NJ bill A469 a step toward regulatory agency oversight of HOAs?

NJ bill, A469 (former A1730), sponsored by NJ Speaker Pro Temp, Jerry Green, attempts to detail certain state protections for owner-members of HOAs.  Detailed protection is needed as a result of the vague and broad language of the statutes and governing documents that cause 1) unknowledgeable owners who complain to be “blown away” by HOA “officials,” including attorneys, and 2) unnecessary law suits just to clarify language that the HOA attorneys know misrepresent legal doctrine.

For example, “attorney-client privilege” is abused to apply to legitimate corporate records that are not attorney work products; and the misleading, contractual “after notice and opportunity to be heard” phrase regarding complaint hearings that short circuits the legitimate due process protections specifying confrontation of witnesses, providing evidence and the questioning of witnesses by an independent tribunal.

Among other things, the bill addresses due process by DCA (Department of Community Affairs) and fair election procedures, another vague and unspecified process in the governing documents.  It further takes the proactive step, as I’ve alluded to in my writings on HOAs as a government entity, with the pronouncement that, “Any governing documents of an association not in compliance with this section . . .  shall be deemed amended to be in compliance” (C.45:22A-43.c); and “Notwithstanding the provisions of any law to the contrary, a homeowners’ association shall be deemed to have amended its governing documents, including its bylaws” (45:22A-46.e.) (my emphasis).

In addition, additional regulatory powers are granted to DCA, “The Commissioner of Community Affairs shall promulgate any rules and regulations that may be necessary to effectuate the provisions of [this bill]” (C.45:22A-48.b).

Relevant excerpts from this bill can be read at Excerpts.

Some call it government interference in a democratic society.  Others, including yours truly, see it as legitimate police powers of the government to protect its citizens. As stated in this bill in its closing “Statement” (“legislative intent” statement), “This bill clarifies the intent of the Legislature that P.L.1993, c.30 (C.45:22A-43 et seq.) be viewed as an enabling act for homeowners’ associations of non-condominium types of planned real estate developments . . . .” (My emphasis).

In fact, the Planned Community Act states,

 “45:22A-22. Public policy

“The Legislature in recognition of the increased popularity of various forms of real estate development in which owners share common facilities . . .  deems it necessary in the interest of the public health, safety, and welfare . . . that dispositions in these developments be regulated by the State pursuant to the provisions of this act.

“45:22A-24. Administration of act. 4.

“This act shall be administered by the Division of Housing and Development in the State Department of Community Affairs, hereinafter referred to as the “agency.”

Does NJ law make HOAs an arm of the state, state actors, or an unconstitutional delegation of legislative powers to a private entity? 

In short NJ law has created a state regulatory agency and is now proposing to grant it further legitimate authority under its police powers in the “interest of the public health, safety, and welfare.”  An “enabling act,” as the statutes are clearly being designated, is required to grant powers and authority to state agencies.  State agencies are “arms of the state” subject to the 14th Amendment.

If deemed not, then do the NJ statutes provide sufficient control and oversight of private entities by the legislature?  I believe a resoundingly not!  A469 attempts to move in this direction, but more is needed.

I argued this issue in regard to HOAs in general in Supreme Court says corporations cannot be used to evade Constitution and Regulatory agency enforcement of HOA violations.

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