Homeowners Associations are Quasi-Municipal Actors in NJ

The New Jersey Superior Court, Appellate Decision issued an important decision last week in Committee For A Better Twin Rivers, et al. v. Twin Rivers Homeowners' Association, et al. (A-4047-03T2).  The case concerned a dispute concerned competing factions of residential homeowners in a large planned unit development (Twin Rivers).  A dissident faction sought the right to post political advertising, use the community room, tape homeowner board meetings, gain access to financial records, and gain access to voter roles.  The controlling board refused, arguing that the homeowners group was not subject to state constitutional requirements.   The Court concluded that a homeowners association that functioned in a "quasi-muncipal" capacity should be viewed as a government actor and held that the expressive rights guaranteed by the New Jersey Constitution (Art. I, sections 6 and 18) applied.  There was therefore a requirement that fair and open elections be permitted for the board of the homeowners association, including the right of opposing candidates to run.

According to the Court's summary, the Court also concluded that: provisions of the New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA) as amended, N.J.S.A. 45:22A-21 to -48, apply to a community association founded before the enactment of the statute and its amendments. The exemption provision of N.J.S.A. 45:22A-42 was narrowly construed.

The Court also indicated that standard-setting and standard-applying exercises that do not implicate the expressive rights guarantees of the State Constitution but, rather, bear upon operational features of the community association are properly evaluated under statutory standards, the business judgment rule, and assessments of the parties' contractual rights and interests.  The court also indicated that association by-laws that provided for weighted voting according to property value (and denied tenants the right to vote while allowing non-resident owners to do so) were not illegal under the New Jersey constitution or state statute.   

It seems likely that there will be a further appeal.