The New Jersey Housing Opportunity Act aims to enhance housing production by mandating revisions to municipal development regulations. Under this bill, each municipality must ensure that its regulations include at least one of three options within four months of enactment: a minimum lot size of no more than one-quarter acre for single-family residential development, the allowance for two-unit dwellings on single-family lots, or the development of accessory dwelling units on such lots. The bill defines "accessory dwelling unit" as a self-contained residential unit with independent living facilities, which can be part of or separate from the primary dwelling.

If a municipality fails to comply with these requirements, the default regulation of a minimum lot size of one-quarter acre will automatically apply, overriding any contrary local regulations. However, the provisions of the bill do not extend to dwellings in historic districts or to lots with pre-existing covenants or restrictions that dictate different development standards. This legislation is designed to facilitate more flexible housing options and increase the availability of residential units across New Jersey.