The ABCs of Pennsylvania's 3407 Certificate of Resale Requirement

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    Statute §3407 of the Pennsylvania Condominium Act (the “Act”) provides that a contract for the resale of a condominium unit by someone other than the developer is unenforceable unless the unit owner furnishes certain information and documents.  Accordingly, under §3407(17)(a) when requested, the Association must furnish a Certificate containing the information and supplying the documents necessary to enable the unit to comply with his obligations. 

    Thus, unlike its neighboring state, Pennsylvania requires actual participation by the Association when it comes to the resale of a condominium unit.  However, it is key for an Association to be mindful that such participation should remain limited to the confines of the Act.  Far too often the author of the 3407 Certificate, acting on behalf of the Association, subjects the Association to undue liability by making statements that go beyond its responsibility pursuant to the Act.  

    For example, the Act requires the Association to verify the amount of monthly common expenses, any unpaid common expenses or any unpaid special assessment currently due from the selling owner.  Mindful of the limiting language of currently due, the Association should be wary not to include information on the Certificate with regard to the possibility of a future increase in the monthly assessment or a future special assessment.  While it may seem at the time as a good faith gesture, in the end it only creates confusion amongst the seller and buyer as to whom shall be responsible for payment in the case that such possibility becomes a reality. 

    Moreover, an Association should avoid making certain ultra vires statements such as “the Association will not increase its common monthly assessment” or “the Association will not issue a special assessment for the next six months”.  Again, while the Association may truly have no intention of having to break such a “promise”, the Association cannot subject itself to the possibility of allowing such an over-reaching statement to prevent it from raising emergency funds when needed.

    Thus, with the above advice in mind we strongly encourage Associations to review their current 3407 policy and assure not only compliance but that same does not create undue liability for the Association or confusion amongst the parties.

Divorce Law Podcast - # 1

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The Divorce Law Podcast is a 10 episode series presented by Robert Durst, Shareholder and Chairperson of Stark & Stark's Divorce Law Group.  Throughout the series, Mr. Durst will answer the most common questions individuals considering a divorce will face, and together the series of podcasts are constructed so that listeners may use them as an "owners manual" for their divorce. 

This first installment of the Divorce Law Podcast will focus on the initial discussions you and your spouse will have after the decision to separate has been made, including guidelines for how to approach the subject of divorce with your children.

You can download the first installment here. (3.6 MB)

Episode 1 Show Notes (PDF)
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Cell Phones, Email and the Electronic Age of Divorce

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In a copy written story by Brad Stone in the September 15, 2007 edition of the New York Times, Mr. Stone gives us an insight into the new world of divorce evidence and eavesdropping. Straying spouse's whereabouts, activities and indiscretions may now be permanently recorded by electronic records, cookies and billings. Even password-protected computers can be accessed by readily available software, which can either record or even forward e-mail communications.

Cell phone records can trace a person's hour-by-hour location. And, invasive spouses can surreptitiously receive snapshots of their husband/wife's computer screens with 15 seconds of an e-mail or instant message. According to the article divorce attorneys across the country admit that their files are filed with intercepted, recorded or "recovered" information.

How and if the materials can be properly utilized as evidence is another issue. How such information conflicts with a person's right to privacy is, perhaps, a much bigger issue. Taken beyond the prurient interests of such communications, larger issues also arise as to how the inadvertent disclosure of other private communications captured in the process may or may not be utilized by the intercepting party. Sensitive business conversations, trade secrets, corporate inside trading information and similar materials captured in the process raise serious privacy and wiretapping issues.

Bob Durst, a divorce attorney in Princeton, NJ and an author and teacher on issues of Evidence in divorce cases, raises the issue as to whether or not the acceptance or utilization of such materials jeopardize the client's case and/or may expose both the client and the attorney to wiretapping penalties and liabilities. Despite the apparently proliferate use of such information there is very little legal authority as to their admissibility or whether they do constitute wiretapping violations. 

The admonition should be to avoid mere curiosity, the effort to gain an "edge" ion the litigations and error on the side of caution until there is more authority as the legal implications of the interception or retrieval of such information. In the vast majority of case the information obtained may be interesting, but is likely to be of limited legal value and could result in serious negative consequences to both the attorney and the client.
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Domino-Like Bankruptcies Offer Lessons

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Timothy P. Duggan, Shareholder and Chair of Stark & Stark's Bankruptcy and Creditor's Rights Group was quoted in the article Domino-Like Bankruptcies Offer Lessons, in the September 17, 2007edition of NJ Biz.

You can read the full article here.

New Jersey Realty Transfer Fees Due on Sale of Residences

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Upon the sale of residential real estate, many Sellers are surprised to learn that the transfer is subject to a New Jersey Realty Transfer Fee.  This is a tax imposed on Sellers by the State of New Jersey pursuant to N.J.S.A. 46:15-5 et seq.  In certain instances the amount can be significant.

First enacted in 1968, and comprised of a modest fee, the Realty Transfer Fee law has been amended several times, most recently in 2004.  Each time, not surprisingly, the Realty Transfer Fee has been increased on higher priced real estate.

The Realty Transfer fees are calculated on a sliding scale, with the rate per $500.00 of sales price increasing as the sales price increases.  The table below summarizes the standard rates:

    Sales Price                        Realty Transfer Fee
    $500.00 to $350,000.00                $2.00 to $2,105.00
    $350,000.00 to $1.0 million                $2,105.00 to $9,575.00
    $1.0 million to $2.0 million                $9,575.00 to $21,675.00
                and $6.05 per $500.00 in excess of $2.0 million

A reduced Realty Transfer Fee is available to senior citizens, blind persons, and disabled persons on the sale of one-or two-family residences which they own and occupy, and on the sale of low and moderate income housing.

Those reduced fees are:

    Sales Price                        Realty Transfer Fee
    $500.00 to $350,000.00                $.50 to $650.00
    $350,000.00 to $1.0 million                $650.00 to $4,675.00
    $1.0 million to $2.0 million                $4,675.00 to $11,475.00
                and $3.40 per $500.00 in excess of $2.0 million

Certain deed transfers are exempt  from the Realty Transfer Fee under N.J.S.A. 46:15-10.  The most common of these are:

    •    Deed for consideration of less than $100.00;

    •    Deed between husband and wife, or parent and child;

    •    Deed by an executor or administrator of a decedent to a devisee or heir to effect distribution of the decedent’s estate in accordance with the decedent’s will or the intestacy laws;

    •    Deed recorded within 90 days following the entry of a divorce decree which dissolves the marriage between the grantor and grantee;

    •    Deed conveying a cemetery lot or plot;

    •    Deed in specific performance of a final judgment;

    •    Confirmatory or corrective deed; and

    •    Deed of a receiver, trustee in bankruptcy or liquidation, or assignee for the benefit of creditors.       

In 2004, legislation was also passed requiring non-resident Sellers to file an estimated Gross Income Tax on the transfer of real property as a condition to recording the transfer.  The estimated Income Tax payment is determined by multiplying the Seller’s gain, as computed for tax purposes, times the highest Gross Income tax rate of 8.97%.  However, in no case may the estimated payment be less than 2% of the sales price paid.

Finally, there is a Realty Transfer Fee due from the Buyer for purchases of residential property in excess of $1.0 million.  This is commonly referred to as the “Mansion Tax” and is 1% of the purchase price.  Thus, if the “Mansion Tax” applies, the minimum transfer tax paid by the Buyer is $10,000.00.

Can a Step Parent Kidnap a Child?

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In State v. Froland, the New Jersey Supreme Court recently heard arguments on the question as to whether a stepmother could be found guilty of kidnapping her husband's children from a prior marriage.

Stacey Froland, the stepmother of her husband's child form a prior marriage and John Kindt, her husband and the natural father of the children, stocked a 39 foot boat with several months worth of provisions, maps and charts for the Bahamas and several books like "Cruising with Children", "How to be Invisible" and "Hide Your Assets and Disappear".

The children's mother intervened and both Kindt and Froland were arrested and charged with first degree kidnapping. Froland, the stepmother was convicted and sentenced to 7 years in prison.

The charges against Kindt, the natural father, were dismissed under an interpretation of the kidnapping statute which concluded that the removal of the children was "with the consent of a parent", namely Kindt.

In response to a question from Justice Virginia Long, the prosecutor responded and argued that Ms. Froland’s conviction for kidnapping should stand even if the Court were to conclude that Mr. Kindt, her husband and co-participant in the plan should go scott free.

Thus, if the Court accepts the prosecutor’s argument, a second spouse/step parent could be sentenced to prison for kidnapping the children of a spouse's prior marriage prior spouse even if the spouse his/herself is exempt form such prosecution. Bob Durst, a divorce attorney at Stark & Stark, Princeton, NJ is of the opinion that such a finding would work a serious inequity under the circumstances of the Froland case.

If Mr. Kindt, the parent of the children has the authority to authorize the trip, how then could Ms. Froland who was participating in the actively under the authority and authorization of Mr. Kindt (who apparently had the authority to authorize the trip) be criminally culpable?
The case raises important issues as to how the role of stepparent may or may not interact with the stepchildren, and will undoubtedly be watched closely by a variety of interest groups and legal pundits.
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New York Cooperatives and Condominiums - Judicial Review of Board Decisions

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As New York cooperative and condominium home ownership has grown, disputes between tenants-owners and governing boards have landed in the court system.  Courts have noted that cooperative or condominium associations are quasi-governmental “a little democratic sub society of necessity”. Like a municipal government, governing boards are responsible for running the day-to-day affairs of the cooperative and condominium and to that end, often have broad powers in the areas that range from financial decision making to promulgating rules and regulations regarding pets and parking spaces. See Levandusky v. One Fifth Ave. Apt. Corp 75 N.Y.2d 530 (App. Div. 1990).

The court in Levandusky determined that to best balance the individual and collective interests at stake, the proper standard of review concerning board decisions is the business judgment rule.  This rule prohibits judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes. 

The prospect that each board decision may be subjected to full judicial review hampers the effectiveness of the board’s managing authority.  The business judgment rule protects a board’s decision and managerial authority from indiscriminate attack.  At the same time, it permits review of improper decisions when the challenger demonstrates that the board’s action had no legitimate relationship to the welfare of the association or acted outside the scope of its authority.

A party challenging board action must demonstrate a genuine and material issue as to whether a board acted outside the scope of its authority, in bad faith, or other than in furtherance of the welfare of the community.    Courts have upheld decisions of boards when it related to handicap accommodations, alterations and repairs, objectionable conduct, financial issues, and issues relating to the adoption of house rules.  The standard for judicial review as determined by Levandusy has remained the standard.  All a board is required  to do is demonstrate that they acted in good faith and in the best interests of the community. The board does not have to prove its reasonableness or prove that it was the right decision but rather a board need only show that it made a decision based upon relevant facts, acted within the scope of its authority and acted in furtherance of the community’s purpose.

As long as the board acts in accordance with its scope of authority, acts in good faith and makes its decisions in furtherance of the welfare of the Association, the court will give deference to the board when one of its actions is challenged. 
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Employer Not Liable For Refusing To Grant Employee's Unreasonable Accommodation Request

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In a recent decision by the United States Court of Appeals for the 3rd Circuit, the  Court upheld a trial decision finding that an employer did not violate the Americans With Disabilities Act (ADA) by terminating an employee who insisted on an unreasonable accommodation. 

The case involved Edward Whelan, an employee of Teledyne Metalworking Products, who informed his employer that he had a degenerative eye disease.  As an accommodation for the eye disease, Mr. Whelan requested and received a transfer to an outside sales job.  Later, his vision worsened and he was no longer able to work in outside sales.  Therefore, Mr. Whelan notified the company that he was only able to work as a marketing coordinator out of his home.

Several years later, Teledyne consolidated its operations in Alabama.  Teledyne advised Mr. Whelan that he was required to transfer to Alabama and requested information about the accommodation Mr. Whelan would need to perform his essential job functions.  Mr. Whelan proposed only one accommodation–that Teledyne permit him to work out of his house in Pittsburgh.  Teledyne could not agree to have Mr. Whelan work out of his house in Pittsburgh and fired Mr. Whelan for not transferring to Alabama.

Mr. Whelan filed a lawsuit against Teledyne claiming it had violated the ADA by failing to provide him with a reasonable accommodation.  The 3rd Circuit supported and affirmed the jury’s finding that Teledyne had accommodated Mr. Whelan and would continue to accommodate him if he transferred to Alabama.  However, Mr. Whelan’s singular accommodation request to continue working from his home in Pittsburgh was unreasonable.  The 3rd Circuit further admonished Mr. Whelan as he requested a single, unreasonable accommodation and failed to provide appropriate information needed to devise an appropriate accommodation.

When an employee requests an accommodation, the employer must engage in the interactive process to determine what type of reasonable accommodation can be made for that employee.  However, an employer may not be required to provide the employee’s first choice of accommodation if that request is deemed to be unreasonable.  The employer must engage in good faith discussions and attempt to understand and work out whatever type of limitation or accommodation could be made for the employee.  However, the employee cannot hold the employer hostage with unreasonable requests.

Here Comes the Sun: Legislation to Permit the Installation of Solar Collectors in Home Owners Associations Becomes Law

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On August 21, 2007, Governor Jon Corzine signed into law C. 45:22A-48.2, which makes it unlawful for homeowners associations to prohibit the installation of solar collectors on certain roofs of dwelling units.  This legislation, originally introduced in March of 2006, was passed by the Assembly in March 2007, and by the Senate this past June.  The full text of this legislation can be found here.

As specified in the text of the legislation, homeowners associations may not prohibit members from installing solar collectors so long as such collectors are placed on the roof of a single family unit or townhouse unit that is not designated as a common element or common property in the association’s governing documents.  In addition, the association may adopt reasonable rules and regulations to oversee the installation and maintenance of solar collectors with regard to: (1) the qualifications, certification and insurance requirements of individuals or contractors who install such solar collectors; and (2) the location, color, supportive structures and size of the solar collectors that may be placed on the roof.  Further, the association cannot adopt any rule or restriction that would significantly increase the costs of the initial installation of the solar collectors or that would inhibit the solar collectors from functioning at their intended maximum efficiency.

It is important to note that this legislation does not affect the rights and responsibilities of condominium owners and boards pursuant to the New Jersey Condominium Act.  In fact, because the roof of most if not all condominiums are designated as common elements or common property, the decision to install solar collectors on the roof of a condominium would have to be made solely by the condominium association’s board in its discretion.  Any attempt by an individual unit owner in a condominium to install solar collectors on common elements would be violative of the Condominium Act and, most likely, that association’s governing documents.

Tax Evasion Results in a 5-Year Federal Prison Sentence

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From time to time unreported income, failure to report nanny income, failure to  deposit withholding tax for nannies, children on company payrolls or family members being claimed as employees  for medical insurance purposes come to light.

In the reported New Jersey decision of Sheridan vs Sheridan (247 NJS 552, Ch. Div. 1991) our Judges are instructed to report such tax evasion issues to the IRS. However, over the 15 plus years since the Sheridan decision many litigants, divorce attorneys and, on occasion,  even Judges have minimized that admonition.

It is not uncommon to hear comments to the effect that the IRS has more important things to do, the IRS is not going to rely upon the testimony of a disgruntled family member, that "nanny tax fraud" is the rule not the exception and, worst case scenario, no one goes to jail for such tax indiscretions and, if they come to me, I'll just pay the taxes and be done with it .

In a copy written story in its September 7,2007 edition the New York Times reports the travails of one Mr. Richard Josephson. According to the article, Mr. Josephson was sentenced by a Federal District Judge in White Plains, NY to 5 years in prison (prison time, not probation!) for just such tax evasion violations.

Among other alleged violations, Mr. Josephson apparently:
       1. Failed to report or file withholding or social security for a nanny.
       2. Put his daughter on a company payroll for a "no show" job
       3. Claimed that his wife was a company employee so that she could be included in the 
           company insurance plan.
       4. Reported income in his children's names

Who was a witness against Mr. Josephson??  His adult daughter! At the conclusion of a four week trial, the jury convicted Mr. Josephson of on a series of tax charges including what the Times article describes as the first ever criminal conviction for failing to pay the so called "nanny taxes".

Perhaps, Mr. Josephson's plight should serve as a reminder--------do not take such allegations lightly. The IRS and/or a Federal Court may not.

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Proposed Tax Credit for Condominium and Co-Op Owners Gains Support In Philadelphia

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Pursuant to New Jersey’s Municipal Services Act, every municipality in New Jersey is required to either provide certain municipal services – such as snow removal, trash  collection, recycling and lighting of roads and streets – to condominium and homeowners associations and co-ops within its borders or, in the alternative, to reimburse these communities for such services.  The purpose behind the Act is simple – eliminate the double taxation of community association residents.  While not unique, New Jersey is one of only a handful of other states that provide for such benefits.  Now, other states and individual municipalities are starting to take notice.

Earlier this year, Bill 070073 was introduced in the Philadelphia City Council, which, if enacted, would provide a tax credit for owners of condominiums and co-ops who do not currently receive regular city trash collection, recycling and bulk item collection services.  The proposed legislation, sponsored by City Councilmen Jim Kenney and Frank DiCicco, has been gaining support lately as a result of the previous efforts of the City Council and despite the opposition of Mayor John Street, who has refused to comply with a previous Court ruling that required the City to provide no-cost refuse collection services to community associations.

Bill 070073 attempts to remedy the inequities suffered by members of community associations who typically pay the same local taxes as non-association homeowners even though community association members are often denied typical municipal services such as trash  collection and recycling.  This Bill seeks to eliminate the double taxation problem by reimbursing tax payers in community associations for trash hauling expenses, which are normally privately funded by assessments paid by unit owners to their respective association.  The legislation is expected to move forward for a vote before the city counsel in the coming months.  The full text of this proposed legislation can be found here.

Cohabitation & Its Affect on Alimony in 2007

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     Many Marital Settlement Agreements or Judgments of Divorce contain a provision that alimony will terminate upon the recipient’s cohabitation in a manner analogous or tantamount to a remarriage.
   
     In most instances, that provision further provides that cohabitation must be with an unrelated adult of the opposite sex.

    The purpose of such provision is not to pass moral judgment upon a person’s lifestyle choices, but to prevent the inequity of a person manipulating the intent and purpose of alimony by living in an arrangement that is tantamount to a remarriage, while not marrying their partner solely to prevent a termination of their alimony.

    Our Courts have consistently ruled that a former spouse’s payments of alimony should not be used to support a new partner or, conversely, may no longer be necessary if the recipient is being supported by a new partner.

     Now that New Jersey has adopted legislation which enables same sex couples to register as a Domestic Partnership and/or to enter into a Civil Union, the same issue arises, as it has in several other states with conflicting results, as to whether or not a Domestic Partnership or Civil Union is a “cohabitation analogous to the remarriage.”
 
    The issue is further compounded by the argument that a heterosexual person may remarry, but simply chooses not to do so in order to continue their alimony.  On the other hand, a same sex couple does not yet have that option.

     A recently widely reported case from the State of Oregon held that an ex-husband was obligated to continue the payment of alimony to his ex-wife notwithstanding her admitted cohabitation with a domestic partner.  In that case, the Court apparently reasoned that such cohabitation is not analogous to remarriage, and that a Domestic Partnership was something much different than a marriage. 

    However, in a recent Virginia Appellate Court decision, the Court reached the opposite conclusion and found that an ex-wife who was cohabiting with another woman in a Civil Union had, in fact, entered into a relationship “analogous to remarriage” and terminated her alimony.

    In the Virginia case, the Court focused on the term “analogous” which it reasoned means that something is “in many ways similar to,” but not necessarily identical to something else.

    Specifically, it found that a relationship which involved actual cohabitation, had a romantic component, had the legal status of a Civil Union and had an intention of permanency was in all significant respects analogous to a marriage.

    There does not appear to be any reported case in any state specifically discussing a contractual provision that the cohabitation must be with a person of the opposite sex.  However, it could arguably be assumed that if New Jersey Appellate Courts ultimately find that a Domestic Partnership or Civil Union is “analogous” to a marriage as did the Virginia Appellate Court, they may well find that the imposition of the requirement that the cohabitation with a person of the opposite gender may be violative of the equal protection clause of the United States Constitution.

    Although New Jersey was one of the first states to authorize Civil Unions between same sex couples, it has not yet had a reported Appellate Division case discussing the impact of a Domestic Partnership or Civil Union on the person’s existing right to alimony from a prior marriage. 
 
    While it is dangerous ground to predict what an Appellate Court may ultimately decide on such an important policy issue, it is likely, given the social philosophy expressed by our Legislature in the Domestic Partnership and Civil Union statutes, that our Courts may look to the substance of the relationship and disregard the form as to whether it is a marriage, Domestic Partnership or Civil Union and/or the gender of its participants.
  
    For those Agreements and Judgments which are in place, there is little, if anything, which can be done until there is an Appellate Decision on the subject. 
  
    However, for persons who are currently in the process of divorce and will be making or receiving payments of alimony, care should be taken in drafting the language of the Settlement Agreement or Judgment of Divorce.
   
     Certainly, the potential payor of alimony should insist that any cohabitation including a Domestic Partnership or Civil Union will terminate alimony.
   
     Issues, also, frequently arise regarding the duration of the cohabitation and whether or not cohabitation for a relatively short period of time should terminate existing alimony.  From an alimony recipient’s perspective, a brief ill-conceived or immaturely terminated cohabitation should not terminate alimony from a prior long term marriage.  Obviously, the converse is true from an alimony payor’s perspective.
 
    Careful negotiation and drafting of an Agreement requires, at the very least, a statement of the parties’ intention with regard to cohabitation and/or the termination of alimony.  Is it their intention that any cohabitation of whatever nature and with whatever gender qualifies as a terminating event?
   
     As society changes, concepts such as Domestic Partnerships and Civil Unions become a reality, so should well advised and thoughtful divorce litigants anticipate such future changes and specifically craft their divorce Agreements so as to avoid unnecessary future expense and litigation over issues which could be negotiated and specifically resolved at the time of their divorce.

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Tenants Allowed to Maintain Almost "No Deductible" For Commercial Insurance Coverage

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When was the last time you reviewed the insurance provision of your tenant’s commercial lease?  Do you know if the lease prohibits a high deductible for the tenant?

It is probably a good time to take a look at the lease in light of the New Jersey Appellate Division’s decision on August 20, 2007 in Boston Market Corporation f/k/a Golden Restaurant Operations, Inc.  v. Myrus Hack, docket No. A-0182-05T20182-05T2 27-2-8272 (unpublished). The Appellate Court held that a commercial tenant was not in default under a lease because it’s maintained insurance with an extremely high deductible.

The Appellate Court characterized this issue as: “The simple question posed here is whether or not the insurance arrangements made by [plaintiff] comply with the lease provisions respecting the tenant’s insurance obligation.”  The lease did not expressly prohibit insurance with a high deductible.

The Appellate Court focused on whether the insurance obtained by plaintiff, with high deductibles of up to one million dollars, constituted self-insurance or no insurance at all. The tenant always maintained insurance coverage for the property.

The Appellate Court concluded that the tenant was not in default of provisions relating to insurance requirements in the lease between the parties.

Although the Appellate Court may have placed form over substance in its lease interpretation, the decision highlights the value for commercial landlords to review and understand their lease language regarding their tenant’s responsibility to obtain insurance. Specifically, commercial landlords should review their leases for the following points:

1) Type of Insurance.  Ensure that the lease describes the particular type of insurance to be maintained;

2) Maximum Deductible.  Provide a provision within the lease for a maximum deductible.  This can help eliminate a tenant obtaining insurance with a higher deductible than any potential loss that could be sustained if the property were destroyed.  For instance, if the property is worth $1 million dollars, but the deductible is $1 million dollars, the tenant is the one responsible for the $1 million dollar loss.  A tenant’s bankruptcy could wipe out their liability;

3) “First Dollar Coverage.”  Check that the lease contains a statement that the insurance policy must furnish “first dollar coverage.”  This allows the insurance carrier to pay the claim on a first dollar basis, then require the tenant reimburse the carrier up to their deductible amount.
 

Reasonable Attorney's Fees - A Subjective Standard

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Condominiums within Pennsylvania and New Jersey are creatures of both real estate law and state statutes.  A condominium’s enforcement authority is rooted in restrictions that both run with the land and are recorded as restrictive covenants with the deed clerk of the county where the condominium is located.  The major respective statutes are the Pennsylvania Uniform Condominium Act and the New Jersey Condominium Act. 


Both state statutes provide that a condominium association is entitled to recover its reasonable attorney’s fees along with the costs of suit incurred as a result of the condominium having to litigate matters relating to the collection of common expense assessments [N.J.S.A. 46:8B-21 and 68 Pa. C.S. 3315(f)]. Simultaneously, the majority of condominium declarations/master deeds and bylaws allow for the recovery of reasonable attorneys’ fees and legal costs in collection actions.
   

In New Jersey, the Rules of Professional Conduct at 1.5(a) and New Jersey Court Rules 4:42-9 govern applications for attorney’s fees.  Whereas these rules set forth eight (8) factors to be considered by the reviewing court, experience has shown that the determination of the  “reasonableness” of the attorney’s fees boils down to the subjective opinion of the particular judge ruling on the fee application.  Courts of both states will consider such issues as whether opposition was filed by the debtor defendant, whether court appearances were required, whether discovery was exchanged and whether any additional motions or court pleadings had to be filed outside of the ordinary. 


In Pennsylvania, this subjective standard was illustrated in the case of Mountain View Condominium Association v. Bomersbach, 734 A.2d 468 (Pa.Cmwlth. 1999).  In Mountain View, the Commonwealth Court of Pennsylvania ruled that the lower court did not err in its  calculation and award of attorney’s fees which the condominium was entitled to recover from a unit owner. What makes Mountain View so noteworthy is that the Court allowed a fee award of $46,548.64 on what was initially only a debt of $1,200.00 when the condominium initiated the law suit.


Whereas the fee rates which condominiums agree to pay their attorneys may be the same or similar to their competitors’ within the industry, the court’s awarding of these fees through the foreclosure process is dependant upon the court’s subjective opinion.  Some courts rightfully award a condominium all legal fees and costs incurred in a foreclosure action, penny for penny, whereas in some situations some specific judges dramatically reduce the amount of the attorney fee award.


 When a judge issues an order awarding attorneys fees and legal costs less than the amount which the condominium incurred, the condominium may file a motion seeking the court to reconsider its position on the award, or the condominium can appeal the court’s decision to the proper appellate court.  However, both of these options will cause the condominium to incur additional legal fees which may not be recoverable from the debtor.  The decision as to whether the condominium should file a motion for reconsideration or appeal the court’s decision after the entry of final judgment should be made on a  case by case decision based upon the total amount which the court has reduced the fees awarded, and the time-frame in which the condominium finds itself in regards to moving forward with the foreclosure action.


As stated by the trial court in Mountain View, “[t]he Association had the option of either backing off or enforcing its rights under the Declaration and the decisional law.  The fact that it elected not to compromise, to stand on principal and to uphold the law requires that its attorney’s fees be covered.  Any holding to the contrary would cause chaos in Condominium Associations whose compliant members would have to bear the cost of dealing with non-compliant members.” In the end, there is no sure-fire way to predict the amount of attorney’s fees which will be awarded by a court.  However, this should never deter an condominium from enforcing its declaration/master deed and bylaws to collect unpaid assessments, the “life-blood” of the condominium.

Wall St. Fear: Bond Traders Dread Layoffs, Lost Bonuses

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Bill Singer, Shareholder and member of Stark & Stark's Securites Practice Group, was quoted in the article, Wall St. Fear: Bond Traders Dread Layoffs, Lost Bonuses in the Sunday September 2, 2007 edition of the New York Post.

You can read the full article here.