New Jersey P.L.2019, c.68 (A5002): Assessment Lien Priority for Condos and HOAs

Quick Answer

P.L.2019, c.68 (Assembly No. 5002, first reprint) was approved April 29, 2019 and took effect immediately. It did two things: it amended the condominium lien section, N.J.S.A. 46:8B-21, and it created a parallel lien section for other planned real estate developments (the new section codified at N.J.S.A. 45:22A-44.1). The one point most boards need: the bill kept the limited lien priority over prior mortgages at six months, after an earlier draft had proposed nine, and it added an annual renewal of that priority.

At a Glance

What the Law Says

This page covers the bill as enacted and what it changed. For the full mechanics of the condominium lien section, see our page on N.J.S.A. 46:8B-21 and assessment lien priority.

Section 1: changes to the condominium section

The reprint shows the amendments to 46:8B-21. Three changes are visible in the text:

• Six months, not nine. The priority amount is limited to the customary assessment "for the six-month period prior to the recording of the lien." The enacted text shows a "nine-month" period struck and "six-month" restored in the reprint, so a nine-month version existed at an earlier stage of the bill but is not law.
• Annual renewal. Added sentence: "This limited priority shall be cumulatively renewed on an annual basis as necessary."
• Collection costs language. The lien secures interest "and any late fees, fines, expenses, and reasonable attorney's fees imposed or incurred in the collection of the unpaid assessment." The earlier phrase "if authorized by the master deed or bylaws" was deleted from this clause. Our reading: the clause no longer ties late fees and fines to a governing-document authorization, but other law and the governing documents may still matter. Confirm with counsel.

The 60-month limits in paragraphs (4) and (5) now carve out the renewal. Paragraph (4) says that "Except for the cumulative annual renewal" the priority "shall expire on the first day of the 60th month following the date of recording." Paragraph (5) bars priority where an earlier recorded association lien has obtained priority over the same mortgage for 60 months, again "not including the cumulative annual renewal."

Section 2: the new section for other planned real estate developments

Section 2 is a new section with the same architecture as the condominium section: a lien on each unit for unpaid assessments, effective on recording of a claim of lien that states the unit description, record owner, amount due and date due; only sums "due and payable when the claim of lien is recorded"; "signed and verified by an officer or agent of the association"; and no recorded lien where the unpaid assessment "consists solely of late fees."

• Limited priority over prior recorded mortgages and other liens, except municipal liens and federal tax liens.
• Priority limited to "customary assessments" up to the six-month amount, renewed annually.
• Priority applies to a lien recorded before the association receives a summons and complaint to foreclose the mortgage, or before a lis pendens is filed.
• Written notice to any first mortgage holder when recording a lien that may get priority; a good faith effort to identify the holder is "deemed to be in substantial compliance."
• A 10-day certificate of unpaid assessments on request, grantor and grantee joint and several liability for assessments up to conveyance, and protection for a foreclosure acquirer from pre-title assessments.

In section 2 the defined term is "assessment" (not "customary condominium assessment"): periodic payments for "regular and usual operating and common area expenses pursuant to the association's annual budget," excluding reserves for contingencies, late charges, penalties, interest and collection costs. Payments must be due monthly or no less often than quarterly.

Subsection g. excludes cooperatives and says the section does not "diminish the priority of a cooperative's issuer's lien or security interest in the shares of stock and lease appurtenant thereto."

What This Means in Practice

For boards of HOAs and other non-condominium associations

The act's title says it concerns liens "in certain common interest communities," and the official summary says it "permits certain planned real estate developments to file certain liens." Our reading: an HOA that is a planned real estate development should look at 45:22A-44.1 as the source of its lien procedure, and confirm with counsel whether its own community qualifies.

For boards of condominiums

The priority period and the renewal matter if a lien sits for years. The statute does not say how the "cumulative" renewal is documented or what an association must file to renew. Open question: whether a new recording is needed each year. Ask counsel before relying on renewal.

For owners

• A lien made up only of late fees cannot be recorded.
• Upon full payment, the payer is entitled to a recordable satisfaction of lien.
• An owner or buyer may request a certificate of unpaid assessments, due within 10 days.

What the law does not say

• It sets no penalty for an association that misses a notice step. It says an association that tried in good faith to identify the mortgagee is in substantial compliance.
• It does not say whether a lien claim or its priority is affected by a later amendment to the sections. We read the 2019 session law only, not later history.

Timeline

Related New Jersey Law

• N.J.S.A. 46:8B-21, assessment liens and priority
• P.L.2020, c.100, limits on assessments in communities that pre-date the 1977 planned real estate law, including void liens
• N.J.S.A. 45:22A-43, association organization and membership
• New Jersey HOA laws and regulations, our state overview

Board Checklist

• Confirm with counsel whether your community is a condominium, a planned real estate development or a cooperative, since the cooperative exclusion applies to section 2.
• Check that each claim of lien states the unit description, record owner, amount due and date due, and is signed and verified.
• Do not record a lien made up only of late fees.
• Include only sums due and payable on the recording date.
• Send the written notice to any first mortgage holder when recording a lien that may get priority, and keep proof of the good faith search.
• Calendar the 10-day deadline for certificates of unpaid assessments.
• Track the 60-month priority expiry and ask counsel about renewal.

Frequently Asked Questions

When did P.L.2019, c.68 take effect?

It was approved April 29, 2019 and its last section says it "shall take effect immediately."

How much priority does an association lien get over a mortgage?

Limited priority up to the customary assessments for the six-month period before the lien is recorded, renewed annually "as necessary," and subject to the recording and notice conditions in the statute.

Was a nine-month priority ever adopted?

No. A nine-month figure appears struck in the reprint, and the enacted text uses six months.

Does the law apply to homeowners' associations?

Section 2 creates a lien for associations in certain planned real estate developments. Cooperatives are excluded. Whether a particular association qualifies depends on its documents and facts; confirm with counsel.

Can an association record a lien for late fees only?

No. The text says an association "shall not record a lien in which the unpaid assessment consists solely of late fees."

What must a lien claim contain?

The description of the unit, the name of the record owner, the amount due and the date due, signed and verified by an officer or agent of the association.

Are reserve contributions covered by the priority?

The defined assessment excludes "reserves for contingencies." Our reading: that exclusion limits what counts toward the priority amount, not whether reserves can be assessed or included in the lien generally.

Where This Comes From

We read the chaptered text of P.L.2019, c.68 (A5002, first reprint) on the New Jersey Legislature's session-law site, pub.njleg.gov, including its bracketed and italic amendment markings. We did not re-read later amendments or case law interpreting the sections.

How APM Helps

Association Property Managers provides remote HOA and condo management for associations in New Jersey, starting at a flat $99/month per community with no per-door fees or long-term contracts. See remote management in New Jersey, browse every New Jersey state-law guide, or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for New Jersey when we build your proposal.

Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed New Jersey attorney before acting.