Appellate Court Interprets 'Housing-related dispute' Clause in New Jersey's Condominium Act to Include Assessment-Related Disputes
New Jersey’s Appellate Court recently held that unpaid assessment and/or maintenance fee delinquency disputes between a condominium and a unit owner are ‘housing-related’ disputes for the purposes of New Jersey’ Condominium Act, N.J.S.A. 46:8B-14(k). In Bell Tower Condominium v. Pat Haffert, et al, the board approved a special assessment related to alleged necessary repairs. Haffert’s share was $22,000.00. Haffert refused to pay. Haffert – who was a board member at the time - challenged the special assessment on procedural and substantive grounds. He argued that the vote was mishandled, that the board had violated the Act repeatedly over the years via its failure to procure annual audits, have elections, have open meetings, make financial records available for inspection, etc. When Haffert still refused to pay, and attorney communications failed to resolve the dispute, the condominium sued. Haffert filed a counterclaim, in which he sought an order compelling the condominium to provide him alternative dispute resolution (“ADR”) vis a vis the assessment-related dispute. At the case’s conclusion, the court entered a $22,000.00 judgment against Haffert. The court rejected Haffert’s ADR-related claims.
Haffert appealed. On appeal, the court reiterated the dictates of Finderne Heights, an appellate court decision from 2007. In Finderne Heights, the appellate court ruled that – because of the Act and its section 14(k) – all ‘qualifying disputes must be sent to arbitration if after suit is filed, either party chooses to invoke the alternative dispute remedy that must be made available under the Act.
It has been commonly understood that disputes involving unpaid assessments and/or maintenance fees were not ‘housing-related’ for the purposes of Finderne Heights and 14(k). The court in Bell Tower disagreed. This does not mean however that a condominium cannot commence a collection action at law and/or at equity without first offering and/or participating in, ADR. It means only that once a debtor – after suit is filed – pleads and/or seeks through formal court papers that the delinquency be the subject of ADR, the condominium must oblige. Since almost all disputes involving unpaid assessments and/or maintenance fees are uncontested, there should be no significant impact to the condominium’s assessment management and recovery program. Additionally, I assume that efforts will be made to amend the Act to overturn that decision. Before changing any process or program in light of the Bell Tower case, feel free to contact me to discuss and/or to clarify.
If you would like to discuss this client alert in more detail or how it may affect your community association, please contact David Byrne at 609-895-7365 or by email at dbyrne@stark-stark.com
