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

There has been some recent concern about Senate Bill No. 2577 that is apparently being prepared for Governor Corzine’s desk for adoption as it relates to age-restricted communities.

The bill would allow developers to make an application permitting a change from an age-restricted development to a non-restricted development. What appears to be causing a lot of concern is the reliance upon the buzz word of “age-restricted” to “non-restricted” without delving into the bill itself.

One of the major requirements for an age-restricted development to be converted to a non-restricted development is that the developer of the age-restricted development cannot be holding any deposits for, or has not conveyed any units within, a particular development. Therefore, any development that is already under construction, or houses have closed, or even if a development has yet to close its first home, but a deposit has been conveyed by a purchaser to the developer, that particular development cannot be converted from age-restricted to non-restricted.

You may access a copy of Senate Bill No. 2577 here.

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Senate Bill 88/Assembly Bill 305, which is intended to prevent the improper sale or transfer of property to those who do not meet the age requirements of a senior community, was signed into law yesterday by Governor Jon Corzine.

 
The Bill, initially introduced by Senator Christopher J. Connors, Assemblyman Brian E. Rumpf and Assemblyman Daniel M. Van Pelt in January of this year, requires the purchaser of a property in an age-restricted community to certify that the person occupying the residence meets the age requirements of the community. This would assist adult communities in complying with quotas established for the "housing for older persons" exception from the federal "Fair Housing Amendments Act of 1988."

Currently, federal law states that 100% of the resident in a community built for occupants 62-years of age or older must be 62-years of age or older. Whereas, communities intended for residents 55-years of age or older, only need to have 80 % of the residents and one person per household be 55-years of age or older.
 

I am pleased to announce that SB 88 has been signed into law. This Bill will assist in creating a method of ensuring compliance by age-restricted communities with federal law. You can read more on the passage of Senate Bill 88/Assembly Bill 305 here.

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The Appellate Division recently decided in favor of an association as it pertains to the amount of attorneys fees awarded in the matter of Summerhill Condominium v. Venner. What is most germane to associations is the fact the lower Court found, and was upheld by the Appellate division, the attorneys fees and costs to be reasonable, despite the attorneys fees being more than 50% of the amount of maintenance fees due.


While the Appellate Court stated that the work needed to complete this matter was not "novel or complex", the Court did recognized the amount of work needed to complete the matter, and agreed that the fees in this matter were similar to fees that are regularly charged for this type of work.


It is important that Courts have an understanding of the legal work needed to collect maintenance fees. Regardless of the amount owed to an association, the attorneys fees and costs needed are similar no matter the amount owed.

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In the recent case of Ruggiero v. Valleybrook Homeowner’s Association (Valleybrook), the plaintiff, Ruggiero, claimed that the method Valleybrook used to collect maintenance fees was not consistent with all sub-associations, and therefore invalid under the law.


The Appellate Division affirmed a lower Court’s decision stating that Valleybrook’s methodology of collecting maintenance fees was proper, and distinguished this case form the Brandon Farms Property owners Association v. Brandon Farms Condominium Association case ("Brandon Farms").


In Brandon Farms, the governing documents had language requiring the sub-association (the condo) to be responsible for collecting the fees due to the master association (the property owners association).  That was invalidated in 2004 by the New Jersey Supreme Court.  


However, what distinguished this matter from the Brandon Farms case is that the sub-association voluntarily collects the master association fees from its members, and then forwards those sums to the master association.  The Appellate Division decided that this method of collection did not violate any law.

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In Cottelli v. Leisure Village East Association, plaintiff slipped and fell on snow and ice outside of the condominium association. After the plaintiff filed suit, and before the deposition of the association could occur, the association filed a summary judgment motion stating that tort immunity language within their governing documents absolved them from liability in this case.


The association’s governing documents states, “Except for willful or gross negligence, Association not label for bodily injury." The Appellate Division granted summary judgment, but also stated that additional facts relating to the case need to be found in order to determine whether or not negligence or willful misconduct existed on the part of the association. 


This case follows logically what should occur with the tort immunity statute.  While an association may eventually win the case, in order to make certain there is no appeal that can be won, all discovery should be completed so there are no facts in controversy, and the trier of fact (in this case, the judge) can make a determination if tort immunity statute can be utilized in the instant case.

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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. 

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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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