New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

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. 

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On December 22, 2006, the Honorable Neil H. Shuster, Chancery Division, Mercer County Superior Court, rendered a decision in the case of Washington Mutual Home Loans, Inc. v. Rodrigo S. Lima, et al. This decision marks the first time that a New Jersey court has addressed the issue of distributing surplus funds resulting from a foreclosure sale on an “affordable housing unit” where a township or municipality was the successful bidder.

In this case Hopewell Township claimed entitlement to all surplus funds above the mortgaged amount arguing that under current New Jersey Law the owner of the affordable unit would be “personally obligated to pay the administrative entity responsible for assuring affordability any surplus funds,” should the property be foreclosed upon. However, the Brandon Farms Condominium Association argued that the New Jersey Condominium Act, which provides homeowner associations the right to collect on any liens, takes priority over the statute cited by Hopewell Township. Brandon Farms also argued that it would be impractical to expect an association to provide a myriad of services to its members if it has no means of collecting assessments to fund the costs of services.

Despite the Township’s claim to the entire surplus, Judge Shuster found that Brandon Farms was entitled to have their liens satisfied using surplus funds, and that only after the Association collected on their liens would any remaining monies go to the Township.

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This week's New Jersey Legal Update podcast will discuss the landmark case of Washington Mutual Home Loans, Inc. v. Rodrigo S. Lima, et al. This podcast will give a brief summary of the case, as well as a discussion of the implications of this decision and the impact it will have on Condominium Associations.

This week's New Jersey Legal Update is presented by A. Christopher Florio, Co-Chair of Stark & Stark’s Community Associations Group.

You can download the New Jersey Legal Update Podcast # 56 here. (5.6 MB)

Technorati Tags: New Jersey : Podcast :  Community Associations : Brandon Farms : Condo : Surplus Funds

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This week's New Jersey Legal Update podcast will discuss the recent Appellate Court decision in Siddons v. Cook which stated that condominiums may have a duty to warn condominium owners of potentially dangerous conditions known to it, even involving property or issues related only to an individual unit.

This week's New Jersey Legal Update is presented by Christopher Florio, Co-Chair of the Firm's Community Associations Group.

You can download the New Jersey Legal Update Podcast # 36 here.(4.5 MB)

Technorati Tags: New Jersey : Podcast : Community Association : Condo

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This week's New Jersey Legal Update is presented by Christopher Florio, Co-Chair of the Firm's Community Associations Group. This week's update discusses the New Jersey Appellate Division's ruling in Micheve v. Wyndham Place at Freehold Condominium Association. In Micheve, the Court struck down the practice of associations raising monies through capital contributions paid by the seller at closing.

You can download the New Jersey Legal Update Podcast # 33 here.(8MB)

Technorati Tags: New Jersey : Podcast : Condo : Community Association

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As a longstanding member of the New Jersey Chapter of Community Associations Institute (CAI) legislative action committee, the 2006 President of CAI's political action committee (CA-PAC), and as Secretary of CAI's Board of Directors, my involvement in the New Jersey legislative process on matters affecting community associations in New Jersey has dramatically increased.

In that regard, I was present at the February 23, 2006 Housing Committee where Assemblyman Caraballo's bill, known as the Uniform Common Interest Ownership Act (UCIOA) was voted out of committee, and sent to the Assembly floor for a full vote. The bill, known as A-798, is a sweeping bill that for the first time in New Jersey history would bring under the auspices of one law issues affecting all community associations in the State (condominiums, homeowners, and cooperatives). Assemblyman Caraballo, a law professor at Seton Hall Law School, has made it very clear that his bill is the first of its kind in the State that will help protect the rights of homeowners living within a community association, while also helping community associations operate more efficiently.

On March 2, 2006, the bill was passed by the New Jersey Assembly by a vote of 55-14, with 6 abstentions. The bill will now go to the Senate for its consideration and disposition.

Technorati Tags: New Jersey : Community Associations

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The general position taken for years has been that senior developments are good for towns because they provide ratables, yet they have little or no impact on the local school system. However, recent newspaper articles report that a number of senior developments have children of school age, thus debunking the generally accepted theory.

The Fair Housing Act, and its amendments, are vehicles used by senior housing developments so that they may "legally discriminate" based upon age. This is acceptable so long as the association maintains its established rules and procedures set forth in the Fair Housing Act. While this post is not intended to go through that procedure, it is intended to advise community associations that they may enforce age restrictions set forth in their own governing documents.

Recently, a town in New Jersey concluded that its ordinance pertaining to senior housing (or age restricted communities) mandated that anyone under the age of 19 may not live in any age restricted community within its township boundaries, with limited exception. The association's governing documents set minimum age requirements which were enforceable. In this situation I believe the Township's ordinance was to narrow and the Township should have been required to broaden its acceptance of age limitations for restricted communities.

Technorati Tags: New Jersey : Condo : Community Association

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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.

Technorati Tags: New Jersey

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Dave's earlier post on an Appellate Court's recent ruling regarding the amendment of association bylaws reminds me of a matter that our firm handled a few years ago. At the time, two of our attorneys were representing a client in a personal injury suit against an age-restricted community. The community had based its defense on the tort immunity statute.

Once I knew what the community's attorneys were basing their defense on, I suggested we file a motion requiring the community to prove it had gone through the required statutory steps to have the tort immunity amendment adopted. This meant proving to the Court that it held a validly announced meeting, and had in its possession all of the ballots that had been cast in that vote. When the community was unable to produce this documentation, the Judge found in favor of our client.

Community associations need to be aware that it is just as important when adopting the tort immunity amendment that the ballots and all of the other documentation of the vote are maintained and accessible in the event proof of their existence and or validity in needed in the future. In addition to tort immunity amendments, associations must expand their review in determining what documents it will keep and for what period of time, in the event it is ever needed.

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I along with Mary Barrett have just finished conducting a series of educational seminars for South Jersey Chapter of New Jersey CAI, and another for property managers from a large nationally known property management company.

When we met with the South Jersey CAI, we discussed the topic of "transition" and what its meaning is for members of a Board. The discussion ranged from the control to the homeowners of an Association, to negotiations with the Developer over construction deficiencies found during the investigative phase of the transition with the Developer. Transition in a community association happens in two ways. First, when the homeowners take control from the Developer and this control is "transitioned" from Developer. The second transition occurs when the Board negotiates with the Developer over defects in the site found by the Association's engineer.

The second property managers seminar included a discussion about the impact of the Fair Housing Act on community associations, as well as tort immunity.

Fair Housing Act issues deal with various individuals typically living in an Association who need a "reasonable accommodation" in order to maintaining a reasonable lifestyle within the community. Examples range from the person who needs a designated handicap parking space due to a specific handicap, to the individual who needs to have a ramp built to their particular home to accommodate a wheel chair.

Tort immunity is a New Jersey statute that enables a community association to insulate itself from certain bodily injuries(typically those considered caused by "simple negligence") if they go through a certain procedure top have their membership adopt an amendment to their by-laws.

Here is a link to the agenda for our presentation on transition. If your board or management company would like to discuss transition issues, tort immunity, Fair Housing Act requirements or other matters which impact associations, please feel free to contact me to discuss scheduling an educational seminar.

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