in difficult circumstances.  

 Observing that many associations already have a stockpile of food and water as  well as a generator in their clubhouse, Martin, of the law firm of Nowell  Amoroso Klein Bierman PA in Hackensack, comments, “Trenton is moving toward relations that most associations already have in place.” Still, there are many problems that need actions, and one of these is  insurance. “If your basement is a certain number of feet below sea level,” he says, “it may not be insured.” One must also remember that climate-related bills were introduced even before  Sandy, in the wake of Hurricane Irene. Irene, in 2011, also caused extensive  damage in New Jersey, with trees downed, railroads and highways flooded, and  shorefront towns evacuated.  

 Making Their Influence Felt

 Now that we’ve been “introduced” to CAI-NJ, IREM and NJAA, how do these organizations and other housing-related  groups represent their memberships before the lawmakers?  

 On one level, they serve as a resource for busy legislators, providing  information and expertise about the housing field and, at times, guiding them  through the process. They also will communicate to the legislators whether a  particular bill is beneficial and should be passed, or whether it needs change  and could hurt the community.  

 Although most legislators are sincere in trying to help their constituents, says  Perl, sometimes there are bills that show a lack of understanding of what  condos or HOAs are about, and that’s where groups like CAI-NJ and others come in.  

 Groups also send representatives to testify at hearings and committee meetings  on pending legislation, and generally seek to make sure bills they’re interested in progress. If legislators don’t get behind a bill, it very well may die in committee and never get onto the  floor.  

 What does it take to be an advocate? “Getting in front of the decision makers takes money,” says Dalley, “and you also need to have an understanding of how the system works. A good  lobbying firm is instrumental in helping organizations negotiate the terrain in  Trenton.” As a national organization, he says, IREM takes lobbying seriously—every year, IREM members from all over the country converge on Washington, D.C.,  for the organization’s Leadership and Legislative Summit.  

 How has the ongoing recession affecting the housing measures being debated and  voted on? To answer this question, Dalley returns to the subject of  foreclosures. “Bills expediting the foreclosure process are now being considered. For too long,” said Dalley, “the foreclosure process has been overwhelmed with the sheer number of  foreclosures, and that has contributed to the problems that common interest  communities in particular have had to endure.”  

 More and More Bills

 Christopher Mangold, the supervisor of the legislative information and bill room  of the state Office of Legislative Services provided The New Jersey Cooperator  with a list of the housing-related bills that were on tap in late  February/early March, as this article was being written. There were 22 pages of  bills, and about two pages under a general heading of “Housing Condo, Co-ops, Mobile Homes.” (Why mobile homes are linked in with condos is anybody’s guess.)  

 Among these were bills extending veterans’ property tax exemptions to co-op shareholders; prohibiting enforcement of  anti-pet bylaws for 12 months for FEMA-designated displaced persons; creating a  dispute resolution program for associations; providing fair standards for HOA  elections; expediting conversions of co-ops into condos; and an “Owners’ Rights and Obligations in Shared Ownership Communities Act.”  

 Candice Alfonso, senior counsel and aide to the Assembly Housing and Local  Government Committee, told us, “As of February 27, 2013, there are over 88 housing-related pieces of legislation  currently pending in the Assembly Housing and Local Government committee. In  the Senate Community and Urban Affairs Committee, there are over 67  housing-related pieces of legislation pending.”  

 However, she says, “From January 2012 to February 2013, eight housing-related pieces of legislation  have been released from the Assembly committee, and 11 have been released from  the Senate committee.”  

 In other words, most of the bills that have been introduced will never get onto  the floor. Which bills will advance to the governor’s desk? Will legislation that has been endorsed by CAI-NJ, IREM, NJAA and other  organizations succeed in helping unit owners, managers and others in the  overall housing community? The New Jersey Cooperator will help keep your own  building or HOA abreast of the goings-on in Trenton, and you can also visit the  legislature’s official sites, check with your representatives, and speak to representatives  of condo- and HOA-related organizations. Knowing how the process works is a key  component of participation in it.      

 Raanan Geberer is a freelance writer and a frequent contributor to The New  Jersey Cooperator.  

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  • I have a co-op that is in the estate of my father. The co-op is cash only, and 55 and older community. It has been for sale for two years now. I am the executrix and I moved to PA. My question is should I take a loss on this property? The price has been lowered four times already..I am at a complete loss and I need some input.