New Jersey's housing agency dropped a rule capping HOA fees on affordable units
New Jersey's housing agency dropped a rule capping HOA fees on affordable units
2026-09-15 · New Jersey · Regulation
New Jersey came within a rulemaking of capping what community associations may charge the affordable units inside them, and then did not do it.
The New Jersey Housing and Mortgage Finance Agency's Uniform Housing Affordability Controls rules were proposed July 21, 2025 at 57 N.J.R. 1470(a), adopted November 6, 2025 as R.2025 d.151 by Executive Director Melanie R. Walter, effective on adoption, and published in the December 15, 2025 New Jersey Register.1
What the proposal would have done
A new N.J.A.C. 5:80-26.7(e) would have provided that condominium and homeowner-association fees and special assessments on affordable units be based on the common-interest percentage of homeowners, and would have prohibited fee increases that would push a unit's housing costs above affordability limits.
What HMFA said on adoption
The agency response appears near-identically at multiple comment numbers:
"The Agency acknowledges the concerns expressed by the commenter and is not adopting the amendments proposed at N.J.A.C. 5:80-26.7(e), which would have provided that condominium and homeowner association fees be based on the common interest percentage of homeowners and would have prohibited increases in fees that would make a unit no longer affordable."
And why
The fullest statement of reasons, in response to comment 173:
"The Agency appreciates the commenter's feedback and, upon adoption, is eliminating the proposed change at N.J.A.C. 5:80-26.7(e). The Agency supports and encourages the expansion of affordable ownership assistance programs by municipalities. The Agency points out that high condominium/HOA fees do significantly impact affordable unit residents; if issues with such fees continue, the Agency will consider future changes to the UHAC rules or request changes to the Planned Real Estate Development (PRED) rules."
Read that last sentence again
It is not a withdrawal. It is a deferral with an explicit condition attached, and the condition is that the underlying problem stop.
HMFA has said on the record that association fees significantly affect affordable-unit residents, and that if the situation continues it will either come back through UHAC or ask DCA to change the PREDFDA rules at N.J.A.C. 5:26. Anyone treating this as a closed file is misreading the adoption document.
What the objection was
The proposal drew dozens of numbered comments, and the objections were structural rather than political.
The New Jersey Condominium Act allocates common expenses among units by a formula set in the master deed. A regulation directing that affordable units be charged by common-interest percentage, and capped besides, would sit across that statutory allocation — and the difference has to go somewhere. In a community with affordable units, "somewhere" means the market-rate owners.
Commenters also raised the Contract Clause, since master deeds are recorded instruments predating the rule, and the practical objection that an association capped on what it may collect from a subset of units cannot fund capital repairs the rest of the statute requires it to fund.
The collision that made this acute
Timing is the reason this proposal landed as hard as it did. It was published in July 2025, one month before New Jersey's reserve-funding amendment took effect, in the middle of the largest wave of assessment increases New Jersey community associations have seen.
Capping what can be charged to one class of units, in a year when the statutory floor on reserve funding was being enforced for the first time, would have concentrated the entire increase on the remaining owners.
What was adopted
The rest of the UHAC package went through. Other subsections of 26.7 — concerning maximum resale price worksheets at 26.7(b) and (c) — were adopted with minor corrections. The chapter carries an expiration date of May 30, 2031.
Those resale-price provisions matter to associations in their own right, because they govern what a deed-restricted unit can be sold for and therefore what an estoppel and resale package has to reflect.
What a board with affordable units should do
Know how many it has, how they are assessed under the master deed, and whether the allocation would look defensible if HMFA revisits this. Associations whose deed-restricted units are assessed on a basis other than the recorded common-interest percentage are the ones with something to explain.
And note where the next move could come from. HMFA named DCA's PREDFDA rules as an alternative route. Those rules were readopted unchanged through 2032 — but a readoption does not prevent an amendment, and an agency that has publicly flagged its interest is not a hypothetical risk.
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