New Jersey Appellate Court Holds Retirement Community Law Violates FHA

Last month, a three-judge New Jersey Appellate Division panel upheld a ruling that found that the New Jersey Township of Berkeley’s municipal ordinance No. 22-13-OA, which limited homeownership to individuals 55 and older for age-restricted communities, was in violation of the FHA as well as the New Jersey Law Against Discrimination (NJLAD).

The case began with the passage of the municipal ordinance in 2022.  The ordinance was challenged by an industry group of realtors.  The trial court granted summary judgment in favor of the trade association, finding that the ordinance was not within the exemptions that allow for such age-based restrictions under the FHA and the NJLAD.  In addition, the trial court found that the ordinance further frustrated the ability of current homeowners to include their homes in estate planning, as the ordinance would have prohibited homeowners from being able to transfer title to anyone under 55.

The Township appealed, arguing that the ordinance was permissible because of the FHA exemption for housing for older persons, but the Appellate Division panel did not agree.  Although the FHA provides an exemption that permits restrictions on occupancy to persons 55 years and older, it does not contain an exemption that permits restrictions on ownership.  Accordingly, the Appellate Division panel affirmed the trial court’s holding.