Regulates institutional investor activities related to ownership of single-family homes, including purchase and lease; supports certain homebuyer assistance programs.

S3226

SENATE, No. 3226

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 2, 2026

Sponsored by:

Senator� SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

Senator� ANGELA V. MCKNIGHT

District 31 (Hudson)

SYNOPSIS

���� Regulates institutional investor activities related
to ownership of single-family homes, including purchase and lease; supports
certain homebuyer assistance programs.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
related to certain home ownership by institutional
investors, and supplementing chapter 27D of Title 52 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.�

As used in P.L.��� , c.��� (C.������� ) (pending before the Legislature
as this bill):

���� "
Affordable housing
"
means an
inclusionary development, as defined pursuant to subsection f. of section 4 of
P.L.1985, c.222 (C.52:27D-304), and other low- and moderate-income housing.

����
"
Beneficial owner
"

means, with respect to an entity, an individual who, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise,
exercises substantial control over the entity, or owns or controls not less
than 10 percent of the ownership interests of the entity.�
"
Beneficial owner
"
shall not include:

���� (1)� a minor;

���� (2)� an individual acting as a
nominee, intermediary, custodian, or agent on behalf of another individual;

���� (3)� an individual acting
solely as an employee of a corporation, limited liability company, or other
similar entity and whose control over or economic benefits from such entity is
derived solely from the employment status of the person;

���� (4)� an individual whose only
interest in a corporation, limited liability company, or other similar entity
is through a right of inheritance; or

���� (5)� a creditor of a
corporation, limited liability company, or other similar entity.

����
"
Commissioner
"

means the Commissioner of Community Affairs.

���� "Family
limited liability company" means a limited liability company:

���� (1)�
that has no more than five members;

���� (2)�
whose membership satisfies the following criteria:

���� (a)�
each member is an individual or a family trust; and

���� (b)�
each member who is an individual is related to each of the other members who
are individuals, within and including the third degree of consanguinity or
affinity; and

���� (3)�
whose revenue is paid directly from one member to another.

���� "Family
trust" means:

���� (1)�
a trust in which a majority of the beneficiaries are individuals who are
related to each other within and including the third degree of consanguinity or
affinity; and where each beneficiary is an individual or an organization
described pursuant to section 170(c)(2) of the Internal Revenue Code (26 U.S.C.
s.170(c)(2));

���� (2)�
a charitable remainder annuity trust or a charitable remainder unitrust, as
those terms are defined pursuant to section 664 of the Internal Revenue Code
(26 U.S.C. s.664); or

���� (3)�
a charitable lead trust.

���� "Institutional
investor":

���� (1)�
means:

���� (a)�� a
partnership, corporation, limited liability company, or trust;

���� (b)�� an
affiliate, subsidiary, or holding company of a partnership, corporation,
limited liability company, or trust;

���� (c)
a beneficial owner of a partnership, corporation, limited liability company, or
trust; or

���� (d)
a beneficial owner of an affiliate, subsidiary, or holding company of a
partnership, corporation, limited liability company, or trust; and

���� (2)�
shall not mean:

���� (a)�
a nonprofit corporation organized for the exclusive purpose of acquiring a
single-family home that is, or is to be, used for the development and provision
of affordable housing;

���� (b)�
a family trust; or

���� (c)�
a family limited liability company.

����
"Low-income
housing" means the same as the term is defined pursuant to subsection c.
of section 4 of P.L.1985, c.222 (C.52:27D-304).

���� "Minor"
means a person under the age of 18 years.

����
"Moderate-income
housing" means the same as the term is defined pursuant to subsection d.
of section 4 of P.L.1985, c.222 (C.52:27D-304).

���� "On
the market and available for purchase" means the status of real property,
on which real property there is constructed or is to be constructed, a
single-family home:

���� (1)�
which real property is listed by a real estate agent or other similar real
estate professional, or the seller of the real property, on a multiple listing
service, or other similar database, for which, if the seller has chosen to use
a real estate agent or other similar real estate professional, the seller has
signed a contract with the real estate agent or other similar real estate
professional for the real estate agent or other similar real estate
professional to advertise the real property to potential buyers; and

���� (2)�
for which the seller is accepting bids or offers for the purchase of the real
property, and which listing is easily accessible by the public and active,
active with contract, pending, contingent, or back on the market.

���� "Single-family
home" means a residential property and any ownership interest of a
residential property, consisting of one to two dwelling units.� A
"single-family home" shall include a townhome or townhouse.

���� "Small
institutional investor" means an institutional investor that, in the
aggregate through any combination of the institutional investor�s partnerships,
corporations, limited liability companies, beneficial owners, or trusts; or
affiliates, subsidiaries, or holding companies of a partnership, corporation,
limited liability company, beneficial owner, or trust, owns 20 or fewer
single-family homes.

���� "Townhome"
or "townhouse" means a single-family dwelling unit, constructed in a
group of three or more attached units in which each unit extends from
foundation to the roof and has a yard or public way on not less than two sides.

���� 2.�
a.� An institutional investor shall not contact the owner of a single-family
home, or the agent of that owner, with respect to that single-family home,
during the first 75 days that the single-family home is on the market and
available for purchase.� An institutional investor shall not place a bid on or
purchase, directly or indirectly, or through any combination of the
institutional investor�s constituent persons or entities, a single-family home
in this State during the first 75 days that the single-family home is on the
market and available for purchase.� An institutional investor shall not lease a
single-family home acquired or purchased by the institutional investor for a
period of five years following the date of acquisition or purchase.

���� b.��� Except
as provided in subsection c. of this section, the provisions of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill) shall not apply to:

���� (1)�� a
tax exempt nonprofit organization that is described in section 501(c) of the
Internal Revenue Code (26 U.S.C. s.501(c)) and exempt from federal taxation
pursuant to section 501(a) of the Internal Revenue Code (26 U.S.C. s.501(a)),
which purchased a single-family home or homes for the exclusive purpose of
providing, and which serve to provide, affordable housing in this State;

���� (2)�� a
small institutional investor;

���� (3)�� a
financial institution, including a credit union, or an institutional investor,
as a direct result of any foreclosure, or a secured transaction pursuant to the
"Uniform Commercial Code - Secured Transactions," N.J.S.12A:9-101 et
seq.;

���� (4)�� an
institutional investor, which, as a condemnor, as the term is defined pursuant
to subsection (b) of section 2 of P.L.1971, c.361 (C.20:3-2), places a bid on,
acquires, or purchases a single-family home pursuant to the "Eminent
Domain Act of 1971," P.L.1971, c.361 (C.20:3-1 et seq.);

���� (5)�� a
governmental authority;

���� (6)�� an
institutional investor whose principal place of business is in this State, or
for which the majority of board members and officers, as applicable, have a
principal place of residence, in this State; or

���� (7)�� such
other institutional investors that the commissioner, in consultation with the
Director of the Division of Consumer Affairs in the Department of Law and
Public Safety, determines to be necessary to effectuate the provisions of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill), in
the public interest, and necessary to preserve the quantity of single-family
homes in this State.� An institutional investor, subject to an exemption
pursuant to this paragraph, shall provide additional information that the
commissioner determines to be necessary for the institutional investor to
qualify for an exemption pursuant to this paragraph and that effectuates the
purposes of P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill).

���� c.���� Notwithstanding
the provisions of subsection b. of this section to the contrary, an
institutional investor shall submit to the commissioner, on a form established
by the Department of Community Affairs, in consultation with the Division of
Consumer Affairs in the Department of Law and Public Safety, and published by
the Department of Community Affairs on the department�s Internet website, for
every taxable year by April 15 annually, and within 60 days of the effective
date of P.L.��� , c.��� (C.������� ) (pending before the Legislature as this
bill) if April 15 is not less than 90 days subsequent to the effective date of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill), a
report containing the information required pursuant to this subsection, and
such other information as required by the rules and regulations promulgated by
the commissioner pursuant to subsection f. of this section, which information
shall include but not be limited to, the number of single-family homes that, in
the aggregate or through any combination of the institutional investor�s
constituent persons or entities, the institutional investor bid on or purchased
within the previous taxable year.

���� d.��� An
institutional investor that violates subsection a. of this section shall
alienate the single-family home within six months of acquiring the
single-family home, and any profit received shall be payable to the Attorney
General.� In addition, an amount equal to the profit received shall also be
paid to, and proportionately divided amongst, any person or entity, including a
small institutional investor, adversely and directly affected by a violation,
which shall be construed liberally, who files a complaint in the Superior Court
of New Jersey, Law Division in the county or vicinage in which the
single-family home is located within 24 months of the date that the violation
occurred.�

���� e.���� (1)�
It shall be an unlawful practice, pursuant to and in violation of the New
Jersey consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), for an
institutional investor to place a bid on or purchase a single-family home in
violation of subsection a. of this section.�

���� (2)�
An institutional investor that violates subsection a. of this section shall be
liable to a civil penalty per violation as provided for in this paragraph, plus
fees and expenses, as follows:�

���� (a)�
An institutional investor that violates subsection a. of this section shall be
liable to a civil penalty of up to $50,000, which shall be collected in a civil
action by a summary proceeding pursuant to the "Penalty Enforcement Law of
1999," P.L.1999, c.274 (C.2A:58-10 et seq.).� The Superior Court, Law
Division in the county or vicinage in which the single-family home is located
shall have jurisdiction over the proceedings.� Process shall be in the nature
of a summons or a warrant, and shall issue upon the complaint of the Attorney
General.�
The penalty revenue collected pursuant to this subparagraph,
and any penalties and interest collected thereon, shall be annually credited by
the State Treasurer to the New Jersey Housing and Mortgage Finance Agency to
establish new programs or supplement existing programs that award grants to
provide down payment assistance to families purchasing single-family homes
within the State.� Grants awarded pursuant to this subsection by the agency
shall give priority to households seeking assistance to purchase any
single-family home that is sold or transferred by an institutional investor.

���� (b)�
In addition to any penalty collected pursuant to subparagraph (a) of this
paragraph, an institutional investor that violates subsection a. of this
section shall be subject to a complaint at the discretion of any person or
entity, including a small institutional investor, directly and adversely
affected by a violation, which shall be construed liberally, if the directly
and adversely affected person or entity files a complaint with the Superior
Court of New Jersey, Law Division in the county or vicinage in which the
single-family home is located within 24 months of the date that the violation
occurred.� The complainant shall be permitted to recover: a civil penalty of
$20,000, which shall be proportionately divided amongst any person or entity,
including a small institutional investor, directly and adversely affected by a
violation; reasonable attorney�s fees; court costs; expenses for expert
witnesses; and other related fees and expenses incurred in proving a violation
of subsection a. of this section. �

���� f.���� The
Commissioner of Community Affairs shall, in consultation with the Director of
the Division of Consumer Affairs in the Department of Law and Public Safety and
the Director of the Division of Taxation in the Department of the Treasury, and
in accordance with the "Administrative Procedure Act," P.L.1968,
c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement the
provisions of P.L. , c.��� (C.������� ) (pending
before the Legislature as this bill).

���� 3.� This act shall take effect
on the first day of the sixth month next following the date of enactment, and
shall apply to all bids placed and contracts for the purchase of a
single-family home executed, or a single-family home owned or acquired, on or after
the effective date, except that the Commissioner of Community Affairs shall
take anticipatory action necessary to effectuate the provisions of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill).�

STATEMENT

���� This bill prohibits certain
institutional investors from placing a bid on or purchasing a single-family
home during the first 75 days that the home is available.

���� Specifically, the bill
prohibits an institutional investor, as defined in the bill, from contacting
the owner of a single-family home, or the owner�s agent, with respect to the
single-family home, or soliciting, placing a bid on, or inducing an offer for,
a single-family home during the first 75 days that the single-family home is
"on the market and available for purchase," as the term is defined in
the bill.� The bill authorizes the Commissioner of Community Affairs
(commissioner) to require institutional investors to report certain information
provided in the bill.� The bill also prohibits an institutional investor from
leasing a single-family home acquired or purchased by the institutional
investor for a period of five years following the date of acquisition or
purchase.

���� The bill would not apply to
certain nonprofit organizations; small institutional investors, as defined in
the bill; financial institutions owning or acquiring a single-family home
through foreclosure or through a secured transaction; institutional investors
acting as condemnors; governmental authorities;
institutional investors for which the principal place of business is, or
the majority of board members and officers principally reside, in New Jersey;

or other institutional investors excepted from the requirements of the bill by
the commissioner.�

���� An institutional investor that
violates the bill is required to alienate the single-family home within six
months of acquisition, and any profit received is to be payable to the Attorney
General, in addition to a penalty of up to $50,000.� The penalty revenue
collected, and any penalties and interest collected thereon, is to be annually
credited to the New Jersey Housing and Mortgage Finance Agency to establish new
programs or supplement existing programs that award grants to provide down
payment assistance to families purchasing single-family homes within the State.

���� A violation of the bill is to
also constitute an unlawful practice in violation of the New Jersey consumer
fraud act.� Further, in addition to any penalty collected by the Attorney
General pursuant to the bill, the bill permits any person or entity directly
and adversely affected by a violation to file a complaint against an
institutional investor in violation of the bill.� The complainant would be
permitted to recover $20,000, which is required to be proportionately divided
amongst any person or entity, including a small institutional investor,
directly and adversely affected by a violation who filed a complaint within 24
months of the date that the violation occurred, in addition to certain fees and
expenses incurred in proving a violation of the bill.�

���� The bill would take effect on
the first day of the sixth month next following the date of enactment.�