New Jersey Bankers Association Bulletin: Action In Trenton April 2003
|Fiduciary Powers Law Altered Concerning Accountants and Out-of-State Banks;|
Fiduciary Powers Law Altered - On March 24, 2003, Governor McGreevey signed a measure sponsored by Senator Cardinale (R-39), and Assemblymen Cohen (D-20) and Impreveduto (D-32) into law -- P.L 2003, c.33. This new law, which was supported by the New Jersey Bankers Association, amends the existing powers of fiduciaries to permit them to employ and compensate accountants from the fiduciary find for services rendered to an estate or trust or to a fiduciary in the performance of the fiduciary's duties, including the duty of a corporate or other fiduciary with respect to the preparation of accountings, without a reduction in the commissions due to a fiduciary.
This new fiduciary power is limited, in accordance with the Governor's recommendations in his conditional veto, to such accountings that "are not the usual, customary or routine services provided by the fiduciary in light of the nature and skill of the fiduciary." To determine what reaches that standard, a court is guided in the new law to consider the "size and complexity of the fiduciary fund, the length of time for which the accounting is rendered, and the increased risk and responsibilities imposed on fiduciaries as a result of revisions to" the Uniform Principal and Income Act of 2001 and the Prudent Investor Act of 1997. The new law also extends to out-of-State banks which have established trust offices in New Jersey the same fiduciary powers that qualified banks enjoy with respect to the purchase, sale, and maintenance for any fiduciary account of securities issued by an investment company for which the qualified bank is providing services as an investment advisor, investment manager, custodian, or otherwise including those for which it receives compensation. The new provisions concerning accountants shall become effective on June 22, 2003. The provision concerning out-of-State banks is effective immediately. Fraudulent Conveyance Statute of Limitations Law Amended - On November 18, 2002, Governor McGreevey signed a measure sponsored by Assemblymen Cohen (D-20) and Cryan (D-20) into law - P1. 2002, c.100. This new law amends the statute of limitations for fraudulent transfers or obligations from one-year after the transfer or obligation was or could reasonably have been discovered to a firm one year. This new law eliminates the need to conduct annual asset searches during the term of every loan that goes into default. This law became effective upon signing.
ON THE GOVERNOR' S DESK The following bills, having passed through both legislative houses, await action by Governor McGreevey. According to the Constitution the Governor is required to act on a measure, which reaches his desk within 45 days, except when the Legislature is adjourned. Since the Legislature is in recess during the budget break through the month of April, the Governor may wait to act on these measures until the Legislature returns in early May. Predatory Lending - After nearly a year of continual negotiations between lenders, consumer groups, certain legislators and representatives of the administration A-75, sponsored by Assemblyman Ahearn (Green Party-38) and Van Drew (D-1), was sent to the Governor on March 2Oth for signature. The bill, known as the "New Jersey Home Ownership Security Act of 2002" is advocated by various consumer groups aimed at stopping predatory lending practices in the state, if they exist. We expect the Governor to sign the bill unless the administration finds reason to conditionally veto the legislation. If signed, we will issue a special legal advisory bulletin dedicated to the new law. The law will take effect 210 days from enactment. Carbon Monoxide Detector Bill on Governor's Desk - On March 3, 2003, a measure sponsored by Senators Palaia (R-1 1), Buono (D-18) Furnari (D-36), and Vitale (D-19), Assemblyman Wisniewski (D-19), Assemblywoman Friscia (D-19), and Assemblymen Kean (R-21), and Barnes (D-18) was sent to the Governor. The bill would make operative a provision of law passed in 1999 that requires the installation of carbon monoxide sensor devices in single-family and two-family homes upon the initial or change in occupancy of such homes. Currently, the law requires that every unit of dwelling space in hotels, multiple dwellings and rooming and boarding houses which presented a potential carbon monoxide hazard be equipped with carbon monoxide sensor devices. However, the provision of that law that extended this requirement to single-family and two-family homes has been held inoperative until such time as the Commissioner of Community Affairs determines that it should be made operative. The Commissioner of Community Affairs has issued a rule proposal, 34 N.J.R 4277(a) (December 16, 2002), which would make operative the installation requirement in new and existing single-family and two-family homes. Bill Eliminating Retention Requirement for Certain Municipal Lien Searches on Governor's Desk - On February 27, 2003, a measure sponsored by Senators Buono (D-18) and Suliga (D-22), and Assemblymen Conaway (D-7) and Connors (D-7) was sent to the Governor. Under current law, municipalities must keep records of all municipal lien searches in bound book form. The bill on the Governor's desk would update the law to permit retention of these documents in alternative modern formats and to permit retention of older bound books in storage. The bill also directs the Division of Archives and Records Management in the Department of State to determine a records retention schedule for these documents that conforms with the actual need for the documents and avoids unnecessary or ineffective retention. The bill will become effective upon signing. Bill on Governor's Desk Requires Landlords to Maintain List of Tenants for Emergencies - On February 27, 2003, a measure sponsored by Senators Sacco (D-32) and Bryant (D-5), and Assemblywoman Quigley (D32) and Assemblyman Impreveduto (D-32) was sent to the Governor. This bill requires every landlord or landlord's representative to maintain a current list of building tenants. Current law requires the landlord or landlord's representative to be available in the event of emergency and to be named on certificate of registration forms that must be filed with the clerk of the municipality. The landlord's representative would be required to provide the list to emergency personnel as may be required in the event of an emergency. The bill also clarifies that whenever the owner of a unit in one of the various types of common interest ownership housing authorized in this State leases a unit to a tenant, the unit owner is required to comply with the certificate of registration requirements, rather than other entities such as the council of co-owners, cooperative association, cooperative corporation, condominium association, or association managing the common or shared elements or interests. The forgoing is only a summary of the major provisions of these new laws or pending bills. NJBA and Riker, Danzig recommend that all financial institutions review these measures with their counsel in detail.