Prohibits condominium associations from assessing insurance deductibles to individual unit owners or groups of unit owners.

S3561

SENATE, No. 3561

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Senator� LINDA R. GREENSTEIN

District 14 (Mercer and Middlesex)

SYNOPSIS

���� Prohibits condominium associations from assessing
insurance deductibles to individual unit owners or groups of unit owners.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning condominium association insurance
policies and amending P.L.1969, c.257.

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

���� �1.�� Section 3 of P.L.1969,
c.257 (C.46:8B-3) is amended to read as follows:

���� �3.�� The following words and
phrases as used in
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
shall have the meanings set forth in this section
unless the context clearly indicates otherwise:

���� �a.��� "Assigns"
means any person to whom rights of a unit owner have been validly transferred
by lease, mortgage or otherwise.

���� �b.�� "Association"
means the entity responsible for the administration of a condominium, which
entity may be incorporated or unincorporated.

���� �c.��� "Bylaws"
means the governing regulations adopted under
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
for the administration and management of the
property.

���� �d.�� Common elements"
means:

���� (i)��� the land described in
the master deed;

���� (ii)�� as to any improvement,
the foundations, structural and bearing parts, supports, main walls, roofs,
basements, halls, corridors, lobbies, stairways, elevators, entrances, exits
and other means of access, excluding any specifically reserved or limited to a
particular unit or group of units;

���� (iii)�� yards, gardens,
walkways, parking areas and driveways, excluding any specifically reserved or
limited to a particular unit or group of units;

���� (iv)� portions of the land or
any improvement or appurtenance reserved exclusively for the management,
operation or maintenance of the common elements or of the condominium property;

���� (v)�� installations of all
central services and utilities;

���� (vi)� all apparatus and
installations existing or intended for common use;

���� (vii)��� all other elements of
any improvement necessary or convenient to the existence, management,
operation, maintenance and safety of the condominium property or normally in
common use; and

���� (viii)�� such other elements
and facilities as are designated in the master deed as common elements.

���� �e.��� "Common
expenses" means expenses for which the unit owners are proportionately
liable, including but not limited to:

���� (i)��� all expenses of
administration, maintenance, repair and replacement of the common elements
,
including deductibles on insurance coverage
;

���� (ii)�� expenses agreed upon as
common by all unit owners;� and

���� (iii)�� expenses declared
common by provisions of
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
or by the master deed or by the bylaws.

���� �f.� "Common
receipts" means:

���� (i)��� rent and other charges
derived from leasing or licensing the use of common elements;

���� (ii)�� funds collected from
unit owners as common expenses or otherwise; and

���� (iii)� receipts designated as
common by the provisions of
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
or by the master deed or the bylaws.

���� �g.�� "Common
surplus" means the excess of all common receipts over all common expenses.

���� �h.�� "Condominium"
means the form of ownership of real property under a master deed providing for
ownership by one or more owners of units of improvements together with an
undivided interest in common elements appurtenant to each such unit.

���� �i.��� "Condominium
property" means the land covered by the master deed, whether or not
contiguous and all improvements thereon, all owned either in fee simple or
under lease, and all easements, rights and appurtenances belonging thereto or
intended for the benefit thereof.

���� �j.��� "Developer"
means the person or persons who create a condominium or lease, sell or offer to
lease or sell a condominium or units of a condominium in the ordinary course of
business, but does not include an owner or lessee of a unit who has acquired
his unit for his own occupancy.

���� �k.�� "Limited common
elements" means those common elements which are for the use of one or more
specified units to the exclusion of other units.

���� �l.��� "Majority" or
"majority of the unit owners" means the owners of more than
[
50%
]

50 percent

of the aggregate in interest of the undivided ownership of the common elements
as specified in the master deed.� If a different percentage of unit owners is
required to be determined under
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
or under the master� deed or
bylaws for any purpose, such different percentage of owners shall mean� the
owners of an equal percentage of the aggregate in interest of the undivided�
ownership of the common elements as so specified.

���� �m.� "Master deed"�
means the master deed recorded under the terms of section 8 of
[
this act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
, as such master deed may be amended or
supplemented from time to time, being the instrument by which the owner in fee
simple or lessee of the property submits it to the provisions of this chapter.

���� n.��� "Person" means
an individual, firm, corporation, partnership, association, trust or other
legal entity, or any combination thereof.

���� o.��� "Unit"� means
a part of the condominium property designed or intended for any type of
independent use, having a direct exit to a public street or way or to a common
element or common elements leading to a public street or way or to an easement or
right of way leading to a public street or way, and includes the proportionate
undivided interest in the common elements and in any limited common elements
assigned thereto in the master deed or any amendment thereof.

���� p.��� "Unit deed"
means a deed of conveyance of a unit in recordable form.

���� q.��� "Unit owner"
means the person or persons owning a unit in fee simple.

(cf: P.L.1979, c.157, s.1)

���� 2.��� Section 15 of P.L.1969,
c.257 (C.46:8B-15) is amended to read as follows:

���� 15.� Subject to the provisions
of the master deed, the bylaws, rules and regulations and the provisions of
[
this act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
or other applicable law, the association shall
have the following powers:

���� (a)�� Whether or not
incorporated, the association shall be an entity which shall act through its
officers and may enter into contracts, bring suit and be sued.� If the
association is not incorporated, it may be deemed to be an entity existing
pursuant to
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
and a majority of the members of the governing
board or of the association, as the case may be, shall constitute a quorum for
the transaction of business.� Process may be served upon the association by
serving any officer of the association or by serving the agent designated for
service of process.� Service of process upon the association shall not
constitute service of process upon any individual unit owner.

���� (b)�� The association shall
have access to each unit from time to time during reasonable hours as may be
necessary for the maintenance, repair or replacement of any common elements
therein or accessible therefrom or for making emergency repairs necessary to prevent
damage to common elements or to any other unit or units.� The association may
charge the unit owner for the repair of any common element damaged by the unit
owner or his tenant
; provided, however, the association shall not pass the
cost of an insurance deductible to a unit owner or his tenant, or a group of
unit owners or their tenants for the repair of any common element or unit not
intentionally damaged by them
.

���� (c)�� The association may
purchase units in the condominium and otherwise acquire, hold, lease, mortgage
and convey the same.� It may also lease or license the use of common elements
in a manner not inconsistent with the rights of unit owners.

���� (d)�� The association may
acquire or enter into agreements whereby it acquires leaseholds, memberships or
other possessory or use interests in lands or facilities including, but not
limited to country clubs, golf courses, marinas and other recreational facilities,
whether or not contiguous to the condominium property, intended to provide for
the enjoyment, recreation or other use or benefit of the unit owners.� If fully
described in the master deed or bylaws, the fees, costs and expenses of
acquiring, maintaining, operating, repairing and replacing any such
memberships, interests and facilities shall be common expenses.� If not so
described in the master deed or bylaws as originally recorded, no such
membership interest or facility shall be acquired except pursuant to amendment
of or supplement to the master deed or bylaws duly adopted as provided therein
and in
[
this
act
]

P.L.1969,
c.257 (C.46:8B-1 et seq.)
. In the absence of such
amendment or supplement, if some but not all unit owners desire any such
acquisition and agree to assume among themselves all costs of acquisition,
maintenance, operation, repair and replacement thereof, the association may
acquire or enter into an agreement to acquire the same as limited common
elements appurtenant only to the units of those unit owners who have agreed to
bear the costs and expenses thereof.� Such costs and expenses shall be assessed
against and collected from the agreeing unit owners in the proportions in which
they share as among themselves in the common expenses in the absence of some
other unanimous agreement among themselves. No other unit owner shall be
charged with any such cost or expense; provided, however, that nothing herein
shall preclude the extension of the interests in such limited common elements
to additional unit owners by subsequent agreement with all those unit owners
then having an interest in such limited common elements.

���� (e)�� The association may levy
and collect assessments duly made by the association for a share of common
expenses or otherwise, including any other moneys duly owed the association,
upon proper notice to the appropriate unit owner, together with interest thereon,
late fees and reasonable attorneys' fees, if authorized by the master deed or
bylaws.

���� All funds collected by an
association shall be maintained separately in the association's name. For
investment purposes only, reserve funds may be commingled with operating funds
of the association.� Commingled operating and reserve funds shall be accounted
for separately, and a commingled account shall not, at any time, be less than
the amount identified as reserve funds.� A manager or business entity managing
a condominium, or an agent, employee, officer, or director of an association,
shall not commingle any association funds with his or her funds or with the
funds of any other condominium association or the funds of another association
as defined in section 3 of P.L.1977, c.419 (C.45:22A-23).

���� If authorized by the master
deed or bylaws, the association may levy and collect a capital contribution,
membership fee or other charge upon the initial sale or subsequent resale of a
unit, which collection shall be earmarked for the purpose of maintenance of or
improvements to common elements to defray common expenses or otherwise,
provided that such charge shall not exceed nine times the amount of the most
recent monthly common expense assessment for that unit.

���� (f)�� If authorized by the
master deed or bylaws, the association may impose reasonable fines upon unit
owners for failure to comply with provisions of the master deed, bylaws or
rules and regulations, subject to the following provisions:

���� A fine for a violation or a
continuing violation of the master deed, bylaws or rules and regulations shall
not exceed the maximum monetary penalty permitted to be imposed for a violation
or a continuing violation under section 19 of the "Hotel and Multiple
Dwelling Law," P.L.1967, c.76 (C.55:13A-19).

���� On roads or streets with
respect to which Title 39 of the Revised Statutes is in effect under section 1
of P.L.1945, c.284 (C.39:5A-1), an association may not impose fines for moving
automobile violations.

���� A fine shall not be imposed
unless the unit owner is given written notice of the action taken and of the
alleged basis for the action, and is advised of the right to participate in a
dispute resolution procedure in accordance with subsection (k) of section 14 of
P.L.1969, c.257 (C.46:8B-14).� A unit owner who does not believe that the
dispute resolution procedure has satisfactorily resolved the matter shall not
be prevented from seeking a judicial remedy in a court of competent
jurisdiction.

���� (g)�� Such other powers as may
be set forth in the master deed or bylaws, if not prohibited by P.L.1969, c.257
(C.46:8B-1 et seq.) or any other law of this State.

(cf: P.L.2007, c.165, s.1)

���� 3.��� Section 24 of P.L.1969,
c.257 (C.46:8B-24) is amended to read as follows:

���� 24.� (a)� Damage to or
destruction of any improvements on the condominium property or any part thereof
or to a common element or elements or any part thereof covered by insurance
required to be maintained by the association shall be repaired and restored by
the association using the proceeds of any such insurance.�
[
The
]

Except as
provided in subsection (b) of section 15 of P.L.1969, c.257 (C.46:8B-15), the

unit owners directly affected shall be assessed on an equitable basis for any
deficiency and shall share in any excess.

���� (b)�� If the proceeds of such
insurance shall be inadequate by a substantial amount to cover the estimated
cost of restoration of an essential improvement or common element or if such
damage shall constitute substantially total destruction of the condominium property
or of one or more of the buildings comprising the condominium property or if
[
75%
]

75 percent

of the unit owners directly affected by such damage or destruction voting in
accordance with the procedures� established by the by-laws shall determine not
to repair or restore, the� association shall proceed to realize upon the
salvage value of that portion of� the condominium property so damaged or
destroyed either by sale or such other� means as the association may deem
advisable and shall collect the proceeds of� any insurance.� Thereupon the net
proceeds of such sale, together with the net proceeds of such insurance shall
be considered as one fund to be divided among the unit owners directly affected
by such damage or destruction in proportion to their respective undivided
ownership of the common elements.� Any liens or encumbrances on any affected
unit shall be relegated to the interest in the fund of the unit owners.

���� (c)�� The master deed or the
by-laws may make other and different provision covering the eventualities set
forth in paragraphs (a) and (b) of this section or covering other results of
damage or destruction to any part or all of the condominium property, notwithstanding
the provisions of paragraphs (a) and (b).� If the master deed or by-laws shall
require insurance against fire and other casualty with respect to individual
units, it shall also provide for the application of the proceeds and the rights
and obligations of unit owners in case of damage or destruction.

(cf: P.L.1969, c.257, s.24)

���� 4.��� This act shall take
effect immediately.

STATEMENT

���� This bill would prevent
condominium associations from assessing insurance deductibles to individual
unit owners or groups of unit owners.� Under current law, a condominium
association can pass the cost of any deductible arising from a claim under the
association's insurance policy to an individual unit owner.� This bill would
prevent condominium associations from placing the burden of a deductible on one
owner or a group of owners.� The bill would ensure that unit owners realize the
full benefit of an association's insurance policy, which is the pooling of
risks among a large group of similarly situated individuals.