Capping capital contribution fees

From the Courier Post:

Corzine to review bill on N.J. condo fees

What started out as litigation here is now legislation in Trenton that will limit but also legalize a standard practice of charging an upfront fee to condominium buyers.

The bill, which has passed both chambers of the Legislature and is now on the governor’s desk, will allow condominium associations, only through their master deed or bylaws, to charge a one-time, nonrefundable “capital contribution fee” upon closing.

Lilo Stainton, Gov. Corzine’s press secretary, said she said she does not know whether he is expected to sign it.

“We do not have a date on this one yet. It’s still under review,” Stainton said.

For condo associations, charging this fee is nothing new. However, the bill, if signed, will allow associations to charge up to nine times the amount of a unit’s monthly maintenance fee, in addition to legally protecting the practice.

The amount was amended in the Senate from 18 times the monthly maintenance fee.

Currently, no law governs what condo associations are allowed to charge, and some have charged “whatever they wanted to new members,” said Peter Botsolas, the chief of staff to Assemblyman Frederick Scalera, D-Essex, who is one of the bill’s primary sponsors and a former condo association president.

“It (the bill) validates their master deeds or bylaws for the purposes of defraying common expenses, and furthermore it safeguards and earmarks those funds so that they are not used as some sort of slush fund,” Botsolas said.

He added that the common capital contribution fee is between three and six times the monthly maintenance fee.

“That (the cap) is something new, and it provides parameters for associations and gives them guidelines where there were no guidelines before, so we view that as very positive,” said Kurt Macysyn, executive vice president of the Community Associations Institute, New Jersey chapter, located in Hamilton, just outside Trenton.

This entry was posted in New Jersey Real Estate. Bookmark the permalink.