Skip to Content
IMPORTANT UPDATE: COMMUNITY ASSOCIATIONS’ ABILITY TO COLLECT IS UNDER THREAT
By May 6, 2020 Posted in Community Association Law Share
We hope everyone is staying safe and healthy during this unprecedented time.
On April 12, 2020, and April 14, 2020, our office warned of a new bill working its way through the New Jersey Legislature: S2330 / A3908, entitled “COVID‑19 Financial Security for Consumers Act.” When the bill was last before the Legislature, it was tabled for further consideration and editing.
Well, it is back, and in the same form as last time! And we need your help opposing it. The COVID‑19 Financial Security for Consumers Act paints with a broad brush in its application to community associations. If it passes, it will critically impact associations’ ability to collect on past-due maintenance and assessment fees. It allows everyone, whether or not they suffer from a COVID‑19-related hardship, to delay the payment of maintenance fees without consequence. While we feel for those who are experiencing a bona-fide hardship and are accommodating them, there is no reason to allow everyone, hardship or not, to cease paying.
Section 3 of the COVID‑19 Financial Security for Consumers Act is the troubling part. This section of the act prevents any creditor or debt collector from initiating, filing, or threatening to file any new collection lawsuit until 120 days after the current public health emergency comes to an end (the date of which is currently uncertain). Likewise, during that time, creditors and debt collectors cannot initiate or threaten to initiate a garnishment, seizure, attachment, withholding, or repossession.
Other provisions are superfluous, because they are already prohibited by Federal Law. Creditors and debt collectors, for example, cannot visit or threaten to visit a debtor’s house or place of employment. They cannot confront a debtor regarding collection in any public place. They cannot report any debt to a collection agency. Section 3 also prevents debt collectors from calling debtors unless the debtor calls first or asks to be called.
The penalties for violating the Act, are substantial. The State Attorney General can sue creditors or debt collectors who violate these rules, as can the debtor. In response, courts can order creditors or debt collectors to pay fines up to $5,000.00 for violations. Similarly, courts can force creditors or debt collectors to retract any debt reported to a credit reporting agency. If a private party sues, he/she can recover their counsel fees under this bill.
The only circumstance under which a creditor or debt collector may begin a collection action during this health emergency, or 120 days afterward, would be if the statute of limitations would otherwise expire. In other words, if the statute of limitations is going to run during this period, the creditor or debt collector may file a collection action. However, when serving the debtor with the lawsuit, the notice must clearly state that the creditor or debt collector cannot attempt to collect any portion of the debt until the conclusion of the coronavirus period.
The COVID‑19 Financial Security for Consumers Act would essentially remove any motivation for a member of a community association to pay maintenance fees for up to 120 days after the public health emergency ends. Without this motivation to pay, associations could see a devastating loss of income, which would, in turn, harm even those members who continued to pay. Additionally, the 120-day waiting period in this bill would place community associations and the end of a long line of litigants who have already filed suits to collect their debts.
Many community associations are already engaged in work-out plans with those suffering a hardship as a result of COVID‑19 and its effect on the economy. In addition, associations are increasing cleaning and sanitation work in common areas to combat COVID‑19. If associations see a sudden decrease in income, they may resort to halting their own necessary payments, like those on insurance policies, or to management personnel, utilities, garbage removal, and so on. Further, Associations may end up having to raise maintenance fees to combat the effects of this bill.
We are calling for the Legislature to exempt community associations from this bill. We have written an open letter to the Senators sponsoring this bill.
Please contact these Senators if you also believe that this bill could negatively impact New Jersey community associations. See our letter below:
VIA EMAIL
The Honorable Nellie Pou
New Jersey State Senator
New Jersey Senate District 35
(Senpou@njleg.org)
The Honorable Joseph P. Cryan
New Jersey State Senator
New Jersey Senate District 20
(SenCryan@njleg.org)
The Honorable Steven V. Oroho
New Jersey State Senator
New Jersey Senate District 24
(SenOroho@njleg.org)
The Honorable Joe F. Vitale
New Jersey State Senator
New Jersey Senate District 19
(SenVitale@njleg.org)
The Honorable Dawn Marie Addiego
New Jersey State Senator
New Jersey Senate District 8
(SenAddiego@njleg.org)
The Honorable Mila M. Jasey
New Jersey State Senator
New Jersey Senate District 27
(ASWJasey@njleg.org)
The Honorable Verlina Reynolds-Jackson
New Jersey State Senator
New Jersey Senate District 15
(ASWReynoldsJackson@njleg.org)
The Honorable John F. McKeon
New Jersey State Senator
New Jersey Senate District 27
(ASMMcKeon@njleg.org)
The Honorable Andrew Zwicker
New Jersey State Senator
New Jersey Senate District 16
(ASMZwicker@njleg.org)
The Honorable P. Christopher Tully
New Jersey State Senator
New Jersey Senate District 38
(ASMTully@njleg.org)
The Honorable Lisa Swain
New Jersey State Senator
New Jersey Senate District 38
(ASWSwain@njleg.org)
The Honorable Wayne P. DeAngelo
New Jersey State Senator
New Jersey Senate District 14
(ASMDeAngelo@njleg.org)
The Honorable Annette Quijano
New Jersey State Senator
New Jersey Senate District 20
(ASWQuijano@njleg.org)
The Honorable Thomas P. Giblin
New Jersey State Senator
New Jersey Senate District 20
(ASMGiblin@njleg.org)
RE: BILL CONCERNING FINANCIAL SECURITY, AMENDING P.L. 2020, c7 and N.J.S. 2A:17-19
Dear Senator / Assemblyperson:
We have become aware of the above-captioned Bill, which we understand to be up for consideration before the Legislature commencing Thursday, May 7, 2020. I am writing to comment upon Section 3 of the proposed Bill. This Bill, if passed as written, will negatively affect the vast majority of the approximately 7,000 community associations (condominiums, homeowner associations and co-ops) in New Jersey, housing approximately 1.5 million New Jersey Residents.
Section 3 of the Bill, which, if passed, will remove any motivation by any community association resident to pay maintenance assessments for at least the 120-day period of the statute. The loss of income could be devastating to many community associations, which may have to do such things as reduce the extra cleaning they are performing on common areas in order to combat the Coronavirus, halt necessary maintenance, such as roof leaks, plumbing leaks, the correction of electrical issues, switching over from heat to air conditioning and the like, resulting in safety and health challenges. Other ramifications could include the halting of payments on insurance policies, prompt garbage removal and other activities necessary to the health and safety of the members of these communities.
Because of the way community associations are administered, they don’t fit neatly into the interim business relief loans offered by PPP or EIDL. There is no way for the community associations to make up that money without raising maintenance fees and increasing the economic burdens on their entire communities.
In our view, it is important in this instance, not to paint with a broad brush. Our firm represents over 200 community associations in New Jersey. We have created a system that identifies those who really need help, and separates them from those who are perfectly able to pay. It allows the person economically affected by the Coronavirus to explain their hardship and tell us the best they can do to address their obligations, and then we assist the Association in coming to a plan for those affected. This is a responsible procedure administered responsibly by professionals.
In the over 200 community associations we represent, less than 2% have asked their Associations for relief in connection with lost employment due to the Coronavirus. When those applications have been received, we have assisted those in need by creating tailor-made payment plans, based on their circumstances.
Respectfully, the government of this State has enough on its plate securing the health of its residents and assuring the recovery of the economy without a creating a broad legislative scheme that is not necessary for the vast majority of community association residents, and is already being administered responsibly.
The Community Associations Institute is a vast resource for the review of legislative action that affects community associations. It has a Legislative Action Committee and is poised to provide guidance on legislative issues such as the one proposed here, so as to avoid consequences that the non-practitioner could not be expected to foresee.
As the proposed Bill does not limit itself to those affected by the Coronavirus, or just to community associations, it will serve to harm many who are justifiably entitled to collect their debts, many of whom have already suffered a hardship as a result of being unable to obtain access to the Courts.
Several aspects of Section 3 of the Proposed Bill, in particular those prohibiting threatening to visit the household of a debtor, threatening to visit a debtor’s place of employment, or confronting the debtor in a harassing manner are already prohibited by the Federal Fair Debt Collection Practices Act.
Further, the Fair Debt Collection Practices Act requires a 30-day notice to a debtor prior to accessing the Courts, and the Courts are not presently accessible.
Section 3(a)(3) will serve to delay an already delayed process, as the Courts are not hearing such matters, and have made it clear that they will not reopen these mattes for some time to come. To require this 120-day waiting period before even advising someone, especially someone who has experienced no hardship, that an action in Court may be commenced, will put the community associations at the end of a long line of litigants who are permitted to file lawsuits, greatly extending the time over which community associations will need to recover their lost income, and greatly extending the time over which services, needed by the whole of their communities will be diminished.
We appreciate the fact that you are trying to reduce the stress of those who have suffered negative economic impact from the pandemic. But stress is not reduced by putting off addressing a problem. Stress is reduced by solving the problem. Allowing a person affected to discuss his hardship and work out a plan forges better relationships. Communications and community reduces stress.
For all of these reasons, Section 3 of this Bill will not serve the public interest. It will result in reduced services to residents of community associations across the State. It will reduce commerce as a time when we need all the commerce we can get.
We again urge you to communicate with the Community Associations Institute, as a reasonable and efficient means of working through the issues associated with the proposed bill.
Thank you for your attention to this matter.
Very truly yours,
GRIFFIN ALEXANDER, P.C.
/s/ Robert C. Griffin, Esq.
Robert C. Griffin, Esq.
Finally, for those interested, Section 3 of the Act is reproduced in its entirety below:
- Except as otherwise provided in subsection d. of this section, with respect to the covered coronavirus period, no creditor or debt collector shall:
- initiate, file, or threaten to file any new collection lawsuit;
- initiate, threaten to initiate, or act upon any legal or equitable remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property or funds for the payment of a debt to a creditor;
- initiate, threaten to initiate, or act upon any legal or equitable remedy for the repossession of any vehicle;
- visit or threaten to visit the household of a debtor at any time;
- visit or threaten to visit the place of employment of a debtor at any time;
- confront or communicate in person with a debtor regarding the collection of a debt in any public place at any time; or
- report any portion of a debt which is alleged to be unpaid, to any debt collector.
- With respect to the covered coronavirus period, no debt collector shall initiate a communication with any debtor via telephone, either in person or by recorded audio message to the debtor's residence, cellular telephone, or other telephone number provided by the debtor, except that a debt collector shall not be deemed to have initiated a communication with a debtor if the communication by the debt collector is in response to a request made by the debtor for the communication.
- A debtor or the Attorney General may bring an action alleging a creditor or debt collector has violated the provisions of this act. Upon a finding that non-compliance by a creditor or debt collector with this section has occurred, a court of competent jurisdiction may:
- order the non-compliant creditor or debt collector to retract the debt reported to the collection or credit reporting agency, bureau, or data collection facility;
- impose a fine on the non-compliant creditor or debt collector, not to exceed $5,000;
- order the non-compliant creditor or debt collector to pay a reasonable counsel fee in connection with a debtor who has suffered damage as a result of an attempt to collect a debt or damage to a credit rating due to the reporting of a debt to a collection or credit reporting agency, bureau, or data collection facility;
- order the non-compliant creditor or debt collector to take such steps as are necessary, within 30 days of the order, to rehabilitate the credit record of a claimant, with a showing made to the court of the efforts made in that regard; and
- order the non-compliant creditor or debt collector to pay an award of damages to the individual not to exceed 25 percent of the debt attempted to be collected or reported by the non-compliant creditor or debt collector to the collection or credit reporting agency, bureau, or data collection facility, the minimum award being $350.
- In the case of an action or proceeding that would otherwise be barred from being brought by the expiration of the statute of limitations as provided in N.J.S.2A:14-1 or N.J.S.12A:2-725, as applicable during the covered coronavirus period, a creditor or debt collector may commence an action or proceeding in a court of competent jurisdiction against a debtor, provided that the creditor or debt collector includes in any process served on a debtor prominent language putting the debtor on notice that the creditor or debt collector may not attempt to collect on any portion of a debt which is alleged to be unpaid or report any portion of a debt which is alleged to be unpaid, to any collection or credit reporting agency, bureau, or data collection facility, until the conclusion of the covered coronavirus period.
The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based upon particular circumstances. Each legal matter is unique, and prior results do not guarantee a similar outcome.
ATTORNEY ADVERTISING MATERIAL © 2020 Griffin Alexander, P.C. All rights reserved.
For any questions about this blog, or to schedule a consultation with an attorney, contact Griffin Alexander, P.C. at 973-366-1188 or through our website here!