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New Jersey Ass'n of REALTORS® v. New Jersey Dep't of Envtl. Prot.: State Association Voids Recordkeeping Requirement

A New Jersey appellate court has considered the New Jersey Association of REALTORS®' challenge to a state regulation requiring the association to maintain certain environmental records.

The New Jersey Department of Environmental Protection ("Department") adopted regulations entitled the "Technical Requirements for Site Remediations". These regulations required that anyone performing a site remediation must record a "deed notice" ("Deed Notice") with the county register in order to provide notice of any conditions on the property or restrictions on the property due to site contamination. Under a separate rule, a party recording a Deed Notice must also send this notice to other specified parties.

The new regulations added the "New Jersey REALTORS® Association" to the list of parties to whom the Deed Notice must be sent ("Regulation"). While there is no such organization, the Department conceded that it intended this change to apply to the Association. The Department's stated rationale for adding the Association was because its members have a "legal obligation to inform prospective purchasers of the presence of certain properties that may pose a risk to human health and safety." The Department conducted a rulemaking process with a comment period, but the Association did not participate, as it was unaware of the proposed change. Therefore, the Regulation went into effect, and the Association began receiving these notices.

The Association filed a lawsuit seeking a judicial declaration that the Regulation was void as written. The Association argued that the Regulation imposed a duty upon real estate licensees which was contrary to the state's Disclosure Act. First, it required licensees to notify purchasers of off-site conditions. Second, it required the Association to compile a list of off-site conditions in order to help its members provide such notice. The effect of these changes was to impose a new duty upon real estate licensees.

The Superior Court of New Jersey, Appellate Division, agreed with the Association and declared the Regulation void. The Act requires that a seller or builder provide the purchaser of real estate with notice of the availability of lists of off-site conditions maintained by municipal clerks. The term "seller" includes real estate licensees. A "seller" who provides notice of the availability of these lists is deemed to have complied with the Act. The Act further states that no seller "shall be required to compile or to contribute to the compilation of, in whole or in part, the list of off-site conditions required to be made available by municipal clerks".

The court found that the Regulation imposed a duty upon real estate licensees and the Association which was contrary to the language of the Act. The Regulation appears to require real estate licensees to provide buyers with the lists of off-site conditions, even though the Act only requires licensees to provide notice about the availability of such lists. When an administrative regulation alters the terms of a legislative enactment, courts will intervene and declare the regulation void. Since the Regulation altered the terms of the Act, the court declared the Regulation void.

New Jersey Ass'n of REALTORS® v. New Jersey Dep't of Envtl. Prot., 842 A.2d 262 (N.J. Super. Ct. App. Div. 2004).