Establishes procedure to dissolve common interest community by constituent homeowners.

S4104

SENATE, No. 4104

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 4, 2026

Sponsored by:

Senator� MICHAEL L. TESTA, JR.

District 1 (Atlantic, Cape May and Cumberland)

SYNOPSIS

���� Establishes procedure to dissolve common interest
community by constituent homeowners.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
permitting constituent homeowners to
dissolve
a common interest community and supplementing P.L.1977,
c.419 (C.45:22A-21 et seq.), amending P.L.1983, c.127,
and repealing
section 26 of P.L.1969, c.257 (C.46:8B-26)
.

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

���� 1.� (New section)� a.� Notwithstanding
any provisions of the governing documents of a planned real estate development
to the contrary, an association may be dissolved pursuant to Title 15 of the
Revised Statutes or Title 15A of the New Jersey Statutes, as applicable, by
action of its members as provided in this section.

���� b.� The association members may
recommend a plan of dissolution of the association through a petition signed by
not less than 25 percent of the association members.� The plan of dissolution
shall be submitted to the executive board, and shall be compliant with the
rules and regulations promulgated by the Commissioner of Community Affairs
pursuant to section 3 of P.L.��� , c.��� (pending before the Legislature as
this bill).

���� c.� The executive board shall
hold the meeting within 60 days from the day that the petition is submitted to
the executive board.� Notice of the meeting shall be given to each member
entitled to vote at the meeting within the time provided by the governing
documents of the association and as permitted by applicable law.

���� d.� At the meeting, a vote of
the members shall be taken on the proposed plan of dissolution.� The plan of
dissolution shall be approved upon receiving the affirmative vote of two-thirds
of the votes cast by the members of the association entitled to vote thereon.�
Following a vote rejecting a plan of dissolution, the executive board shall not
hold a subsequent vote on a proposed plan of dissolution until 18 months after
the date of the vote rejecting the prior plan of dissolution.

���� e.� (1)� If the executive
board fails to hold a meeting as required pursuant to subsection c. of this
section, or fails to hold a vote at the meeting pursuant to subsection d. of
this section, each member of the board shall be subject to a penalty to be paid
to the Department of Community Affairs of $100 for each week following the 60
day deadline established by subsection c. of this section that a meeting and
vote is not held.� Association funds shall not be used to pay a penalty imposed
pursuant to this paragraph.

���� (2)� If the executive board
fails to hold a meeting as required pursuant to subsection c. of this section,
or fails to hold a vote at the meeting pursuant to subsection d. of this
section, an association member may, after 240 days following the date the petition
was submitted to the executive board, submit the proposed plan of dissolution
with a petition signed by not less than two-thirds of the members of the
association to the Commissioner of Community Affairs to commence the dissolution
of the association.

���� 2.� N.J.S.15A:12-1 is amended
to read as follows:

���� a.� A corporation may be
dissolved in any one of the following ways:

���� (1)� by action of the
incorporators or trustees pursuant to section 15A:12-2;

���� (2)� by action of the members
pursuant to section 15A:12-3;

���� (3)� by action of the board
and the members pursuant to section 15A:12-4;

���� (4)� by action of the board
pursuant to section 15A:12-5;

���� (5)� by action of the members
pursuant to section 15A:12-6;

���� (6)� by the filing of a
certificate of dissolution pursuant to section 15A:12-7 upon expiration of any
period of duration stated in the corporation's certificate of incorporation;

���� (7)� by a judgment of the
Superior Court in an action brought pursuant to section 15A:12-11, 15A:12-12,
or 15A:14-2 or otherwise;�
[
or
]

���� (8)� automatically by the
Secretary of State revoking a certificate of incorporation as set forth in
subsection c. of section 15A:4-5
; or

����
(9)� for an association, as
defined pursuant to subsection n. of section 3 of P.L.1977, c.419 (C.45:22A-23),
by action of a two-thirds majority of association members pursuant to section 1
of P.L. , c.��� (C.��������� ) (pending before the
Legislature as this bill)
.

���� b.� A corporation which has
been dissolved in a proceeding pursuant to section 15A:12-11 or 15A:12-12, or
which has been dissolved, or the certificate� of incorporation of which has
been revoked, for a cause or by a method not� mentioned in this section, shall
be subject to all the provisions of this� chapter and of chapter 14, to the
extent that those provisions are compatible� with a court-directed dissolution,
or with the statute or common law proceeding� pursuant to which the
dissolution, or revocation is effected.

(cf: N.J.S.15A:12-1)

���� 3.� (New section)� The
Commissioner of Community Affairs, in consultation with the Executive Director
of the Housing and Mortgage Finance Agency, shall, pursuant to 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).� The rules and regulations shall include,
but shall not be limited to:

���� a.� procedure for the
separation of common property such as roadways, facilities, and parks;

���� b.� process for a government
entity to assume ownership of common property such as roadways, facilities, and
parks; and

���� c.� procedure for dissolution
by the department in accordance with paragraph (2) of subsection e. of section
1 of P.L.��� , c.��� (C. )
(pending before the Legislature as this bill).

���� 4.� Section 26 of P.L.1969,
c.257 (C.46:8B-26) is repealed.

���� 5.� This act shall take effect
on the first day of the seventh month next following enactment, except that the
Commissioner of Community Affairs and the Executive Director of the Housing and
Mortgage Finance Agency may take anticipatory action to effectuate the
provisions of this act.

STATEMENT

���� This bill establishes a
procedure permitting constituent homeowners to dissolve their common interest
community through a two-thirds majority vote affirming a compliant plan for
dissolution, as submitted to the executive board of the association following a
petition signed by at least 25 percent of the association members.� The bill
requires the executive board of an association to hold a vote on a plan for
dissolution within 60 days of the submission of a sufficient petition and give
notice to each member that the vote will take place.� If a vote on a plan for
dissolution fails, a subsequent vote on a plan for dissolution will not take
place for 18 months.

���� The bill establishes a penalty
of $100 per week following the 60 day deadline that a meeting and vote are not
held to be imposed on each member of the association board.� The bill specifies
that association funds may not be used to pay the penalty established by the
bill.� The bill further provides that, when an association board has not held a
meeting or not held a vote on a proposal for dissolution within the period
provided for in the bill, an association member may submit a petition with the
signatures of two-thirds of the association members to the Department of
Community Affairs (department) to proceed with the dissolution.

���� The bill amends
N.J.S.A.15A:12-1 to establish the provisions of the bill as a procedure for the
dissolution of a nonprofit corporation that is the association of a common
interest community.� The bill additionally requires the Commissioner of
Community Affairs, in consultation with the Executive Director of the New
Jersey Mortgage and Finance Agency, to promulgate rules and regulations
governing plans for the dissolution of an association, including procedure for
the separation and government entity ownership of certain common property such
as roadways, facilities, and parks and procedure for the dissolution of an
association by the department when a successful petition is submitted following
a failure of the association board to hold a meeting and vote on the proposal
for dissolution. �The bill takes effect on the first day of the seventh month
next following enactment, except that the Commissioner of Community Affairs and
the Executive Director of the Housing and Mortgage Finance Agency may take
anticipatory action.