S4104

An Act permitting constituent homeowners to dissolve a common interest community and supplementing P.L.1977, c.419 (C.45:22A-21 et seq.), amending P.L.1983, c.127, and repealing section 26 of P.L.1969, c.257 (C.46:8B-26).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) a. Notwithstanding any provisions of the governing documents of a planned real estate development to the contrary, an association may be dissolved pursuant to Title 15 of the Revised Statutes or Title 15A of the New Jersey Statutes, as applicable, by action of its members as provided in this section.

b. The association members may recommend a plan of dissolution of the association through a petition signed by not less than 25 percent of the association members. The plan of dissolution shall be submitted to the executive board, and shall be compliant with the rules and regulations promulgated by the Commissioner of Community Affairs pursuant to section 3 of P.L. , c. (pending before the Legislature as this bill).

c. The executive board shall hold the meeting within 60 days from the day that the petition is submitted to the executive board. Notice of the meeting shall be given to each member entitled to vote at the meeting within the time provided by the governing documents of the association and as permitted by applicable law.

d. At the meeting, a vote of the members shall be taken on the proposed plan of dissolution. The plan of dissolution shall be approved upon receiving the affirmative vote of two-thirds of the votes cast by the members of the association entitled to vote thereon. Following a vote rejecting a plan of dissolution, the executive board shall not hold a subsequent vote on a proposed plan of dissolution until 18 months after the date of the vote rejecting the prior plan of dissolution.

e. (1) If the executive board fails to hold a meeting as required pursuant to subsection c. of this section, or fails to hold a vote at the meeting pursuant to subsection d. of this section, each member of the board shall be subject to a penalty to be paid to the Department of Community Affairs of $100 for each week following the 60 day deadline established by subsection c. of this section that a meeting and vote is not held. Association funds shall not be used to pay a penalty imposed pursuant to this paragraph.

(2) If the executive board fails to hold a meeting as required pursuant to subsection c. of this section, or fails to hold a vote at the meeting pursuant to subsection d. of this section, an association member may, after 240 days following the date the petition was submitted to the executive board, submit the proposed plan of dissolution with a petition signed by not less than two-thirds of the members of the association to the Commissioner of Community Affairs to commence the dissolution of the association.

2. N.J.S.15A:12-1 is amended to read as follows:

a. A corporation may be dissolved in any one of the following ways:

(1) by action of the incorporators or trustees pursuant to section 15A:12-2;

(2) by action of the members pursuant to section 15A:12-3;

(3) by action of the board and the members pursuant to section 15A:12-4;

(4) by action of the board pursuant to section 15A:12-5;

(5) by action of the members pursuant to section 15A:12-6;

(6) by the filing of a certificate of dissolution pursuant to section 15A:12-7 upon expiration of any period of duration stated in the corporation's certificate of incorporation;

(7) by a judgment of the Superior Court in an action brought pursuant to section 15A:12-11, 15A:12-12, or 15A:14-2 or otherwise; [or]

(8) automatically by the Secretary of State revoking a certificate of incorporation as set forth in subsection c. of section 15A:4-5; or

(9) for an association, as defined pursuant to subsection n. of section 3 of P.L.1977, c.419 (C.45:22A-23), by action of a two-thirds majority of association members pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. A corporation which has been dissolved in a proceeding pursuant to section 15A:12-11 or 15A:12-12, or which has been dissolved, or the certificate of incorporation of which has been revoked, for a cause or by a method not mentioned in this section, shall be subject to all the provisions of this chapter and of chapter 14, to the extent that those provisions are compatible with a court-directed dissolution, or with the statute or common law proceeding pursuant to which the dissolution, or revocation is effected.

(cf: N.J.S.15A:12-1)

3. (New section) The Commissioner of Community Affairs, in consultation with the Executive Director of the Housing and Mortgage Finance Agency, shall, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The rules and regulations shall include, but shall not be limited to:

a. procedure for the separation of common property such as roadways, facilities, and parks;

b. process for a government entity to assume ownership of common property such as roadways, facilities, and parks; and

c. procedure for dissolution by the department in accordance with paragraph (2) of subsection e. of section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. Section 26 of P.L.1969, c.257 (C.46:8B-26) is repealed.

5. This act shall take effect on the first day of the seventh month next following enactment, except that the Commissioner of Community Affairs and the Executive Director of the Housing and Mortgage Finance Agency may take anticipatory action to effectuate the provisions of this act.

STATEMENT

This bill establishes a procedure permitting constituent homeowners to dissolve their common interest community through a two-thirds majority vote affirming a compliant plan for dissolution, as submitted to the executive board of the association following a petition signed by at least 25 percent of the association members. The bill requires the executive board of an association to hold a vote on a plan for dissolution within 60 days of the submission of a sufficient petition and give notice to each member that the vote will take place. If a vote on a plan for dissolution fails, a subsequent vote on a plan for dissolution will not take place for 18 months.

The bill establishes a penalty of $100 per week following the 60 day deadline that a meeting and vote are not held to be imposed on each member of the association board. The bill specifies that association funds may not be used to pay the penalty established by the bill. The bill further provides that, when an association board has not held a meeting or not held a vote on a proposal for dissolution within the period provided for in the bill, an association member may submit a petition with the signatures of two-thirds of the association members to the Department of Community Affairs (department) to proceed with the dissolution.

The bill amends N.J.S.A.15A:12-1 to establish the provisions of the bill as a procedure for the dissolution of a nonprofit corporation that is the association of a common interest community. The bill additionally requires the Commissioner of Community Affairs, in consultation with the Executive Director of the New Jersey Mortgage and Finance Agency, to promulgate rules and regulations governing plans for the dissolution of an association, including procedure for the separation and government entity ownership of certain common property such as roadways, facilities, and parks and procedure for the dissolution of an association by the department when a successful petition is submitted following a failure of the association board to hold a meeting and vote on the proposal for dissolution. The bill takes effect on the first day of the seventh month next following enactment, except that the Commissioner of Community Affairs and the Executive Director of the Housing and Mortgage Finance Agency may take anticipatory action.