Sept 2024

DCA CHALLENGE... from page 12.

Nonetheless, the ruling supported the double-envelope system. • In upholding the DCA’s regulation mandating that owners have until five business days before election to become current in the payment of fees, the court appeared to have misconstrued the Nonprofit Corporations Act, to which the overwhelming majority of associations are subject. That act provides that in the absence of the corporation’s bylaws setting a “record date” for determining good standing, a default of 10 days before the meeting applies. The court took pains to point out that provision only applied to “mem bers meetings,” not elections meetings, failing to recognize that election meetings are invariably members’ meetings. • CAI-NJ claimed that the DCA regulation requiring the reservation of a seat on the board for affordable owners was not supported by the Radburn Election Law. The court agreed, finding “An agency may not adopt reg ulations that, rather than fill in gaps in the statute, alter the terms of a legislative enactment or frustrate the policy embodied in the statute.” Hence it reversed the DCA regulation on that issue.

purpose of the Radburn Election Law was to ensure “fair and open” elections it was within DCA’s authority to adopt this regulation. However, the court did confirm that “public tallying” means only the actual counting of the ballots. It does not include determining the eligibil ity of owners to vote nor does it prevent opening the outer and inner envelopes outside of the public when a double-envelope system is used. This clarification is useful in understanding the limited nature of the tallying requirement. • Similarly, the court rejected the challenge to anonymous balloting and the requirement that a double-envelope system be used, finding that it does not impose an undue burden on associations. One of CAI-NJ’s arguments on this point suggested that this was particularly problemat ic when weighted voting is required. The court seemed to misapprehend the fact that placing the weight of each vote on the ballot may sacrifice the identity of the voter.

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SEPTEMBER 2024