N.J. Admin. Code § 5:80-26.5

Current through Register Vol. 56, No. 21, November 4, 2024

Section 5:80-26.5 - Control periods for ownership units

(a) Each restricted ownership unit shall remain subject to the requirements of this subchapter until the municipality in which the unit is located elects to release the unit from such requirements pursuant to action taken in compliance with (g) below. Prior to such a municipal election, a restricted ownership unit must remain subject to the requirements of this subchapter for a period of at least 30 years; provided, however, that:

1. Units located in high-poverty census tracts shall remain subject to these affordability requirements for a period of at least 10 years;

2. Any unit that, prior to December 20, 2004, received substantive certification from COAH, was part of a judgment of compliance from a court of competent jurisdiction or became subject to a grant agreement or other contract with either the State or a political subdivision thereof, shall have its control period governed by said grant of substantive certification, judgment or grant agreement or contract; and

3. 95/5 units are subject to the option and price restriction rules set forth at 5:80-26.20 through 26.26.

(b) The affordability control period for a restricted ownership unit shall commence on the date the initial certified household takes title to the unit and shall terminate only at such time as the municipality opts to release the unit from the requirements of this subchapter in accordance with (g) below, or at such other time as is applicable under (a) above.

(c) Prior to the issuance of the initial certificate of occupancy for a restricted ownership unit and upon each successive sale during the period of restricted ownership, the administrative agent shall determine the restricted price for the unit and shall also determine the non-restricted, fair market value of the unit based on either an appraisal or the unit's equalized assessed value. At the time of the sale of the unit, the purchaser shall execute and deliver to the administrative agent a recapture note obligating the purchaser (as well as the purchaser's heirs, successors, and assigns) to repay, upon the first non-exempt sale after the unit's release from the requirements of this subchapter, an amount equal to the difference between the unit's non-restricted fair market value and its restricted price. The recapture note shall be secured by a recapture lien evidenced by a duly recorded mortgage on the unit. The recapture note and recapture mortgage lien shall be in favor of the Agency if the unit was financed under UHORP or MONI, in favor of the State if State funds other than UHORP or MONI contributed to the financing of the unit, and, in all other cases, in favor of the municipality in which the unit is located. The recapture note and recapture mortgage lien shall be in the form prescribed in subchapter Appendices L, M, N, O, P, and Q, incorporated herein by reference, as applicable.

1. The recapture lien shall also provide that the recapture amount shall be reduced by the cumulative dollar value of capital expenditures by all owners during the control period for improvements and/or upgrades to the unit, as approved by the administrative agent.

2. Municipalities that exercise the option to purchase restricted ownership units pursuant to (f) below shall not be required to satisfy the recapture lien.

3. Upon termination of the affordability control period pursuant to (g) below, and satisfaction of the recapture of the lien, the unit may be sold at fair market value and the proceeds retained by the seller.

(d) All conveyances of restricted ownership units shall be made by deeds and restrictive covenants substantially in the form prescribed in subchapter Appendices A, B, C, D, L, M, N, O, P and Q, incorporated herein by reference, as applicable. Each purchaser of a 95/5 unit, in addition, shall execute a note and mortgage in the form of Appendices G and H, incorporated herein by reference.

(e) The affordability controls set forth in this subchapter and incorporated in instruments in the forms presented in subchapter Appendices A, D, E, F, G, H, I, J, K, L, M, N, O, P and Q, incorporated herein by reference, shall remain in effect despite the entry and enforcement of any judgment of foreclosure with respect to restricted ownership units.

(f) At the time of the first non-exempt sale following a 30-year interval from the date of the issuance of the initial certificate of occupancy, a municipality shall have the right of first refusal to purchase a restricted ownership unit at the maximum restricted price, with the exceptions noted under (a) above, provided that:

1. The municipality enters into a contract to purchase the unit within 60 days of notification of intent to sell by the owner of the restricted unit; and

2. The recapture lien described in (c) above remains in full force and effect.

(g) Any municipality may elect to release a restricted ownership from the requirements of this subchapter at a time to be set forth in the municipal ordinance required under (g)3 below, but after the expiration of the applicable minimum control period specified under (a) above, provided that:

1. The recapture lien described in (c) above remains in full force and effect;

2. If the lien required under (c) above is in favor of the municipality, the municipality has a COAH-approved spending plan pursuant to 5:94-6.5(c) requiring that all proceeds from the satisfaction of a recapture lien on a restricted ownership unit be used to create one new affordable unit for every unit released from affordability controls within the municipality; and

3. The municipal election to release the unit from the requirements of this subchapter is made pursuant to a municipal ordinance authorizing such elections with respect to units located either in areas specifically identified in the Housing Element of the municipal Master Plan or throughout the entire municipality.

(h) A municipality may use development fees to purchase and/or rehabilitate a restricted ownership unit.

(i) In those instances in which control periods expire pursuant to this section, the administrative agent shall, within 60 days of the expiration of the control period, execute a release, substantially in form set forth in Appendix F to this subchapter, incorporated herein by reference, of all restriction instruments with respect to the unit. The owner of the restricted unit is responsible for recording the release instruments and returning the recorded originals promptly to the administrative agent. Upon the expiration of the control period for a restricted ownership unit established in this section, the owner of the unit shall be entitled to sell it to any purchaser at the fair market price.

N.J. Admin. Code § 5:80-26.5

Amended by 49 N.J.R. 3423(c), effective 10/16/2017