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. 

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.

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

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

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

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

Technorati Tags: New Jersey : Community Associations

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

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.

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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.

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.

The requirements are not complex but must be addressed regularly and accurately. A corporation must submit an annual report with the required fee each year following its date of incorporation. This is also an opportunity to ensure that its registered agent and the physical location of the registered office is correct. A corporation which fails to file its annual report for two consecutive years may have its charter revoked. As a result of this revocation, the corporation can lose the right to use its corporate name, among other things. To reinstate its good standing, the corporation must submit certain forms and fees. If, while its charter was revoked its name has been "taken" by another corporation, the association will have to come up with a new name requiring new filings and additional fees. A Stark & Stark attorney can serve as the association's registered agent which facilitates the necessary filings each year.

Please take a moment to ensure that your association's corporate filings are up to date.

Common areas include clubhouses, pools, and recreation areas such as playgrounds and tennis courts. In New Jersey, towns and municipalities may not tax a condominium's common elements. It is generally believed, but not technically the case, that the common areas of a homeowners association enjoy the same tax protection.

Many associations are improperly assessed taxes on their common areas. Now is the time to review tax assessments and determine whether a tax appeal is warranted. We suggest the following:

1.Get a copy of your 2005 tax assessment. Your tax assessor will send you a small "green card" in January or early February stating the association's tax assessment. If you do not receive the tax card, call the township tax assessor.

2.Review the tax card and determine if common property is being separately assessed. Is the clubhouse being assessed at its full value? Is open space being assessed as a building lot?

3.Review the association's governing documents to confirm that the common property is specifically identified as common property, subject to restrictions on use and transfers.

4.If the common property is being separately taxed, call us to discuss filing a tax appeal. We may be able to help reduce the assessment to a nominal value or no value at all.

5. IMPORTANT: The deadline to file your tax appeal is April 1, 2005.

Should your homeowner association have questions regarding the assessment of its common property area, contact A. Christopher Florio, David J. Byrne or Timothy P. Duggan to discuss your specific matter.

The New Jersey Supreme Court ruled that under the Condominium Act, N.J.S.A. 46:8B-1 a builder or developer cannot make a condominium association responsible for an individual association member's failure to pay assessments owed to an "umbrella" organization. In this matter, the "umbrella" organization was the plaintiff, Brandon Farms Property Owners Association which was made up of three separate classes of property owners in the Brandon Farms complex.