Many New Jersey age-restricted communities, particularly those in South Jersey, have provisions in their declarations or master deeds that restrict ownership of a home to persons 55 and older or in some cases to 62 years of age and older. Those governing document provisions also require that the home must be occupied by at least one-person 55/62 years of age or older.
In New Jersey Realtors v. Township of Berkeley (“New Jersey Realtors”), the New Jersey Appellate Division has affirmed in an opinion issued on July 31, 2024, a trial court holding in Ocean County stating that a local Berkeley Township Ordinance requiring that homes in certain land use zones be owned by a person over a certain age (“According to [New Jersey Realtors], by setting a minimum age for property ownership in retirement communities, the ordinance was discriminatory, and the restriction did not fall within the limited housing for older persons exemption. Finding that the ordinance violated the [Fair Housing Act] and the [New Jersey Law Against Discrimination], the judge invalidated the ordinance. We agree and affirm.”) [1]
The full text of the case can be found here.
On March 29, 2022, the Township of Berkeley adopted an amended Ordinance 22-13-OA to lend support to the local senior communities’ enforcement of a governing document provision that provided that the owner of a Home must be 55 years of age or older. A typical governing document provision that has this age restriction states that, “No Owner as defined in this Declaration shall be less than 55 years of age, provided however, that in the event the Lot or Living Unit is owned by a married couple, only one of the spouses must meet the requirements of this Article.”
Thereafter, a prospective purchaser attempted to purchase a Home within a Senior Community although he was under 55 years of age. That community rejected the proposed owner and the purchase was cancelled. The local Realtors Association then filed suit for a prerogative writ against the Township seeking an order declaring the Ordinance “invalid and unenforceable.” The trial court found that the restriction was unlawful, and the Township appealed out of which came the recent Opinion.
The New Jersey Realtors Court held that, when the applicable standards are applied, the “Ordinance unreasonably infringes upon the well-established and constitutionally protected right to own and sell property and the restriction unreasonably and irrationally exceeds the public need.”
Although the main application of the New Jersey Realtors case is that of the age (familial) restriction, the Court’s opinion goes into a related issue that is contained in many 55 and older communities’ governing documents. That issue is the restriction in many age-restricted communities to limit sales to a natural person and not to any corporation, trust, partnership or the like. The Court states held that:
- “Although the Township posits that enforcement of the restriction could accomplish a worthwhile purpose, the person to whom alienation is prohibited could be substantial and impactful. As the [trial] judge pointed out, the restriction could impact to a significant degree the very seniors the Township seeks to protect by preventing owners over the age of fifty-five from transferring title to nonqualifying family members, a common practice in estate planning. Additionally, the Ordinance would adversely affect every owner’s ability to sell by limiting the pool of eligible buyers.”
The Becker community association attorneys who represent 55/62 and older communities, have for some time, advised their association client to not enforce the association’s governing document age-restricted-ownership provisions pending the Appellate Division’s decision given an apparent conflict between the restriction and the terms of both the Fair Housing Act and New Jersey’s Law Against Discrimination. Now that the case has been decided boards should contact their attorneys to determine what changes, if any, should be made.
To accomplish the removal of what have now been deemed unlawful restrictions associations should consider New Jersey Statute 46:15-18(c) that allows a board to amend the association’s governing document upon its own authority and without a vote of the owners if any member of the association makes a written request to remove a provision that is unlawful.
This article is not legal advice and may not be relied upon as such. Any association considering the applicability of the New Jersey Realtors case and whether to make changes to their governing document accordingly must consult with its attorney.
Footnotes:
[1] The age restriction in a governing document dealing with occupancy, which follows the requirements of the Housing for Older Persons Act (“HOPA”) was not challenged in the case since under HOPA an age restricted Association may discriminate based upon age (a/k/a familial status) under an exception to the Fair Housing Act as to who occupies the Home.