Restricts purchase of single-family homes by certain institutional investors.

S3942

SENATE, No. 3942

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 12, 2026

Sponsored by:

Senator� VINCENT J. POLISTINA

District 2 (Atlantic)

Co-Sponsored by:

Senator Gopal

SYNOPSIS

���� Restricts purchase of single-family homes by certain
institutional investors.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning institutional investor acquisition of
single-family homes and supplementing chapter 3 of Title 46 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 the
term is defined
pursuant to subsection f. of section 4 of P.L.1985,
c.222 (C.52:27D-304).�

����
"
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.

����
"Director" means the
Director of the Division of Taxation
in the Department of the Treasury.

���� "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.

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

���� "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 four 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 with a yard or public way on not less than two
sides.

�

���� 2.�
a.� 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.�

���� 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; or

���� (6)�� such
other institutional investors that the Commissioner of Community Affairs, in
consultation with the
Director of the Division of Taxation in the
Department of the Treasury and 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
Director of the Division of
Taxation in the Department of the Treasury
, on
a form established by the
Division of Taxation
, in consultation with the Division of Consumer Affairs in the Department
of Law and Public Safety and the commissioner, and published by the
Department
of the Treasury
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 director pursuant to section 3 of
P.L.��� , c.��� (C.��� ) (pending before the Legislature as this bill), 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 subsections a. or c. of this section
shall be liable to a civil penalty of not less than $20,000 and, subject to the
provisions of subparagraph (b) of this paragraph, $40,000 per violation, plus
fees and expenses, as follows:�

���� (a)�
An institutional investor that violates subsection a. or subsection c. of this
section shall be liable to a civil penalty of $20,000, 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.

���� (b)�
Notwithstanding a 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: $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 P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill).�

���� 3.��� The
Commissioner of Community Affairs and the
Director of the Division of
Taxation in the Department of the Treasury

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

���� 4.��� 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 acquired, on
or after the effective date of P.L. , c. (C. )
(pending before the Legislature as this bill), except that the Commissioner of
Community Affairs, the
Director of the Division of Taxation in the
Department of the Treasury,
and the Director
the Division of Consumer Affairs in the Department of Law and Public Safety
shall take anticipatory action necessary to effectuate the provisions of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill).

STATEMENT

���� This bill would prohibit
certain institutional investors from placing a bid on or purchasing a
single-family home
during the first 75 days
that the single-family home is on the market and available for purchase.

���� Specifically, the bill would
prohibit an institutional investor, as defined in the bill, from placing a bid
on or purchasing, 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,� as the
term is defined in the bill.

���� 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; an
institutional investor acting as a condemnor; a governmental authority; or
other institutional investors excepted from the requirements of the bill by the
Commissioner of Community Affairs (commissioner), as specified in the bill.�

���� The
bill requires all institutional investors to provide an annual report to the
Director of the Division of Taxation in the Department of the Treasury
(director) containing certain information required by the bill.� The bill
specifies that the report is to be provided on a form established by the
Department of the Treasury.�

���� The bill requires an
institutional investor that places a bid on or
purchases a single-family home in violation of the bill to alienate the
single-family home within six months of acquiring the single-family home.� Any
profit is to be payable to the Attorney General.� In addition, an amount equal
to the profit received is also to be paid to, and proportionately divided
amongst, any person or entity�including a small institutional investor,
adversely and directly affected by a violation, which is to be construed
liberally�who files a complaint in the Superior Court of New Jersey, Law
Division within 24 months of the date that the violation occurred.�

���� The
bill provides that a violation of the bill would be an unlawful practice,
pursuant to and in violation of the New Jersey consumer fraud act.� An
institutional investor that violates the prohibition on bidding on or
purchasing a single-family home during the first 75 days the single-family home
is on the market and available for purchase or that fails to provide the annual
report to the director, would be liable to a civil penalty of not less than
$20,000, and, subject to certain provisions of the bill, $40,000 per
violation.� The $20,000 civil penalty is to be collected in a civil action
brought by the Attorney General by a summary proceeding pursuant to the
"Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et
seq.).� Notwithstanding a 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 the 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 requires the commissioner and director to adopt rules and regulations to
implement the provisions of the bill.� The bill would take effect on the first
day of the sixth month next following the date of enactment, and apply to a
single-family home acquired, and all bids placed, and contracts executed for
the purchase of, a single-family home, on or after the effective date of the
bill, except that the commissioner, director, and the Director the Division of
Consumer Affairs in the Department of Law and Public Safety would be required
to take anticipatory action necessary to effectuate the provisions of the bill.