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A1572
ASSEMBLY, No. 1572
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman SEAN T. KEAN
District 30 (Monmouth and Ocean)
SYNOPSIS
���� Prohibits conflict of interests by governing board
members or management employees of homeowners' associations.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act
concerning homeowners� associations and supplementing Title 46 of the Revised
Statutes.
����
Be It Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� a.� No officer, board
member or employee or member of the immediate family of an officer, board
member or employee shall have an interest in a business organization or engage
in any business, transaction, or professional activity, which is in substantial
conflict with the proper discharge of duties to the association.
���� b.��� The association shall
not, during the period in office of the officer or board member and for one
year subsequent to that period:
���� (1)�� award a contract to an
officer or board member, or to a member of the immediate family of an officer
or board member, or to a business organization in which the officer or board
member holds more than a 5 percent interest or is an employee of the business
organization; or
���� (2)�� employ for compensation,
an officer or board member or member of the immediate family of an officer or
board member.
���� c.���� No officer or board
member shall use or attempt to use that office to secure unwarranted privileges
or advantages for the officer or others.
���� d.��� No officer or board
member shall act in official capacity in any matter where the officer or board
member, an immediate family member, or a business organization in which the
officer or board member has more than a 5 percent interest, has a direct or indirect
financial or personal involvement that might reasonably impair the objectivity
or independence of judgment of the officer or board member, or is an employee
of the business organization.
���� e.���� No officer or board
member shall undertake any employment or service, whether compensated or not,
which might reasonably be expected to prejudice the independence of judgment of
the officer or board member in the discharge of duties to the association.
���� f.���� No officer or board
member or employee, or member of the immediate family of an officer or board
member, or business organization in which an officer or board member holds more
than a 5 percent interest or is employed by, shall solicit or accept any benefit
offered for the purpose of influencing the officer or board member, directly or
indirectly, in the discharge of duties to the association.
���� g.��� No officer or board
member shall use, or allow to be used, the officer or board member's position,
or any information received through it that is not generally available to all
unit owners, to secure financial gain for the officer, board member, any member
of the immediate family of the officer or board member, or any business
organization with which the officer or board member is associated.
���� h.��� In awarding contracts to
management companies and other service providers, the association shall:
���� (1)�� disqualify any
contractor in which a sponsor holds an interest until three years after
termination of sponsor control; and
���� (2)�� require that any
contractor disclose the names of any association officer board member or
managing employee, or member of the immediate family of an officer or board
member, employed by the contractor or subcontractor.
���� i.���� At the request of a
unit owner, the Department of Community Affairs shall investigate allegations
of a violation of this section.� If the department finds a violation by a board
member or officer, it shall order the removal of the board member or officer,
and may declare void any action of the board related to the violation.� If the
department finds a violation by a managing employee, it shall report the
violation to the association.
���� 2.��� This act shall take
effect immediately.
STATEMENT
���� This bill prohibits certain
conflicts of interest officers or board members or employees hired to manage
the common elements of a homeowners' association.� In general, the bill
prohibits self-dealing, and is patterned after the public conflicts of interest
law.� The bill prohibits the awarding of a contract to an entity in which a
board member or member of the immediate family of an officer, board member or
managing employee has a financial interest.� The board may not contract with or
engage in any business, transaction, or professional activity, which is in
substantial conflict with the proper discharge of duties to the association or
in which the officer holds or to a business organization in which the officer
or board member holds more than a 5 percent interest or is employed.� The bill
also prohibits the employment for compensation of an officer or board member,
or member of the immediate family of an officer or board member.
���� The bill prohibits an officer
or board member to act in an official capacity in any matter where the officer
or board member, an immediate family member, or a business organization in
which the officer or board member has more than a 5 percent interest, has a
direct or indirect financial or personal involvement that might reasonably
impair the objectivity or independence of judgment of the officer or board
member or is employed by the business organization.
���� The bill designates the
Department of Community Affairs to investigate allegations of violations of the
bill.� If the department finds a violation by a board member or officer, it
shall order the removal of the board member or officer, and may declare void
any action of the board related to the violation.� If the department finds a
violation by a managing employee, it is to report the violation to the
association.
���� Homeowners' associations are
required to be formed pursuant to State statutes.� Many have large budgets, but
there is currently no State oversight over their budgets or guidelines
concerning the avoidance of conflicts of interests that may arise.