Condominium Capital Contributions in Jeopardy

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Micheve v. Wyndham Place at Freehold Condominium Association

The Appellate Court recently struck down an associations ability to raise monies through a capital contribution paid at closing by the seller(Micheve v. Wyndham Place at Freehold Condominium Association).

This particular Board adopted its capital contribution by way of a Board resolution. In ruling that the capital contribution was discriminatory, the Court stated that the resolution violated the New Jersey Condominium Statute, and the association's own Master deed and By-Laws.

Associations are urged to discuss this issue with its counsel, particularly if the association charges a capital contribution by an adopted resolution.

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Comments (6) Read through and enter the discussion with the form at the end
Michele Kupilik - January 6, 2006 1:29 PM

Does this mean that owners are entitled to the dues that were paid at settlement to the Board Association (one time fee) even if it goes back past 10 years?

Jim - February 2, 2006 10:34 AM

Good question. I closed in October 2005. My wife and I paid about $750.00 in a Capitol Contribution closing fee to the Association. Are we talking about the same as in this judgement?

John Viscuso - February 8, 2006 11:13 AM

Can a community association's board legally make a resolution that issues on fee on homeowners SELLING their units, and use that fee for their capital reserve?

Chris Florio - February 13, 2006 1:57 PM

Thank you for your comment.

Based on the Micheve case, associations should no longer be collecting capital contributions by resolution upon a sale. I feel the same would apply if monies are sought from the Seller based on the sale.

A. Christopher Florio, Esq.

NIck - November 25, 2006 12:54 PM

I found this page on google because we are purchasing a townhouse and wanted to know if this still holds true. The agent tells us we must pay a capital contribution as a buyer.

Thanks for any update on this.

Chris Florio - December 7, 2006 3:37 PM

They are required to be paid, and the association can enforce it, if it is a requirement set forth in the governing documents. For example, most capital contributions requirements are set forth in the Master Deed or Declaration, depending on the unit being a condominium or within a homeowner association. The Micheve case dealt with a condominium so the jury is still out on its ramifications with a homeowner association, but the thought process would still be the same.

Assuming you have counsel closing the deal, sounds like he/she should confirm what the governing documents say and then advise you.

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