New Jersey Passes Legislation Requiring Removal of Discriminatory Restrictive Covenants in Association Deeds and Documents

On November 8, 2021, New Jersey Governor Phil Murphy signed a law, A-5390 / SB-2861, which requires the removal of discriminatory terms restricting the ownership or use of real estate as prohibited by law against discrimination of all acts registered on or after January 1, 2022, and further requires that homeowner or condominium associations immediately review their governing documents and remove these terms. Although these commitments are already illegal and unenforceable, the bill seeks to remove them entirely. The bill takes effect immediately.

The bill also requires that a county clerk or registry of deeds and mortgages refuse to accept any deed submitted for registration that refers to the specific part of such a restrictive covenant. In addition, a lawyer or title company preparing or submitting a deed for registration must ensure that the specific part of such a restrictive covenant is not specifically referenced in the deed before the deed is submitted for registration. , although the deed may include general provisions according to which the deed “is subject to all registration clauses[.]However, any deed entered in the land registers as of January 1, 2022 and mistakenly containing such a restrictive covenant nevertheless constitutes a valid transfer of real estate ownership.

With respect to deeds registered with such restrictive covenants, the bill provides an opportunity for a landowner to waive such a restrictive covenant by registering a “certificate of release from certain prohibited clauses” with the county clerk, or a register of deeds and mortgages, as the case may be. , in the county where the property is located. The real estate owner can register such a certificate prior to the registration of a deed ceding real estate to a buyer, or when a real estate owner discovers that such a prohibited undertaking exists and chooses to release it.

Finally, the bill requires that, within 90 days of its passage, each board of directors of a landowners ‘or owners’ association, a cooperative society, a condominium association or a community Planned examines the governing documents of the association to determine whether those documents contain any restriction, agreement or condition that prohibits or restricts the transfer, charge, rental, occupation or use of real property as prohibited by the anti-discrimination law, in particular NJSA 10: 5-4 and 10: 5-12. If an association finds an illegal restriction, commitment or condition in any of these documents, they must edit the document to remove the restriction, commitment or condition. The removal of such restriction, commitment or condition does not require the approval of the members of the association, notwithstanding anything to the contrary in the constituting documents. In addition, if a board subsequently receives a written request from a member of its association to remove from such materials language that the member considers to be an illegal restriction, the board should immediately undertake a review of the materials and complete the review. within 30 days of request. If the Board determines that the Member is correct, the Board must amend the document (s) to remove the restriction, commitment or condition within 30 days of its determination. The bill, however, does not provide for a private cause of action by or against an association, board of directors, member or the public for acting or not acting to remove or not remove a restriction. , an illegal covenant or condition.

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