In April 2019, Governor Murphy signed Assembly Bill A5002/Senate Bill S3414 into law. This new law extends an Association’s six-month assessment lien priority over mortgages to HOAs. Most of you know that previously only Condominium Associations enjoyed this six-month assessment lien priority (the provisions of this law do not apply to Cooperatives).
Despite some internally conflicting language, this new law also seems to make the six-month per year priority cumulative for five years. Theoretically, if an Association records a new lien every year for five years, thirty months of assessments will have priority over the mortgage.
Associations must keep in mind that, although liens protect Associations in bankruptcy and lien priority protects some assessments in case of foreclosure, liens are passive tools that often do not get the debtors paying again.
At McGovern Legal we negotiate payment plans and use Money Judgments, Wage Executions, Bank Levies, Rent Levies, Rent Receivers, Quit Claim Deeds, Foreclosure Actions and other tools to get the assessments, “the lifeblood of the Association” flowing again.
Thank you to CAI-NJ’s Legislative Action Committee for its work on legislation impacting Associations.