Bulletin: NJ2019006

Dear Associates:

Please be advised that on April 29, 2019, the State of New Jersey enacted the following bill, P.L.2019, c.68, which amends the existing lien law in N.J.S.A. 46:8B-21 for lienable unpaid assessments in favor of a condominium or homeowners' association. The revision to the existing statute now provides that the limited priority of an unpaid “customary assessment” shall be cumulatively renewed on an annual basis as necessary. The term “customary assessment” is defined in the bill as an assessment for periodic payments, due the association for regular and usual operating and common area expenses pursuant to the association's annual budget and would not include amounts for reserves for contingencies, nor would it include any late charges, penalties, interest or any fees or costs for the collection or enforcement of the assessment or any lien arising from the assessment.

Per the new bill, an association can collect a six (6) month limited priority lien for each year the lien remains unpaid, provided that the association annually records an amended lien to secure each year’s additional six months of assessments. 

The bill also states that in order for an association lien to hold limited priority over a previously recorded mortgage, the association lien must have been recorded before: (1) the association receives a summons and complaint in an action to foreclose the unit; or (2) a lis pendens is filed with the county.

The new revision to the statute applies to both condominium associations and homeowners’ associations, but specifically excludes cooperatives. As a result of these changes, Stewart Title now requires that the unit owner provide a certificate from the association disclosing the amount of all unpaid assessments pertaining to such unit. Pursuant to N.J.S.A. 46:8B-21(d), the certificate must be provided by the association within 10 days of the request. Once the certificate is provided, all unpaid assessments on the certificate must be paid in full at closing until further notice.  

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.