Bulletin: NJ2019006

Date:
October 08, 2019
To:
All New Jersey Issuing Offices
RE:
UNDERWRITING - NJ HOA/Condo Association Liens

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.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None