September 2025

Homestead Shields & Condo Fees Will A‑3538 Make Your Neighbor’s Delinquency Your Problem? By Jennifer Alexander, Esq., Griffin Alexander, P.C.

“For common interest communities, the consequences could be drastic.”

P icture this: You’re sipping coffee, congratulating yourself for paying your monthly maintenance fees within the timeframe, so as to avoid any late fees, when you spot your neighbor—yes, the one who hasn’t paid in months—doing cannonballs in the community pool you just helped fund. Right now, associations can place a lien on a nonpaying member and, in more extreme cases, even institute a foreclosure. But a bill now moving through the Legislature could effectively scuttle that safety net for community associations. If this bill goes through unamend ed, it could leave the members who do pay their fees essentially subsidizing their defaulting neighbors. What is a Homestead Exemption? A “homestead exemption” is the portion of a person’s primary residence that the law places beyond the reach of attachment, execution, or forced sale so that debt collec

tion does not leave the debtor homeless. In other words, a homestead exemption is a safety net that allows a debtor to keep certain property in the event of a lien or foreclosure. Unlike some other jurisdictions, New Jersey currently allows a judgment creditor to reach virtually all of a homeowner’s equity because state law has never recognized a broad “homestead exemption.” Previously, New Jersey has con fined its protections, for the most part, to a narrow $1,000 shield for household goods. However, this might change in the near future. What Would A-3538 Do? Assembly Bill 3538 would change the current land scape overnight. It defines a homestead to include not only single-family dwellings but also condominium units. The bill states that an owner “shall hold that exemption by operation of law and no written claim or recording shall CONTINUES ON PAGE 34

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SEPTEMBER 2025