CAI-NJ Sept.2018(w)(1)

NJBA.. from page 54.

closed during the subject year, and expenses resulting from the association at that size, and the monthly fees on the homes paying in that year in order to offset these expenses. The developer shall then determine, each year, to charge closed homes either the monthly fee generated by the full occupancy budget or the actual occupancy budget. The developer shall then pay, at the same frequency as the homeowners, typically monthly, the difference between the amount paid by the closed homeowners and the amount of the budget for that period. For example, if the budget contemplated a monthly fee of $200 per month for a given month, and there are 10 closed homes generating income of $2,000, but the budget for that month contem- plated expenses of $3,000, the developer would pay the $1,000 difference. Should the association nonetheless run at an annual oper- ating deficit despite the above formula and contribution, the developer shall be responsible for that deficit, unless the deficit was caused “… by conditions reasonably beyond the control of the developer” which is thereafter defined to include such items as snow removal expenses. The proposed regulation also provides, again during

This has come to be known as the developer’s benefit derived obligation. However, the lack of any definition of how to calculate benefit derived has left it to developers to propose their definition in the Public Offering Statement and, in many cases, has led to disputes with homeowner controlled boards during the transition process. Accordingly, CAI-NJ and the NJBA have now proposed a revised and substantially more comprehensive regulation, summarized as follows: While the developer controls the board, it shall adopt two (2) budgets each year; 1) a full occupancy budget,

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reflecting the anticipated expenses and resultant maintenance fees when all planned homes have closed; and 2) an annu- al budget, taking into account the average number homes to be

Accordingly, CAI-NJ and the NJBA have now proposed a revised and substantially more comprehensive regulation...”

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