New NJ Law Requires Community Association Boards to Remove Discriminatory Restrictive Covenants from Governing Documents

December 28th, 2021 | Community Association Law Blog

By Eric F. Frizzell, Esq.

On November 8, 2021, Governor Philip Murphy signed into law a new statute requiring the removal of discriminatory restrictive covenants in deeds, and imposing specific obligations on community associations to remove them from governing documents.

In enacting the statute, the State Legislature recognized that sections 4 and 11 of New Jersey’s Law Against Discrimination (“NJLAD”) prohibit restrictive covenants, in deeds for real property, that restrict the ownership or use of the property based on race, creed, color, national origin, ancestry, age, marital status, affectional or sexual orientation, familial status, disability, liability for service in the Armed Forces of the United States, nationality, sex, gender identity or expression, or source of lawful income used for rental or mortgage payments.

The Legislature noted, however, that no State law exists that would require the removal of such an unlawful, unenforceable restrictive covenant from a deed. The Legislature found that allowing such language to remain in a legal document “is a reminder of a hurtful and shameful national legacy” that has been outlawed by federal and state law. The Legislature also expressed concern that unsuspecting homeowners or potential home buyers “may be discouraged from buying a home or continuing to reside in a home” whose deed contains such a restrictive covenant, and that “a person who has purchased a home without realizing such language is contained in the deed may feel shocked and upset after reading the deed.”

The new law is intended to address these concerns. It prohibits any deed that is recorded on or after January 1, 2022, from containing a reference to the specific portion of a restrictive covenant that purports to restrict the ownership or use of real property prohibited by the NJLAD, and requires county clerks and registers of deeds to refuse to accept any such deed that is submitted for recording. It also requires each governing board of a community association to review the association’s governing documents by February 6, 2022 (90 days after the November 8, 2021 effective date of the law) to determine whether they contain any restriction, covenant, or condition that “prohibits or limits the conveyance, encumbrance, rental, occupancy, or use of real property as prohibited by” sections 4 and 11 of the NJLAD. If the board finds such an unlawful restriction, covenant, or condition, the governing documents must be amended to remove them. Under the new law, removing the offensive language does not require approval of the association’s members, notwithstanding any contrary provision in the governing documents, i.e., the board can act on its own.

The new law further provides that if, after such review and any amendment of the governing documents has been completed, a board receives a written request from an association member to remove language from those documents that the member believes to be an unlawful restriction, covenant or condition that violates sections 4 and 11 of NJLAD, the board must immediately undertake a review of the document(s) and complete its review within 30 day of the member’s written request. If the board determines that the member is correct, the board, within 30 days of making that determination, must amend the document(s) to remove the offensive restriction, covenant, or condition.

Importantly, the new law provides protection against a community association and its board being sued by a unit owner or member of the public, stating that nothing in it “shall give rise to a private cause of action by or against an association, a board, a member, or the public for acting or not acting to remove or not remove an unlawful restriction, covenant, or condition.” However, it appears that the Department of Community Affairs or other arms of the State can still take action against an association that fails to comply with the new law.

Please contact our law firm if you have any questions about complying with this new law or any other aspect of it.

This bulletin is for informational purposes only and does not constitute legal advice.