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NEW JERSEY COMMUNITY ASSOCIATION COLLECTIONS GUIDE

New Jersey Community Association Collections Guide: Get answers to your questions about New Jersey HOA Collection Laws

Welcome to New Jersey

With over 7,000 condos, HOAs, and co-ops, the state of New Jersey has a massive number of common interest reality associations. According to CAI, an estimated 1.4 million New Jersey residents live in a community association today. 

By 2040 the community association housing model is expected to become the most common form of housing in New Jersey. Currently, New Jersey residents pay $51.3 million a year to maintain their communities and 49,300 New Jerseyites serve as volunteer leaders in their community associations. 

Before you read anything on this page about the laws governing Condo and HOA collections in New Jersey, make sure you have read the governing documents for your association. The governing documents may be stricter than the state laws, and in those cases, the governing documents take precedence.

As a general rule, neither your management company nor board members should attempt to make contact with delinquent homeowners in an attempt to collect the debt, beyond the initial courtesy letters. You need an attorney or a licensed collection agency to collect on your behalf.

Legal Reference Links

FAIR DEBT COLLECTION PRACTICES ACT (FDCPA)

New Jersey Planned Real Estate Development Full Disclosure Act

New Jersey Condominium Act

Other Federal Laws

How to improce HOA delinquencies

How to Reduce Your Condo/HOA Delinquency Rate

Are you living with the Consequences of nonpaying homeowners? If so, you need a better approach to collections for your community association!

This guide will will give you the same techniques that we use to help our clients reduce delinquencies, all but eliminate bad debt write-offs, and see significant savings on legal fees.

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Disclaimer: The information provided on this page is for general informational purposes only and does not constitute legal advice. Axela is a technology provider and is not a debt collector. Laws and procedures may change and may vary depending on the specific circumstances. This information should not be relied upon as a substitute for advice from qualified legal counsel. Users should consult an attorney regarding applicable laws and compliance requirements.

State Collection Laws for HOAs & Condos

Yes. Foreclosure should be the last desperate attempt to recover the association’s money. An HOA should consider a merit-based collection agency to recover its delinquent money before moving to put people out of their homes. Notices should be given to a delinquent before any action is taken.
If the file has not gone to the attorney it is advisable to contact the manager or treasurer of the association to get a copy of the delinquent ledger. Then review the ledger and if you can prove that you made payments that were not applied properly, advise the management company. If the file has been sent to a collection agency the law requires that the collection agency give the debtor 30 days to dispute the debt.
Yes. Late fees can be charged per the governing documents. Regarding late interest, whether or not the governing documents are silent on the matter the association can charge the maximum allowed by law which is 16%.
Yes. An HOA and Condo must be a properly registered corporation and up to date on all of their state and federal filings. There is no special registration required.
Yes. New Jersey does not differentiate between an in-state and out-of-state owner from a collections perspective.
6 years. The statute of limitations periods for HOA claims are different for every state. In New Jersey, consumer debt such as HOA & Condo fees have a statute of limitations of 6 years.
Yes. The board of directors has a fiduciary duty to collect these assessments and if the individual is not in bankruptcy there is nothing legally stopping them from the collection of delinquent assessments.
The best way to handle collections for HOAs is to engage the owners and be armed with all the information you can acquire. Know the equity in the unit, read and understand the governing documents, find out where the owner is, and then begin to engage in the collection efforts. Once again, this is a very heavily regulated industry so this should be done by professional and licensed companies. Once you engage with an owner, you may be surprised to see that most of them will cooperate and come to the table. You just have to ask them and be willing to work with them.
The traditional way to collect is to have the management company send a few courtesy letters to a delinquent owner and then send the file to the attorney for foreclosure. New Jersey is a Judicial Foreclosure state and the process can be long and expensive.
Yes, New Jersey has state laws pertaining to HOA and condo associations. To better understand the laws for New Jersey HOAs, please refer to: To better understand the laws for New Jersey condos, please refer to:
  • New Jersey Condominium Act – N.J.S.A. 46:8B-1. This Act applies to condominium associations created after January 7, 1970, and provides a comprehensive legal framework for, without limitation, formation, apportionment of interest, common expenses, and voting rights; association administration and powers; and purchaser protection in New Jersey.
Yes. New Jersey is a super lien state. An HOA’s assessment lien on a lot in New Jersey has priority, up to a specified amount, over the liens created by a lender’s earlier-filed first mortgage. This is referred to as a “super priority lien” and references the fact that in the event of a foreclosure sale, the super priority portion of the assessment lien must be paid to the HOA from the sale proceeds before satisfying the lien amount of an earlier-filed lender’s mortgage. When faced with a foreclosure proceeding, a lender may offer to pay off the super priority lien amount on behalf of the delinquent lot owner in order to prevent the foreclosure and thereby protect its mortgage or deed of trust. Finally, a bank foreclosure does not extinguish the debt that is owed to the association and the association has the right to pursue the old owner in court for a monetary judgment to recover this debt. It may not be a secured debt but it is surely collectible unless the governing documents say that the debt owed to the association rolls over to the membership.
Yes. Once a property has gone through probate and the court has decided who is the legal owner, all the past due fees are due and payable to the HOA unless the governing documents have a provision that says the debt rolls over to the association. Going forward, after probate has been settled, the new owner must pay their fair share.
An association should always contact a delinquent owner to advise them regarding what is owed. Every owner is entitled to see their ledger and know how much they are owed. An owner may request their ledger at any time and an HOA should be willing and able to provide it to them. An association that publicly publicizes information about a homeowner’s unpaid assessments potentially violates the federal Fair Debt Collections Practices Act which forbids disclosure of information to third parties relating to a debt (which includes HOA assessments).
New Jersey laws place no restrictions on what you can do with the money your association collects in past-due assessments. As long as the money is accounted for in the budget, aligns with the governing documents, and/or is approved by the board of directors it can be spent on any improvements or maintenance that is required by the association.
An HOA can collect as much as is legally owed to them in fees, violations, special assessments, administrative costs, and legal fees – as outlined in the governing documents of the association.
No, but that does not mean that a management company cannot be in violation of the collection statutes. Collections are heavily regulated and anybody who attempts to collect debts should know what they are doing.
Regarding the collection of debt, New Jersey looks to the Federal Fair Debt Collection Practices Act (FDCPA) statutes.

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Take Control of Your Delinquencies

Watch this video to learn how Axela’s collections tools can return delinquent funds to your community association's accounts.

Axela’s technology increases recovery times. On average, using our collections tools results in money in your community’s account within 67 days of the assessments becoming delinquent.

FREE COLLECTIONS ANALYSIS

  • PREDICTABLE CASH FLOW

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    Our proprietary software has resulted in an average recovery time of 67 days. Compare that to a lien judgment, where you must rent out the unit and collect rental fees!

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    We provide you with easy-to-understand monthly reports. You’ll have access to your customer portal 24/7 to instantly check the status of any account.