NJ Department of Community Affairs

Association Regulation Initiative

Access to Financial Records

The New Jersey Condominium Act, N.J.S.A. 46:8B-14(g) states that an association, acting through its officers or governing board, shall be responsible for the maintenance of accounting records, in accordance with generally accepted accounting principles (GAAP), and shall be open to inspection at reasonable times by unit owners. Such records shall include a record of all receipts and expenditures and an account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due, and any interest in common surplus. Section 16 (d) of the Act empowers our Department, acting through the Bureau of Homeowner Protection, to enforce this right of inspection. The right of inspection includes the right to make copies.

You as a unit owner should keep in mind that except for the records of receipts and expenditures and unit payment records, the law does not establish specific records as GAAP records. Classification of records is subject to differing interpretation by financial authorities. Thus, each association, in consultation with its accountant, should identify which of its other financial records are GAAP records and therefore open to inspection under the Condominium Act. If you have a basis for disagreeing with the classification, you may request alternative dispute resolution (ADR -see separate insert).

Please note, the Act does not require associations to provide copies of financial statements or records in the absence of a request. If the governing documents require greater disclosures, and the board does not follow them, you should request ADR. In making a request, it is best to do so in writing and with the understanding that there may be certain reasonable restrictions as to time and location in order to preserve the credibility of the records. If the governing documents or board rules do not specify to whom the request should be made, it should be made to the board.

The law does not mandate annual audits, but another law, The Non Profit Corporation Act, Title 15A, and many association by-laws require them. We are not empowered to enforce either Title 15A or your by-laws. You, however, may enforce such requirements yourself through ADR or private legal action.

If you feel you have been denied access to financial documents which constitute GAAP records, please fill in the enclosed form and mail it to the address listed on the form. Please also include a brief explanation of the circumstances under which you were denied access. The Association Regulation Unit has the authority under N.J.S.A. 46:8B-16(d) to ensure an association responds to your request to review and copy the financial records required to be kept.

For further information on either the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 or the Condominium Act, N.J.S.A. 46:8B-1, check New Jersey's statutes.

An amendment to the Condominium Act, N.J.S.A. 46:8B-14, P.L.1995 c. 313 and the law governing planned real estate developments, N.J.S.A. 45:22A-44, require associations to provide “fair and efficient” means for unit owners to resolve disputes between one another or against the association. It is referred to as alternative dispute resolution (ADR). This is required as an alternative to litigation. The law requires condominium associations to provide written notice of dispute resolution as a condition of issuing a fine (N.J.S.A. 46:8B-15f.).

The Association Regulation Unit within the Planned Real Estate Development section has the responsibility to require associations to enact alternate dispute resolution procedures if the deficiency is brought to its attention. This office cannot, however, provide ADR and cannot address the substance of your dispute. For example, this office cannot require an association’s board to follow its by-laws or take maintenance actions, remove individual board members, order board members to take or rescind actions, order revisions to or question financial practices (other than those related to the obligation to disclose generally accepted accounting principles or GAAP records), or force boards to change discretionary actions.

Unit owners are empowered to take action to correct such matters either through ADR or litigation as well as by electing new board members. Any allegations of fraud or other criminal conduct should be brought to the attention of your county prosecutor or other pertinent law enforcement agency. Please note, the State Attorney General represents State agencies and general public interests and does not act on individual complaints regarding allegations of board misconduct.

The applicability of ADR to a specific complaint requires a determination of whether it relates to a discretionary board management decision or constitutes a violation of governing documents (Master Deed, By- laws, Association Rules, etc.). Matters in which boards properly exercise discretion are subject to review through the democratic process (petitions, elections, etc.) while violations of governing documents or other legal requirements justify the use of the ADR procedure. Thus, if you proceed to ADR, you should be prepared to refer to specific laws or portions of the governing documents which you believe were violated.

There is no formality required to request ADR but you should make it in writing, to the board, unless the procedure of your association provides otherwise. You should do so even if your association does not have a specific written ADR procedure or has one which does not appear to satisfy the “fair and efficient” criteria. In your request, state your complaint clearly and specifically request that you be provided ADR. If you do not have a copy of your association’s ADR procedure, you should request that the board or its agent supply you with one.

You may inform the board that if there is no response within 14 days you will notify this office. Please note, we do not require that associations file their ADR procedures with us and there is no requirement to receive our approval before instituting a procedure.

Each association is authorized to design the ADR procedure which it feels best satisfies the needs of its owners. Procedures may range from mediation (informal recommendations) rendered by designated neighbors to non-binding arbitration (formal decisions) in a court like setting with numerous formalities overseen by a trained individual. ADR providers are appointed by a board but the association should have an independent means of selection. Whoever is selected must be impartial.

ADR was intended as an alternative to litigation, thus it is not necessary to have legal counsel. However, you may, if you choose, be represented.

Although there is no standard ADR procedure, there is one fundamental rule; the board cannot be the ADR provider. Thus, neither the board nor any member can sit as or with the ADR panel. The board or its members or agent or representative can appear and present the board’s position. The law provides that either party may appeal to court following an ADR procedure. The board cannot appeal a decision to itself. Our office is not empowered to overturn or even modify the outcome of an ADR proceeding.

Please note that ADR is not automatically binding on boards. Thus, if a board fails to cooperate with a recommendation or arbitration decision against it, you must enforce your right in court. Additionally, ADR is not a means to secure an order to stop a board from taking action or to force a board to act. These can only be secured through appropriate court proceedings. Moreover, ADR is not the means to obtain monetary damages against the association.

If you do not receive a positive response to your request for ADR or the association informs you there is no ADR, please fill in the enclosed form and mail it to the address listed on the form. Please also include a brief explanation of the circumstances under which you were denied your ADR rights or how you know there are no ADR procedures.

Further information on either the Planned Real Estate Development Full Disclosure Act, N.J.S. 45:22A-21 or the Condominium Act, N.J.S. 46:8B-1, can be found in New Jersey's ‘Statutes.

Open Public Meetings

All meetings at which a board takes a binding vote are required by law to be open to all owners and advance notice of such meetings must be given as provided by law. The laws governing open public meetings in planned real estate development associations can be found in N.J.S.A. 45:22A-46 or for condominiums in N.J.S.A. 46:8B-13a and N.J.A.C. 5:20-1 et seq.

Advance notice, as prescribed by N.J.A.C. 5:20-1.2(b) shall mean written notice, at least 48 hours in advance, giving the time, date, location, and, to the extent known, the agenda of the meeting. The notice shall be posted prominently in at least one place on the property that is accessible at all times, to all unit owners and must be filed with the person responsible for administering the business office of the association. In addition, it is to be forwarded by mail, telephone, telegram, or hand delivery to at least two newspapers that have been designated by the governing board or by the association to receive such notices. Condominium association by-laws may prescribe additional or alternative methods of providing notice, which provide an equal or greater prospect that unit owners will receive it. Mailings directly to owners, for example, are permitted, as is hand delivering a copy to each unit door.

There is no law administered by the Association Regulation Unit that mandates how often open public meetings are required to be held. The by-laws of an association may establish guidelines, which must be adhered to. An open public meeting must be held when there will be binding votes taken.

Minutes of open meetings must be taken and copies made available to unit owners prior to the next open meeting. Associations are not obligated to mail minutes to owners. It is satisfactory if the minutes are available at the next meeting.

Open Public Meeting requirements regarding board meetings (as opposed to general membership meetings) do not guarantee a right to participate, only to observe. Participation is at the board’s discretion. Moreover, the board may legitimately exclude or restrict attendance at meetings dealing with certain matters, such as litigation, personnel actions, or any matter the disclosure of which would constitute an unwarranted invasion of individual privacy. However, even though certain matters may be discussed in a closed session, any binding votes on the matter must be taken at a public meeting.

The Association Regulation Unit within the Planned Real Estate Development section has the power to ensure that an association complies with the open public meeting requirements.

We request adherence to the mandated insertion of Open Public Meeting (OPM) requirements into an association’s by-laws. However, even if the OPM requirements are not inserted into an association’s by-laws, the law requires associations to comply with them. This office will take the necessary measures to ensure compliance by the association.

If you feel your association has not adhered to the Open Public Meeting requirements, please fill out the Home Owner Complaint Form and mail it to the address listed on the form.