New Jersey bill would let homeowners vote to dissolve their HOA
New Jersey bill would let homeowners vote to dissolve their HOA
2026-09-15 · New Jersey · Legislation · Pending — not yet law
The most radical community-association bill pending in New Jersey would give owners a statutory route out of the association entirely.
S4104, introduced May 4, 2026 by Senator Michael L. Testa Jr., "establishes procedure to dissolve common interest community by constituent homeowners." It was referred to the Senate Community and Urban Affairs Committee and has had no further action.1
The mechanics
A petition signed by at least 25 percent of association members submits a plan for dissolution to the executive board. The board must hold notice and a vote within 60 days. Dissolution passes on a two-thirds majority approving a compliant plan. If a plan fails, no further dissolution vote may be held for 18 months.
The enforcement is aimed at the board personally
This is what distinguishes S4104 from ordinary process legislation. If the board misses the 60-day deadline, each board member is personally penalised $100 per week — and association funds may not be used to pay it.
If the board still will not meet or vote, a member may take a petition signed by two-thirds of members directly to the Department of Community Affairs to proceed with dissolution without the board.
What happens to the common property
The bill amends N.J.S.A. 15A:12-1 to make this the dissolution procedure for a nonprofit corporation that is a common interest community association. DCA, together with the executive director of the New Jersey Housing and Mortgage Finance Agency, would write rules covering "the separation and government-entity ownership of common property such as roadways, facilities and parks."
The act would take effect the first day of the seventh month after enactment, with anticipatory rulemaking allowed.
The provision that would decide whether any of this works
Everything in the bill hinges on the last piece: what becomes of the roads, the basins, the clubhouse and the parks.
A New Jersey planned community's private infrastructure exists because a municipality accepted a subdivision on the understanding that an association would maintain it in perpetuity. Dissolving the association does not dissolve the pavement. Someone has to plough it, light it, and replace it, and the bill's answer is a rulemaking not yet written, requiring a government entity to take ownership of assets it did not build and has not budgeted for.
Municipalities in New Jersey already reimburse associations for a defined set of services under the Municipal Services Act, and the scope of that duty is litigated regularly. Nothing in S4104 obliges a town to accept dedication of a private road that does not meet municipal standards — and most do not, which is frequently why they were private in the first place.
What dissolution would do to the covenants
The bill addresses the corporate entity. It does not, on its face, address the recorded declaration. In New Jersey a declaration of covenants runs with the land and binds successors independently of whether the association that enforces it still exists. Dissolving the corporation could therefore leave a community with covenants intact and nobody with standing to enforce them — which is a different outcome from being freed of them, and arguably a worse one for a homeowner who wants to build a fence.
A lender's view would be similar. Mortgage documents, title policies and resale certificates across the community assume an association exists. So does secondary-market eligibility.
Why it exists
The bill has no committee statement, so its rationale is not on the record. Its timing is suggestive: it arrived in May 2026, in the middle of the most sustained wave of New Jersey homeowner anger at association assessments in decades, from a sponsor whose district covers Cumberland, Cape May and Atlantic counties.
Read against the rest of the board — a 10 percent cap on dues increases, mandatory board training, manager licensure, a DCA ombudsman — S4104 is the outlier that does not try to improve association governance. It proposes an exit.
The personal-penalty provision is worth its own note
New Jersey association directors are volunteers, and the statutory and common-law protections around their decisions — the business judgment rule, indemnification in the governing documents, D&O coverage — are what makes recruiting them possible at all. A statute imposing an uninsurable, unindemnifiable personal penalty for missing a procedural deadline cuts directly across that.
Whether that is a feature or a defect depends on what one thinks the problem is. It is, either way, the provision most likely to draw opposition if the bill is ever heard.
Status
No committee statement, no reprint, no hearing, no vote. No Assembly companion. New in the 222nd Legislature, not a reintroduction.
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