Disability Pensions

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Earlier this year, the New Jersey Appellate Division encouraged the Police and Fire Retirement Board to devise a formula to allocate the marital and non marital aspects of Disability Pensions for marital distribution purposes. Larrsion v. Larrison 392 NJS 1 (App Div 2007.)

The Board has not yet provided such guidance. Accordingly in a very recent decision the Appellate Court took the initiative and developed a formula for the allocation of the marital portion of a police or fireman's disability pension. In an extremely well reasoned and well written opinion by Judge Jane Grall (Sternesky v. Sternesky, released 10.25.2007) the Court develops a formula which it directs the "trial courts to apply in the absence of relevant guidance from the Legislature or Board" .

The formula is somewhat complex and must be specifically analyzed in the factual context of a particular case, but is "must reading" for anyone handling a divorce involving Police or Fireman Disability case and directive information for any other disability type pension.
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In property valuations, the taxman has the edge

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Timothy P Duggan, Shareholder of Stark & Stark's Real Estate, Bankruptcy & Creditor's Rights and Condemnation groups of Stark & Stark, was quoted in the Sunday October 28, 2007 issue of The Trenton Times in the article, In property valuations, the taxman has the edge.

You can read the full article here.

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 - # 5

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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.  The series is constructed so that listeners may use it as an "owners manual" for their divorce. 

This fifth installment of the Divorce Law Podcast will focus on pre-trial motions. Because a large majority of divorce cases are settled outside of the courtroom, pre-trial motions are a very important way of determining the terms of your divorce. This can include, but are not limited to, issues such as child support, alimony, allocation of household bills, allocation of household assets, insurance coverage and parenting time/custody.

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

Episode 5 Show Notes (PDF)
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Fire in Luxury High-Rise Underscores DCA's Plan to Require Fire Suppression Systems for Older High-Rises

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On October 10th, a four-alarm fire tore through the upper floors of an eighteen-floor luxury high-rise condominium under construction on the Jersey City waterfront.  According to the Star Ledger, the blaze proved difficult to fight in part because the building water source and fire suppression system was not completed.  Fortunately, there were no injuries and only minimal damages to the building; however, this fire and the possibility of similar fires at older high-rises underscores the logic behind a new proposal by the Department of Community Affairs (“DCA”), which would require older high-rise buildings to add approved fire suppression systems.

While automatic fire suppression systems have been required by state law in residential buildings of six stories or higher since 1989, older condominium and co-op buildings have been exempt from these requirements.  That is until the DCA’s recent proposed amendments to the New Jersey’s State Fire Prevention Code, specifically, N.J.A.C. 5:70-4.17, which would require older high-rises – both residential and commercial – to be retrofitted to include fire suppression systems.  The DCA indicated that the change was prompted as a result of the special hazard and life-safety issues that high-rises represent in rescue and firefighting operations.  The proposed amendments have been submitted by the DCA and are now subject to a sixty day comment period.  If enacted, condominium and co-op buildings would have up to four years to install an approved fire suppression system. 
   
Should the proposed amendments be enacted, condominium and co-ops throughout the State may be on the hook for significant expenses in order to retrofit these older building to comply with the new law.  While experts estimate the cost for putting fire suppression systems into new construction averages between $1.00 to $2.50 per square foot, adding a fire suppression system to an older building is more difficult and much more expensive.  Some estimates range between $5.00 to $7.00 per square foot, which could cost upwards of $25,000 per building.  Such costs would, of course, be bourn by the unit owners, which may find themselves paying a special assessment, especially if the association’s reserves are not sufficient to foot the retrofitting bill.

Divorce Law Podcast - # 4

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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.  The series is constructed so that listeners may use it as an "owners manual" for their divorce. 

This fourth installment of the Divorce Law Podcast will focus on filing your complaint. This podcast will also address the issue of whether or not your case should be a "fault" or a "no fault" case, and what that difference can mean to your divorce proceedings. 

You can download the fourth installment here. (2.8 MB)

Episode 4 Show Notes (PDF)
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A new battle of Waterloo is under way

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Timothy P. Duggan, Shareholder and member of Stark & Starks Bankruptchy & Creditor's Rights group was quoted in the October 12, 2007 Star Ledger article, A new battle of Waterloo is under way.

You can read the full article here.

Resolving Custody & Parenting Disputes In A Divorce

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     High conflict divorces often result in unnecessary and contentious custody or parenting time disputes.  The conflict between parents regarding their perceptions as to the fault of the other parent, the involvement of third parties, asset distribution or alimony often destroy the parties’ ability to objectively focus upon the best interests of their children.

    When that occurs, the children’s relationship with one or both of the parents is almost always affected and the contentiousness is almost always damaging to the children. The conflict between the parents becomes so intense that they are no longer able to focus on the best interests of the children and, in the worst case scenarios, the children often become helpless pawns in the parents’ “war.”

    There are two very constructive and generally successful alternatives provided  by the Court system as useful alternatives to mitigate such adverse consequences to the children.  Both alternatives can be of significant benefit to the children, but both require an honest and good faith effort by the parties themselves.  Each involves utilization of an objective third party with the hope that the objectivity of a third party can help well meaning and well intended, but temporarily misguided parents to see their way through their own divorce conflicts and to refocus on the children’s best interest. 
 
The alternatives are:

Mediation
    New Jersey Rules of Court provide that when “the Court finds that either the custody of children or parenting time issues, or both, are a genuine and substantive issue the Court shall refer the case to mediation.”

    Each county has its own Court employed mediators.  The mediators employed by the Court system are trained by the system and handle nothing but custody and parenting time mediations. The mediation process is conducted directly by the parties themselves and almost always without the involvement of attorneys. Anything which is said during the mediation is completely confidential and cannot be subsequently used by either party if the mediation is not successful.

    All evaluations or expert analysis are deferred while the mediation is in progress, and the mediation cannot last any longer than two (2) months from the date it commences unless specifically extended by the Court. If the mediation is successful in resolving the matters at issue, the mediator prepares a memorandum outlining the parties’ agreement and submits the memorandum directly to the Court for incorporation into and entry as an Order of the Court. 

    If the mediation is not successful, the mediator simply reports that to the Court and to counsel for the parties without comment as to the reasons for the failure and the Court will process the matter to its ultimate conclusion without reference to anything which was said or occurred in the mediation. The process is highly successful.  It is generally believed that between 60% and 70% of the cases which are submitted to mediation are ultimately resolved. Because the mediators are employed by the Court system themselves, there is no charge to the parties for the services of the mediator.

Parenting Coordinator
   
     The use of Parenting Coordinators is a growing trend now being used by the Courts on a limited, trial basis. Parenting Coordinators are, for the most part, mental health professionals who have applied to and been approved by the New Jersey Supreme Court as Parenting Coordinators.  Once approved, they are placed on an list from which the parties, their attorneys or the Court may select the Coordinator who they feel is appropriate for a particular case.

    Unlike the Court employed mediators, the Parenting Coordinators are privately employed and  are compensated for their services.  The Court Order appointing the Parenting Coordinator will stipulate how the Coordinator is to be paid--whether by one party or the other, in equal percentages or in proportionate percentages and will often designate the hourly rates for the Coordinator. Unlike the mediator who simply facilitates discussion between the parties themselves, the Parenting Coordinator may act as an impartial decision maker when the parties are unable to come to their own agreement. 

    The parties’ agreement and/or the Order appointing the Parenting Coordinator can stipulate the  specific areas to be determined by the Coordinator.  Common issues submitted to Parenting Coordinators include time schedules, holiday sharing, school vacations, religious schooling or training, involvement in extracurricular activities and elective medial care. A Parenting Coordinator can be utilized while the divorce is pending, but are more often  utilized after the divorce when parenting issues inevitably outlive the conclusion of high conflict divorces surface. A skilled Parenting Coordinator will utilize skills as a counselor, parent educator, mediator and, ultimately, arbitrator in bringing the parental disputes to a conclusion.  Very often a competent Coordinator can resolve the matters and issues by simply being a good listener and a competent, objective educator.

    Although the use of Parenting Coordinators is a relatively new development, it is hoped  that the use of Coordinators will minimize the parties’ repeated return to Court for the resolution of  parenting issues, and will favorably impact on the children’s best interests by reducing the conflict between the parents. Information regarding the parent coordination pilot programs implemented by the New Jersey Supreme Court can be found at www.njcourtsonline.com or at www.judiciary.state.nj.us “Notice to the Bar” by the Honorable Phillip S. Carchmen, dated April 2, 2007. There is also an excellent discussion of parenting coordination from a psychological perspective at www.apa.org/monitor/jan05/niche.html .

     Although there are very valid reasons to make either mediation or the use of a Parenting Coordinator contra indicated, either or both are alternatives which should be considered in any case in which custody or parenting is a contested issue.
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Estate & Wealth Planning for Women

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Rosemary D. Durkin, Shareholder and member of Stark & Stark's Trusts & Estates Group, will be a guest speaker at the October 23, 2007 and November 7, 2007 seminar, Estate & Wealth Planning for Women, presented by Merrill Lynch.

These seminars will focus on important issues women need to face when planning for retirement, addressing the financial well-being of their future generations, and providing sufficient income for a lifetime. Women live an average of 5-7 years longer than men, the average life expectancy for women is 80-years old, 80% of women will be responsible for their own finances and estate planning, and most women are unaware that without proper planning, up to 55% of their estate could go to the government.

Join hosts Susana Lugones and Katherin Romero, Financial Advisors from Merrill Lynch, and Rose Durkin in this free educational seminar.

While the seminar is free, dinner will be provided and a reservation is required. To register, please contact Susana Lugones at 866-243-4311 or by email.

Recall forces NJ meat firm to close doors

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Timothy P. Duggan, Chair of Stark & Stark's Bankruptcy & Creditor's Rights Group, was quoted in the article, Recall forces NJ meat firm to close doors, in the October 6, 2007 issue of the Star Ledger.

You can read the full article here

Divorce Law Podcast - # 3

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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.  The series is constructed so that listeners may use it as an "owners manual" for their divorce. 

This second installment of the Divorce Law Podcast will focus on the importance of gathering information and evidence for your divorce proceedings. This podcast will discuss the basic documents you should collect in order to proceed successfully with your divorce.

You can download the third installment here. (3MB)

Episode 3 Show Notes (PDF)
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Mediator Privilege

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The New Jersey Supreme Court has adopted New Jersey Rule of Evidence 519 entitled “Mediation Privilege” to become effective July 1, 2008.  It provides that a mediation communication is privileged and shall not be subject to discovery or admissible in evidence in a proceeding unless waived or precluded under limited circumstances further defined in the amendment.

However, evidence or information that is otherwise admissible or discoverable does not become inadmissible or protected from discovery solely by reason of its disclosure or use in a mediation.

The parties to a mediation may expressly waive the privilege, and in the case of the privilege of a mediator, it may be expressly waived by the mediator.

Among the exceptions, where the privilege does not apply are the following:

1.    Communications made during a public mediation;
2.    A threat or statement of a plan to inflict bodily injury;
3.    Communications sought or offered to prove or disprove a claim or complaint against a mediator arising out of a mediation;
4.    Communications offered to prove or disprove a claim or complaint of professional malpractice; and
5.    Communications sought or offered to prove or disprove child abuse or neglect in a proceeding involving DYFS, unless DYFS participates in the mediation.

The privilege does not exist where a court, administrative agency or arbitrator finds that the party seeking discovery where the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality and the that the mediation communication is sought or offered in a proceeding involving a crime or to avoid liability on a contract arising out of the mediation.

A mediator may not make a report or recommendation regarding a mediation to a court.

The foregoing evidence rule expands upon New Jersey Court Rule 1:40-4 “Mediation - General Rules” which include a “confidentiality” provision.  It mirrors several provisions within the New Jersey Uniform Mediation Act, N.J.S.A. 2A:23C-1 to 13.  The evidence rule reaffirms the court’s intent to foster uninhibited communication during mediation, so as to further the goal of creating an environment wherein the parties will discuss freely their respective positions creating greater opportunities for settlements to occur.

A Sponsor-Placed Bylaw Veto Clause Invalidated by Superior Court Judge

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A condominium client represented by Stark & Stark's Community Associations Group successfully challenged, and secured the invalidation of, a clause placed in the bylaws by that condominium's sponsor by which that sponsor reserved to itself the right to veto any decision of the condominium's board.  When creating the bylaws to impose upon that condominium's owners, this sponsor of a condominium in Jersey City included a provision by which it could veto "any action" that that sponsor "in its absolute and sole discretion" felt impaired or "adversely" affected the sponsor's rights, or caused the sponsor to "suffer any financial, legal or other detriment", or which "may have any direct or indirect detrimental impact upon" that sponsor.

Fortunately for this condominium, and for any similarly situated condominium, New Jersey's Condominium Act (the "Act") allows for a sponsor veto of a much, much limited nature.  The Act invalidates only the following condominium actions, if not approved in writing by a sponsor:  (1) assessment of the sponsor for capital improvements; or, (2) any action detrimental to the sale of units (although an increase in maintenance fees, without discrimination against that sponsor, is not "detrimental" to the sale of units).

In voiding and invalidating this sponsor's overreach, and improper veto clause, the court relied upon both the clear language of the Act, but also upon the New Jersey Supreme Court's important decisions of the past 6 years:  Fox v. Kings Grant Maint. Ass'n. and Brandon Farms Property Owners Ass'n, Inc. v.  Brandon Farms Condo. Ass'n,, Inc.  Both of those cases forcefully stand for the proposition that when owners assume control of a condominium that control is to be absolute.   The Supreme Court in Fox wrote that the "unit owners' interests take precedence over any outside interest, whether that interest is a developer ... or any other outside party."  In Brandon Farms, the Supreme Court invalidated a developer-created governance scheme because it violated "the public policy set forth in the  Act by putting the developer's interest in selling ... homes ahead of the Condominium Association's interests".

In our case, the sponsor, by creating this veto clause, and then attempting to utilize it, was attempting to exert lingering control over the condominium's owners.  This sponsor was also seeking to ensure its interests, and not the owners' interest, were the key focus of that condominium.  Neither would be permitted by this court and thus Stark & Stark's client was freed from this "veto" clause and the sponsor's conduct.

Divorce Law Podcast - # 2

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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.  The series is constructed so that listeners may use it as an "owners manual" for their divorce. 

This second installment of the Divorce Law Podcast will focus on the selection of the attorney who will assist you through your divorce. This podcast will discuss the three C's you should consider when selecting an attorney: competency, cost and chemistry.

You can download the second installment here. (4 MB)

Episode 2 Show Notes (PDF)
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Coordinated Review Program Indefinitely Suspended

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Franchisors and their counsel are not the only ones scrambling to digest the intricacies of the revised FTC Rule. Citing the challenges in examiners having to learn a new disclosure format, the franchise coordinated review program has been suspended indefinitely.  The suspension went into effect on July 31, 2007. 

The coordinated review program was adopted to streamline the franchise registration process.  It provided franchisors with the ability to simultaneously register their franchise offering in two or more participating states.  A lead examiner would then be assigned to coordinate and oversee the registration process among the states.  Prior to the suspension, 11 states participated in the program. 

The future of the coordinated review program is not known.  However, state administrators plan to re-evaluate the program after July 1, 2008, when the new disclosure format becomes mandatory and examiners will no longer have to review disclosures under both the new and old formats.  

Copyright Act Applies to Community Association's Exhibition of Movies

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How often have you seen the FBI warning screen preceding a movie and wondered, does this warning apply to me?  A common issue raised by community associations is whether the association can show a motion picture or DVD at a site within the association, possibly the pool, clubhouse, or community room.  The Federal Copyright Act, Title 17, U.S.C. Section 101(1) and Section 106 make it unlawful to show a film in public without the explicit permission of the film’s copyright owner.  Renting or purchasing a cassette or DVD from the local video store or library gives the customer the right to view the film, but not to show it in public.  The Copyright Act defines “public” in this context as “any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.”  According to Senate Report # 94-473, Page 60; House Report number 94-1476, Page 64, public performances of movies are illegal unless they have been authorized by license.  Even “performances in ‘semi-public’ places such as clubs, lodges, factories, summer camps and schools are ‘public performances’ and subject to copyright control.”  Furthermore, both for-profit corporations and non-profit organizations must secure a license to show videos, regardless of whether an admission fee is charged. 

Non-compliance with the Copyright Act is considered infringement and can carry steep penalties. Unlicensed exhibitions are federal crimes and can subject the association to a penalty ranging from $750.00 to over $100,000.00  per exhibition for knowingly violating the Copyright Act.  Even inadvertent violators of the Copyright Act are subject to substantial civil penalties ranging from $750.00 to $30,000.00 for each illegal showing, plus other possible penalties under the Copyright Act. 

Therefore, if the association wishes to organize a weekly movie viewing, movie marathon, or some other event where a copyrighted motion picture will be shown, the association should first obtain a license.  Fortunately, the obtaining of a license is a relatively simple procedure.  The association may contact the Motion Picture Licensing Corporation (“MPLC”) and request the purchase of an annual license.  The fee to obtain a license from the MPLC is based upon the type of organization, the number of units within the association, and the number of locations at which the film will be shown.  For example, for an association with 200 homes and one clubhouse, the number of units would be 200 and the location for exhibiting the movie would be 1.  The cost for an association to obtain a license varies according to the formula stated above, but appears to average$2.10 per unit, so that an association with 200 units would be charged an annual licensing fee of $420.00 and an association with 428 units, $899.00.


Securing a license from the MPLC would allow an association to exhibit movies an unlimited number of times.  Once a license has been obtained, the association could show any of the movies covered by the umbrella license granted by the MPLC.  The umbrella license covers the majority of the major motion picture producers and distributors including Walt Disney Pictures, Warner Bros., United Artist Pictures, Touchstone Pictures, Orion Pictures, Sony Pictures Classics, Fox 2000 Films, plus a large number of other corporations.  Furthermore, once a license has been obtained, the association and guests of its members would be allowed to use the association’s facilities and equipment to show movies.  While a license would not allow the association, or one of its committees or organizations, to charge an admission to view the movie, the association would be allowed to take volunteer donations to offset the cost of purchasing the license.  In addition, the association could charge to sell beverages or food at the time of the movie showing.  An additional benefit of the license granted by the MPLC is that if the association had previously infringed upon the Copyright Act or rights of any of the companies covered under the umbrella license, the MPLC agrees that upon obtaining a license, it will not seek legal recourse or assert any claim for any of the prior possible infringements.

It is imperative that an association’s Board of Directors and legal counsel be aware of these issues so that inadvertent violations of the Copyright Act may be avoided.

Capital Contributions Now Permitted by NJ Condominium Act

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On September 10, 2007, Governor Corzine signed into legislation a bill modifying Section 46:8B-15 of the New Jersey Condominium Act.  The bill now confirms that condominium associations may charge a capital contribution or membership fee, as long as the association’s master deed or by-laws provide the authority for doing so.  You may recall that the recent Micheve case cast doubt on an association’s ability to collect these fees.  Also included in the bill is a provision mandating that association funds must be maintained separately and not commingled.

Capital Contribution and Membership Fees.  The law now provides that, if authorized by the master deed or bylaws, an association may collect a capital contribution, membership fee or other charge upon the initial sale or subsequent resale of a unit.  The funds collected must be allocated for maintaining or improving the common elements or defraying common expenses or otherwise.  The charge may not exceed nine times the amount of the most recent monthly common expense assessment for the unit.  The bill also validates any existing master deed or bylaws provision which already provides for the collection of this type of fee. 

Thus, a condominium association whose by-laws or master deed already include authority to charge a capital contribution or membership fee (whether in the original version or by amendment prior to this legislation) can now be confident of its ability to charge the fee.  Any condominium association which does not currently have the authority to charge a capital contribution or membership fee may now take steps to amend its by-laws or master deed.

The legislation, because it is part of the Condominium Act, does not apply to homeowners associations or cooperatives. 

Maintaining Association Funds.  The law also includes a provision that requires all funds collected by the association to be maintained separately in the association’s name.  For investment purposes only, reserves may be commingled with operating funds of the association as long as each fund is accounted for separately and the balance of the account never falls below the amount identified as reserve funds.  Under no circumstances may association funds be commingled with the funds of the managing agent, a trustee, or of another association.  These requirements should not be a surprise to most associations as they likely operate in this way already.