A push for fair and democratic board elections in New Jersey got a major boost this past July when Gov. Chris Christie signed legislation that would codify a fair process for electing board members. The passage of the law also signals to all developers and community associations throughout the state that New Jersey values fair, transparent and accessible elections for all of its citizens. It was the culmination of a decade-long battle by homeowners from one particular New Jersey community who sought change in a governance structure that only favored a select few.
When we think of modern governance and our opportunities as citizens to participate, we still like to believe that our vote counts. Not only does this matter in a presidential election or mayoral runoff, but even in the most local of concerns: that of electing people to a board of trustees for our community association – the place we call home. Yet for years, this precise issue of owners being denied meaningful access to participate in their own governance has been the source of dispute in one community called Radburn, located in Fair Lawn.
Founded in 1929, Radburn boasts a community of over 3,000 people who reside in 469 residences of diverse style and architecture. Although Radburn’s planning was far ahead of its time, its governance structure – now almost 90 years old – is anachronistic. Radburn is a community where only those nominated by a nominating committee may run for most board seats. The catch? The nominating committee is controlled exclusively by the board. The owners are not members of the association. Only those who have served or are serving on the governing board are members of the Radburn association.
In 2006, a group of owners sought the aid of the courts in efforts to kick wide open the election doors long closed to only the select few already serving on the board, or their allies. Ultimately, though, an appellate court concluded in 2010 that nothing in Radburn’s bylaws contradicted any provision of New Jersey law. The court held that ‘[W]ithout a basis in legislation, it is beyond our authority to effect such a change in the relationships between community associations and their members.’”
Upset by this result, a number of Radburn residents turned to New Jersey State Senator Robert Gordon for help. In September 2016 Gordon introduced legislation that would democratize the process of electing members to an association’s governing board. Given the long history of being denied the ability to meaningfully participate in board elections, the Radburn residents sought a bill that would provide significant detail on the nominating, election and voting process.
That day finally came. Senate bill 2492, sponsored by Gordon (among many others) and Assembly bill 4091, sponsored by Assemblyman Timothy Eustace along with many other Assembly representatives, unanimously passed each house of the legislature. On July 13, 2017, Gov. Christie signed the law, which becomes effective on the first day of the third month following its enactment – in other words, on October 1 of this year.
New Election Requirements
Some of the components of the legislation are set forth below. Board members should carefully review this with their association’s attorney and management to ensure adherence with the requirements of the new law:
A. All owners of units or homes in a community are members of the association, whether or not the governing documents provide that they are.
B. A resident-owner in good standing will have the right to nominate him- or herself or any other owner in good standing for any seat on the executive board; but if the existing bylaws allow all owners – not just resident owners – to nominate themselves or others, that will apply in place of allowing only resident-owners to nominate themselves or others.
C. If an owner is nominated by another owner, the nominated owner must accept the nomination within seven days.
D. All units will be entitled to an equal number of votes, unless the governing documents establish weighted voting based on a unit’s size or value. Any other weighting of votes is invalid.
E. If the governing documents do not establish a schedule for board elections – unusual in modern documents – they must occur not less often than every two years.
G. Associations must comply with certain procedural requirements in holding board elections:
Not later than 30 days prior to forwarding the notice of the election meeting, the association must send notice to all owners of the right to nominate themselves or other owners in good standing;
The period for submitting nominations shall not be less than 14 days following the mailing of the request for nominations;
While the association may set a deadline for receipt of nominations, it must accept nominations that are received one day late or, if no deadline is set forth, then the deadline is the business day before the mailing of the notice of the election meeting
The association must send a notice of the election meeting not less than 14 nor more than 60 days prior to the meeting at which the election will be held (note that this differs from the most common bylaws provision that states that notice must be sent not less than 10 nor more than 90 days prior to the election meeting)
All unit owners who are current in the payment of all valid charges due the association may vote in the election (note that in connection with nomination and voting, good standing may not include being in compliance with the restrictions, rules, and regulations);
Exceptions and the Bylaws Amendments
There are certain exceptions to the above requirements that may apply. For instance, there is a limited exception for associations having less than 50 units. Those associations need only have an election procedure that provides notice of the election meeting, and notifies members of the right to nominate anyone in good standing. And where an association’s governing documents provide for certain board positions to be occupied by a person living in a specific section of the community, only the owners in that section may nominate themselves or another owner from the section and all owners are not authorized to run for all board seats.
Since the Radburn bylaws were not amendable by the homeowners, the legislation also contains provisions concerning bylaw amendments. The provisions of the new law will impact very few associations, since they apply only to communities with bylaws that are either not amendable by the owners, or which require a vote of more than two-thirds of all owners to amend. If an association falls into that category, the statute sets forth a procedure to be followed that permits a vote by two-thirds of all votes to amend the bylaws.
While the legislation will not affect those associations that already include within their governing documents an independent process for board elections consistent with the new law, for those associations long without access to their own governance, this is a significant win. It provides a road map of procedural steps that associations are required to follow to hold a valid election. While these procedural steps are already likely followed by a majority of associations, all boards should consult with management and their attorneys when first holding an election on or after October 1, 2017, the effective date of the new law.
Attorney J. David Ramsey is a shareholder at the Morristown-based law office of Becker & Poliakoff.