Dear Homeowner: You recently requested assistance regarding

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Dear Homeowner:

You recently requested assistance regarding your association. The Association

Regulation Unit in the Department of Community Affairs enforces provisions of the New Jersey

Condominium Act and the Planned Real Estate Development Full Disclosure Act pertaining to

the obligations of an association comprised of residential owners in the following three areas:

that associations adopt and properly administer alternate dispute resolution procedures (ADR);

comply with open meeting requirements; and provide owners access to financial records at

reasonable times. Included with this letter are information sheets outlining these provisions.

Please note that the Department of Community Affairs does not have the statutory

authority to take actions such as investigating alleged wrongdoings of board members or

employees, removing board members from office, ordering board members or employees to

comply with governing documents or to take or rescind specific actions. Similarly, we cannot

order revisions to financial practices or operating procedures, conduct audits or review

elections. Owners are empowered to correct such matters through ADR or litigation as well as

by petitioning the board or electing new board members.

If you wish to make a formal complaint that your association is not in compliance with its

obligations as described in this material, please complete the enclosed Common Interest

Community Association Complaint form and return it, along with the appropriate supporting

documentation, to the address on the complaint form.

We trust the information supplied will guide you accordingly.

Association Regulation Unit

Planned Real Estate Development

Enclosures

ALTERNATIVE DISPUTE RESOLUTION

Both the New Jersey Condominium Act, N.J.S.A. 46:8B-1 et seq., and the Planned Real

Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq., require associations to

provide a “fair and efficient” alternative to litigation for unit owners to resolve disputes between

one another or with the association. The Condominium Act requires condominium associations

to provide written notice of the availability of ADR as a condition of issuing a fine (N.J.S.A.

46:8B-15f.).

New Jersey courts have found that the requirements of the Planned Real Estate

Development Full Disclosure Act that apply to ADR are intended to apply retroactively to all

common interest communities regardless of when the community was created and the courts

have also found that in the absence of a specific enunciation of public policy, that the provisions

of the Condominium Act can be applied to common interest communities that are not

condominiums. See, for example, Committee for a Better Twin Rivers v. Twin Rivers

Homeowners’ Association 192 NJ 344, 929 A2D 1060; Mulligan v. Panther Valley 337 NJ Super

293, 766 A2d 1186; and Moore v. Radburn 2010 NJ Super upub Lexis 561. Therefore, the

Department recommends that all common interest communities adopt as part of their ADR

policy the provision of notice to a unit owner as a condition of issuing a fine.

The Association Regulation Unit of the New Jersey Department of Community Affairs

has authority to require common interest communities to adopt alternate dispute resolution

procedures. The agency does not provide ADR and does not address the substance of the

dispute.

Although broadly construed, ADR has been found by New Jersey courts to be

inapplicable to actions that challenge the board’s right to exercise certain powers or actions

which are intended to serve the good of the association as a whole. A simple test of whether

the dispute is ripe for ADR is whether an owner can assert that the association’s action imposes

a special harm on the individual as opposed to affecting all owners. If this occurs ADR is

applicable. Any allegations of fraud or other criminal conduct should be directed to the attention

of the county prosecutor or other appropriate law enforcement agency for guidance. Please

note that the State Attorney General does not act on individual complaints regarding allegations

of board misconduct.

The applicability of ADR to a specific complaint requires a determination of whether it

relates to a discretionary board action by the board or the management of the association or

constitutes a violation of the association’s governing documents such as the master deed,

bylaws or rules. Matters in which boards properly exercise discretion are subject to review

through the democratic process (petitions, elections, etc.) while violations of governing

documents or other legal requirements justify the use of the ADR procedure. Thus, if you

proceed to ADR, you should be prepared to refer to specific laws or portions of the governing

documents which you believe were violated.

There is no formal process required to request ADR but you should make it in writing, to

the board, unless the procedure of your association provides otherwise. You should do so even

if your association does not have a specific written ADR procedure or has one which does not

appear to satisfy the “fair and efficient” criteria. In your request, state your complaint clearly and

specifically request that you be provided ADR. If you do not have a copy of your association’s

ADR procedure, you should request that the board or its agent supply you with one.

Alternative Dispute Resolution

Page 2

The laws we enforce do not prescribe the amount of time you should wait to expect a

response from the board regarding your request to participate in an ADR. We recommend you

wait a reasonable amount of time (at least 14 days) for a response from the board. If you do not

receive a response you may contact this office in writing by completing a common interest

community association complaint form. Please note, we do not require that associations file

their ADR procedures with us and there is no requirement to receive Department approval

before instituting a procedure.

Each association is authorized to design the ADR procedure which it feels best satisfies

the needs of its owners. Procedures may range from mediation (informal recommendations)

rendered by designated neighbors to non-binding arbitration (formal decisions) in a court like

setting with numerous formalities overseen by a trained individual. ADR providers may be

appointed by a board but the association should have an independent means of selection.

Whoever is selected must be impartial.

ADR is intended as an alternative to litigation, thus it is not necessary to have legal

counsel. However, you may, if you choose, be represented. If you choose to be represented,

you are responsible for the cost of the representation. Otherwise, in condominiums, any costs

in providing ADR are common expenses pursuant to N.J.S.A. 46:8B-14. In other types of

associations, there may be mandatory charges on the requesting party to cover the costs of

ADR.

Although there is no standard ADR procedure, there is one fundamental rule; the board

cannot be the ADR provider. Thus, neither the board nor any member can sit as or with the

ADR panel. The board or its members or agent or representative can appear and present the

board’s position. The law provides that either party may appeal to court following an ADR

procedure. The board cannot appeal a decision to itself. The Department of Community Affairs

is not empowered to overturn or even modify the outcome of an ADR proceeding.

Please note that ADR is not automatically binding on boards. Thus, if a board fails to

cooperate with a recommendation or arbitration decision against it, you must enforce your right

in court. Additionally, ADR is not a means to secure an order to stop a board from taking action

or to force a board to act. These can only be secured through appropriate court proceedings.

Moreover, ADR is not the means to obtain monetary damages against the association.

The Planned Real Estate Development Full Disclosure Act and the New Jersey

Condominium Act are both available on line at www.njleg.state.nj.us (to obtain statute, scroll

down on left side of page to “Laws and Constitution”, click on statues, enter full name of statute

in search box). The N.J. Administrative Code can also be found on line at

www.michie.com/NJ.

OPEN MEETINGS

All meetings at which a board takes a binding vote are required by law to be open to all

owners and advance notice of such meetings must be given as provided by law. The laws

governing open meeting requirements in New Jersey’s common interest communities can be

found in the Planned Real Estate Development Full Disclosure Act (N.J.S.A. 45:22A-46a.) and

the New Jersey Condominium Act (N.J.S.A. 46:8B-13(a). The New Jersey Department of

Community Affairs has promulgated regulations to assist in the implementation of these

statutory requirements in Chapter 20 of Title 5 of the N.J. Administrative Code (N.J.A.C. 5:20-

1.1 et seq.).

Advance notice, as prescribed by N.J.A.C. 5:20-1.2(b) means written notice, at least 48

hours in advance, giving the time, date, location, and to the extent known, the agenda of the

meeting. The notice shall be posted prominently in at least one place on the property that is

accessible at all times to all unit owners and must be filed with the person responsible for

administering the business office of the association. In addition, it is to be mailed, telephoned,

or hand delivered to at least two newspapers that have been designated by the governing board

or by the association to receive such notices. Condominium association by-laws may prescribe

additional or alternative methods of providing notice, which provide an equal or greater prospect

that unit owners will receive it. Mailings directly to owners, for example, are permitted, as is

hand delivering a copy to each unit door.

There is no law that specifies how often meetings must be held except that the adoption

of an annual budget and the certification of any elections must be performed at meetings open

to the unit owners. However, the Planned Real Estate Development Full Disclosure Act

requires that meetings must be held whenever the board is going to take a binding action. The

association’s by-laws shall include the method of calling meetings of unit owners, the

percentage of unit owners or voting rights required to make decisions and to constitute a

quorum (N.J.S.A. 45:22A-46b.) It is important to note that an annual meeting of the association

is distinguishable from an open meeting. The purpose of an annual meeting is to discuss

association business as opposed to board related issues at an open meeting.

Minutes of open meetings must be taken and copies made available to unit owners prior

to the next open meeting. Associations are not obligated to mail minutes to owners. It is

satisfactory if the minutes are available at the next meeting. Refer to your association’s policy

on copying costs if requesting the adopted minutes of past meetings. However, the cost of

making the last meeting’s minutes available to all unit owners prior to the next open meeting is a

common expense to be proportionally borne by all unit owners

Open Meeting requirements regarding board meetings (as opposed to general

membership meetings) do not guarantee a right to participate, only to observe. Participation is

at the board’s discretion. Moreover, the board may legitimately exclude or restrict attendance at

meetings dealing with certain matters, such as litigation, personnel actions, or any matter the

disclosure of which would constitute an unwarranted invasion of individual privacy. However,

even though certain matters may be discussed in a closed session, any binding votes on the

matter must be taken at an open meeting.

Open Meetings

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Both the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et

seq., and the New Jersey Condominium Act, N.J.S.A. 46:8B-1 et seq., require that the

association’s by-laws include provisions for open meetings. The Association Regulation Unit of

the New Jersey Department of Community Affairs has the authority to ensure that associations

comply with the open meeting requirements of these laws including the adoption of the provision

as an amendment to the association’s by-laws. However, even if the open meeting

requirements have not been formally adopted by an association, the law requires associations

to comply with them.

If you are aggrieved by the fact that your association is not adhering to the open meeting

requirements of the law, please submit the enclosed “Common Interest Community Association

Complaint Form” along with the necessary supporting documentation, to the address listed on

the form.

The Planned Real Estate Development Full Disclosure Act and the New Jersey

Condominium Act are both available on line at www.njleg.state.nj.us. The N.J. Administrative

Code can also be found on line at www.michie.com/NJ.

ACCESS TO FINANCIAL RECORDS

The New Jersey Condominium Act, N.J.S.A. 46:8B-14(g), states that the association, acting

through its officers or governing board, shall be responsible for “the maintenance of accounting

records in accordance with generally accepted accounting principles, open to inspection by unit

owners at reasonable times”. These accounting records shall include (1) a record of all receipts

and expenditures; and (2) an account for each unit setting forth any shares of common

expenses or other charges due, the due dates thereof, the present balance due, and any

interest in common surplus.

In accordance with N.J.S.A. 46:8B-16(d) of the New Jersey Condominium Act, a unit owner may

notify the Department of Community Affairs, upon the failure of an association, to comply with

the requirements set forth in N.J.S.A. 46:8B-14 (the right of inspection of accounting records

maintained by the association). If the association fails to comply, the Department has the power

to order compliance.

The New Jersey Appellate Court has held that the above referenced provisions of the

Condominium Act apply to all Planned Real Estate Developments including cooperatives and

homeowners associations as enunciation of public policy in applying the general welfare clause

of the Planned Real Estate Full Disclosure Act (N.J.S.A. 45:22A-44b). Based on the Court’s

decision, planned real estate developments in New Jersey must provide homeowners residing

in a planned real estate development community with access to the association’s accounting

records in accordance with the New Jersey Condominium Act.

Please note that the Condominium Act does not specify that a homeowner has the right to make

copies of accounting records. If the governing documents of your association or cooperative

allow for copying, and the board does not adhere to the procedures set forth in these

documents, you should request alternate dispute resolution. In making a request to inspect

records, it is best to do so in accordance with the governing documents. The request should be

set forth in writing with the understanding that there may be certain restrictions as to the time

and location of where the records may be reviewed. If the governing documents are not specific

as to whom the records request should be made, address the request to your governing board.

If you have been denied access to accounting records by your association, please submit the

enclosed complaint form, along with the appropriate supporting documentation to the address

supplied on the form. In accordance with the Condominium Act, the Department has the

authority under N.J.S.A. 46:8B-16(d) to issue an order to compel the association to provide

access to these financial records.

The Planned Real Estate Development Full Disclosure Act and the New Jersey Condominium

Act are both available on line at www. njleg.state.nj.us.

Common Interest Community Association Complaint Form

Part One

This form has two parts, both parts must be submitted in

accordance with the instructions or the complaint will not

be processed.

Be sure to read the accompanying handouts regard-

ing the agency’s jurisdiction prior to completing

this form.

Complainant Information

My name is _______________________________________________________________________

I am filing a complaint on behalf of ____________________________________________________

(unit owner name as it appears on association records)

Who owns unit _________________________within the _______________________________________________

(unit designation) (name of development, condominium or cooperative)

My relationship to the complainant is ________________________

My mailing address is ________________________________________________________________

________________________________________________________________

(city) (state) (zip)

Contact me during the day at this telephone number ______ ______ ________or by email at __________________

Signed by ____________________________________________________on this date ______/________/_______

(signature of unit owner)

Association Information

The association is (check one) ___a condominium ___a cooperative___ a homeowners association

The name of the association is _______________________________________________ There are _____# of residential units wit hin the

development. This association is part of a mast er association called ________________________________(if there is no master enter N/A)

The development is located in _________________________________________ Town/City of ___________________________ County

The mailing address of the association is __________________________________ ________________________

__________________________________________________________

(street address and/or PO Box)

__________________________________________________________

(city) (state) (zip)

The current president of the association is _______________________________________

Unit owners elect ____________(#)

of the members of the board of directors which has a total of ___________(#) board members.

The association has employed ______________________________________________________________as the manager of the property.

(name of person and company name if applicable)

The property manager can be cont acted at t his telephone number_________________________________

Common Interest Community Association Complaint Form

Part Two

Nature of Complaint

Include a brief explanation of each item checked along with a description of each document attached

on a separate sheet of paper. The explanation should be no more than three or four paragraphs. Upon the

initial filing of a complaint do not include more documentation than is necessary to establish jurisdiction. Do

include copies of your letters to the board/association regarding ADR, financial records access, requests for

minutes of open meetings, or a copy of the notice of the open meeting. Do not include copies of budgets,

master deeds, by-laws, court decisions, newspaper articles, work orders, site plans, estimates, pictures, an-

nual reports, and so on. Agency staff can not sift through voluminous documents to determine if there is a

cause of action and may return the complaint package if the complaint is not filed in accordance with these

instructions.

Instructions

Mail your completed complaint form to Association Regulation Unit

New Jersey Department of Community Affairs

PO Box 805

Trenton, New Jersey 08625-0805

For additional information or to download complaint forms and copies of the handouts concerning ADR, open meetings and access to

financial records, in unit owner controlled associations, visit the website at http://www.nj.gov/dca/divisions/codes/offices/ari.html

Please check those that apply without modification

____ The Association does not have an Alternative Dispute Resolution (ADR) procedure

Prior to filing a complaint, did you request a copy of the ADR procedure in writing? Were you informed the procedures did not

exist? Was your request ignored? If the answer to the first question is yes, and you were either advised that there is no procedure or

your request was ignored, include a copy of your written request for a copy of the ADR procedure and any written response.

____ Denied access to ADR

Prior to filing a complaint, did you request ADR in writing in accordance with the procedure adopted by your association or in the

absence of a procedure did you request ADR by writing directly to the board? Was your request ignored or denied? If yes, include a

copy of your written request for ADR and any written response.

____ Denied access to accounting/financial records

Prior to filing a complaint, did you request to review the records in writing? Was yo ur request denie d or ignored? Was your request

specific as to records requested? If yes, include a copy of your written request to review the financial records and any written re-

sponse.

____ Minutes not provided from open meeting

Prior to filing a complaint, did you request the minutes in writing? Was your request denied or ignored? If yes, include a copy of

your written request for a copy of the minutes and any written response.

____ Appropriate notice for open meeting not given

Prior to filing a complaint, did you check with the association office to verify it had a copy of the notice? Did you make a written

request to the board for a copy of the notice of the meeting you believe was not appropriately advertised? If yes, describe the circum-

stances which make you believe notice was not provided. Include a copy of your request for a copy of the notice of the open meet ing

and any written response.

____ Binding vote taken without the benefit of an open meeting.

Prior to filing a complaint, did you request a copy of the meeting minutes at which the binding vote should have been taken? If yes,

describe the nature of the binding vote. Include a copy of your request for a copy of the minutes at which you believe the binding

vote should have been taken and any written response.