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Amended Law Allows Additional Time for Condo Associations to Sue Developers

Governor Phil Murphy signed into law an amendment to the New Jersey Statute of Limitations, which allows more time for condominium and cooperative associations to sue real estate developers in certain circumstances.

New Jersey’s Statute of Limitations, N.J.S.A. 2A:14-1, has for years stated that any plaintiff has six years from the date of accrual to bring a suit for property damage. The statute stated simply that these actions “shall be commenced within six years next after the cause of any such action shall have accrued.” Senate Bill 396 amended N.J.S.A. 2A:14-1 to provide planned real estate development associations with a special status, specifically providing that the time to sue is tolled “until an election is held and the owners comprise a majority of the board.” The amendment also states that actions can be brought for any action “that has not been subject to a final judgment dismissing the claim” as of January 18, 2022, the effective date of the amendment.

The amendment allows that a development association’s time is tolled under this new section for any action the association seeks to bring “against a developer or any person acting through, on behalf of or at the behest of the developer[.]” This does not, on its face, include subcontractors, which means that under the plain text of the statute as amended, time is not tolled for any breach of contract or negligence claims that a developer, once sued, may seek to bring against subcontractors of the developer’s contract. Those subcontractors are acting on behalf of the contractor, arguably not on behalf of the developer. This means that once a condo association sues a developer for a construction defect, the statute of limitations may have run out on those common law actions for contractors and developers to seek relief from the parties who actually performed defective construction.

Also, the amendment states that suits may be brought for actions that have not been subject to a final judgment. This leaves open the possibility that cases may be reopened even if they were previously resolved via settlement agreement, or another judgment that is not a “final judgment.”

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