September 2025

New Affordable Housing Restrictions and the Impact on Association Fees By Gregory Vinogradsky, Esq., Callahan & Fusco, LLC

“Prohibiting increases in association fees on affordable units will only cause market rate units to subsidize affordable units...”

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A s you are likely aware, there has been signifi cant controversy and legal challenges related to affordable housing in New Jersey. The New Jersey Supreme Court determined in Southern Burlington NAACP v. Mount Laurel Township that municipalities must provide their “fair share” of low and moderate-income housing. Flowing from that decision came numerous legal challenges and legislation. As New Jersey, like much of the country, continues to grapple with various housing issues, the New Jersey Housing and Mortgage Finance Agency (HMFA) recently promulgated a new rule that went into effect on December 20, 2024 that may only exacerbate the issue. The rule provides a litany of requirements on developers and municipalities with the mission of increasing affordable housing. However, N.J.A.C. 5:80-26.7(d) deals directly with community associations and their right to assess afford able units by providing the following: (d) The master deeds and Declarations of Covenants and Restrictions for affordable developments may not

distinguish between restricted units and market-rate units in the calculation of any condominium or homeowner association fees and special assessments to be paid by low- and moderate-income purchasers and those to be paid by market-rate purchasers. Condominium or homeowner association fees and special assessments charged to affordable units shall be based on the common interest percentage and the full build-out bud get. Affordable units in a condominium or homeowner association subject to a municipal ordinance adopted before December 20, 2004, which ordinance pro vides for condominium or homeowner association fees and/or assessments different from those provided for in this subsection are governed by the ordinance. If the affordability controls on such units are extended by the municipality or by agreement between the municipality and the affordable homeowner, the existing fee structure will be maintained. Any increase to the homeowner association fee, condominium association fee, or amenity fee that would cause an owner of an afford CONTINUES ON PAGE 24

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SEPTEMBER 2025