A buyer younger than 55 is allowed to purchase property in an active-adult neighborhood for people aged 55 and older, according to a recent New Jersey court ruling. They just can't live there.
The ruling was the first by a U.S. court to directly address whether a locality or another entity can restrict ownership based on age.
The decision came in response to Berkeley Township’s concern that corporate entities and younger investors had bought up properties in some over-55 complexes, driving up prices for senior citizens on fixed incomes looking to buy homes there. The township told the New Jersey Superior Court’s appellate division that it passed an ordinance in 2022 to block “rampant house-flipping and speculation by nonowner occupants.” But the court said in a late-July opinion that the law violated the U.S. Fair Housing Act by restricting ownership by age.
The New Jersey Realtors, which sued the township over its ordinance, told CoStar News that the court made the right judgment.
“We believe municipalities and homeownership associations should have the ability to restrict home occupancy, but not ownership, by age,” New Jersey Realtors Chief Executive Officer Jarrod Grasso said in an email.
The township’s ordinance was limited to areas zoned as “planned residential retirement communities” that have at least 100 acres dedicated for single-family detached houses and recreational facilities for neighborhood residents. The group of real estate agents sued the township shortly after it changed language in the ordinance so that it limited occupancy as well as ownership to persons 55 and older.
The appellate court’s ruling upheld an opinion by a lower branch of the superior court in December 2022 that the ordinance violated the Fair Housing Act and New Jersey’s Law Against Discrimination. These laws bar discrimination based on familial status but allow a limited exemption for older persons so they can live free of the “noises and hazards” of children, according to the ruling.
The court didn’t address the township’s claim that its ordinance could help curb corporate speculation in active-adult developments. Instead, the court pointed out the law’s negative side effect of preventing over-55 owners from transferring titles to younger family members.
“Additionally, the Ordinance would adversely affect every owner's ability to sell by limiting the pool of eligible buyers,” according to the ruling.
Berkeley Township declined to comment on the court ruling, and the township’s attorneys did not respond to a request for comment.
