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

David J. Byrne, Shareholder and member of Stark & Stark's Community Associations group presented a seminar at the 21st Annual Cooperator's Co-Op & Condo Expo which was held April April 28 - 29, 2008 in New York. New York.

The seminar focused on avoiding litigation and stopping lawsuits before they start. Mr. Byrne discussed strategies for avoiding litigation related to everything from unpaid fees to disputes between neighbors, and discussed and analyzed laws and regulations governing administrative documents.

You can view a copy of the seminar materials here. A full recording of the seminar will be available online next week.

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A unit owner in a top floor of a Union City condominium recently decided to pay his monthly assessments into an escrow account, alleging that the condominium association had failed to maintain the roof, proximately causing damage to the unit, and personal injury to the owners living inside. In this matter, the owners filed a suit against the condominium, its board members and its managing agent, seeking damages associated with what they contend is a breach of duty on the condominium's part. The owners vacated their unit, and now claim that the condominium must restore the unit's interior and there after pay money to plaintiffs to compensate them for the loss of use of the unit and for disease and other maladies from which they contend to be suffering. In response, the condominium recorded a lien and filed a counterclaim seeking a judgment for all unpaid assessments, late fees and attorney fees. With the case still in its early stages, Megan Christensen and I filed a motion for partial summary judgment, on the condominium's behalf, seeking a judgment against the owners for all unpaid assessments and late fees. We argued that it is clear and fundamental under New Jersey law that a condominium owner must pay assessments regardless of what condition the unit may or may not be in. We asserted, basically, that there is no lawful reason why a condominium owner can ever fail and/or refuse to pay assessments. In response, the owners argued that the alleged, subjective, condition of their unit excused their nonpayment and/or that they should be freed from paying assessments until those conditions are remedied.

Fortunately, for the good of all members of this condominium, the court agreed with us, ruling that these owners are forbidden from withholding payment of assessments, and entering a judgment against the owners. The court also awarded late fees to the condominium. While the owners are still permitted to continue their suit against the Association, they have a judgment against them for all unpaid assessments and late fees. The condominium can execute on that judgment and, also, base a foreclosure action on this decision.

In the end, this case is another decision in a long line of decisions that reiterate the following basic principle under New Jersey law: a condominium owner is absolutely forbidden from withholding, or refusing to pay, assessments, for any reason. Condominiums should continue to hold the line against owners that try to hold their neighbors hostage by withholding the payment of assessments. While condominiums can always try to negotiate or otherwise discuss the dispute with owners, and reach an agreement or not, they should enter such a process from a position of strength, as they can always get the court to force the offending owner to pay his assessments, despite whatever else may be happening.

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David J. Byrne, Shareholder in Stark & Stark's Community Associations group will present at the 2009 Cooperator Co-Op & Condo in New York, New York. The expo will take place Tuesday April 29th from 9AM - 5PM.

Mr. Byrne will present  on avoiding litigation.  During the seminar Mr. Byrne and an experienced property manager will discuss strategies, ideas and ways for cooperatives, condominiums and homeowners associations to avoid litigation.  The speakers will discuss ways unpaid maintenance fees and assessments can be collected, ways regular payments can be assured, without necessarily resorting to counsel. 

They will discuss alternative dispute resolution and conflicts among shareholders, owners, neighbors, boards and others.  Strategies, both practical and legal, to deal with difficult and objectionable shareholder and/or owner conduct will be provided.  Laws and regulations applicable to document retention, and the inspection of records by shareholders and owners, will be reviewed and analyzed."

You can find additional information and ways to register here.

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Before sending any email, especially one associated with your role as a Board Member, answer this question: How would you feel if this email were projected onto a large screen in open court in the presence of a jury?  I suspect if more people asked themselves this simple question, the number of emails sent per day would decrease dramatically. 

   
With the proliferation of email as a preferred form of communication, Board Members are in a unique situation.  They become members of a Board of Trustees and their personal lives immediately become intermingled with the business of the Association.  They become fiduciaries to their neighbors and friends, all the while maintaining personal relationships with those people. Often times, the line is blurred between friendship and Association business and as a result communications that might not be professional in nature, or in line with their duties as Board Members, are sent to other Board Members or other persons in the Community.  Under current discovery rules, many, if not all, of those emails must be produced if litigation arises.  In our experience, there are numerous instances where Board Members have made harmful or derogatory statements about each other, the Developer, and/or other unit owners.  Those emails, while not directly harmful to the Association’s position, are likely to harm the credibility of the author Board Member and weaken the Association’s overall position.  An adversary may look to show a personal vendetta against their client, be it a fellow unit owner or maybe the Developer.  These emails give them the opportunity and evidence to prove that theory to the jury.  This presents a significant problem for those Board Members during their depositions and at trial should the litigation progress to that stage.

   
One way to prevent this from occurring is to completely segregate personal emails from those related to the Association.  Each Board Member could set up a free email account with a service such as Yahoo, Gmail or AOL.  Or the Association could develop its own website, which would provide each Board Member with an email address that is individualized to the Association.  That new account would be used solely for Association business and communications between Board Members related to Association issues.  Just like separate bank accounts prevent the commingling of funds, a new Board Member email account would prevent the blurring of the line between regular citizen and unit owner and a member of Board of Trustees.  It would also tend to save the Association money during litigation, as personal and irrelevant emails would be completely separate, and therefore, would not have to be sorted, copied, produced and/or reviewed by counsel for the Association.  The key would be a zero tolerance policy.  Any email related to Association business or related to the persons role as a member of the Board would have to come from the dedicated Association account.  Otherwise, the personal account may be fair game for discovery as well.

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On March 5, 2008, the Department of Housing and Urban Development (“HUD”), in conjunction with the Department of Justice, issued a Joint Statement, which reinforced the rights of persons with disabilities to make “reasonable modifications” to their dwellings or, in some cases, to common areas of a building or complex, so that they can fully enjoy the premises.  This Joint Statement is both designed to assist housing providers and community associations to better understand their obligations as well as to encourage persons with disabilities to better understand their rights regarding the “reasonable modifications” provision of the Fair Housing Act (“FHA”).  You can read the Joint Statement here.

Among other prohibitions, the FHA prohibits discrimination in housing based on disability.  One type of action specifically prohibited by the FHA is the refusal of housing providers or community associations to permit reasonable modifications – i.e., a structural alteration – of an existing premises, occupied or to be occupied by a person with a disability, when the modification may be necessary to afford the person with full enjoyment of the premises.  The Joint Statement explains who qualifies as a person with disabilities under the FHA and what information may be requested regarding a disability.  The Joint Statement also discusses the difference between a “reasonable modification” and a “reasonable accommodation” and gives specific examples of what constitutes a “reasonable modification”, which include widening doorways to allow for wheelchair accessibility, installing grab bars in bathrooms or installing a ramp to provide access to a public or common area, such as a clubhouse.  Further, although housing providers or associations are required by the FHA to permit these modifications upon notice and a proper request, in most circumstances, the person requesting a modification is responsible for payment of any costs involved.

If you would like to discuss this legislation or how it affects your community association in more detail, please contact Jonathan H. Katz at (609) 219-7448 or via e-mail at jkatz@stark-stark.com

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Common charges are essential to the operation of a condominium association. Such charges pay for the care and maintenance of the buildings and grounds, on-site staff, upkeep of recreational facilities, etc. If owners falls behind in common charge payments, the building may face difficulties paying for operating expenses. When owners default on their obligation to pay common charges, the shortfall is borne by the other unit owners by way of increases in common charges or assessments.


Most governing documents, whether it be the master deed or the by-laws include a provision that provides that every unit owner, by acceptance of a deed or other conveyance agree to pay the condominium association all common expense assessments contemplated in the governing documents. No unit owner may waive or otherwise avoid liability for common charges by non-use of the common elements or for any other reason. If a unit owner falls into arrears, the board of managers (the “Board”), on behalf of the unit owners, shall have a lien on each unit for the unpaid common charges together with interest. The Board may institute foreclosure proceedings. Foreclosure proceedings are most effective in cases where there is no default in the first mortgage as the first mortgage takes priority over a condominium lien. In such cases, when the owner’s equity in the unit is substantial, there is little reason for pause, since the legal fees and costs are recoverable if the foreclosure sale brings in sufficient cash.


Another way to collect unpaid common charges is to sue the delinquent owner for breach of contract due to his or her failure to pay the common charges and obtain a money judgment. Enforcement of the money judgment requires the marshal or sheriff to levy on the judgment. This is effectuated by taking the debtor’s personal property, freezing bank accounts and garnishing wages. Enforcing a money judgment depends on whether personal property exists and/or can be located. It also depends on whether or not the debtor is employed. Utilizing this legal method should be considered on a case by case basis.


Pursuant to the New York Condominium Act, Article 9-B, Real Property Law (the “Condominium Act”), Section 339-kk, the Board may collect rent payments from any tenants occupying a unit. The Condominium Act requires that notice be sent to the tenants advising them to make monthly rental payments to the Association rather than the landlord. If the tenant fails to make such payments, the association can pursue legal action against the tenant and the unit owner.


Regardless of which action the Board decides to take to collect unpaid common charges, it is critical that action be taken promptly. It is important that the Board institute a strict policy regarding collections and strictly adhere to same. Often times, upon receiving notice of the default, owners will negotiate a settlement and/or payoff plan to satisfy the default. In the end, the Board must consider its needs and make the best decision possible to ensure that common charges are collected and the operation of the association is not affected by delinquencies.

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Organized and thorough records could encourage a contractor or developer to settle a dispute with an association short of trial or even prior to initiating litigation.

It is imperative that a specific procedure be put into place and followed with respect to construction issues that arise at an association during transition or when an association is involved with or anticipates litigation with its developer and/or subcontractors. Evidence of complaints, including phone logs, correspondence or electronic communications from home owners, estimates, work orders and proposals should be well documented and maintained in an organized fashion so that all such evidence can be presented when and if necessary.

In the event repairs are necessary, consideration must be given to preserving developer and contractor warranties. No work should be initiated without notifying all potential defendants of the anticipated work, and when applicable, confirming with your attorney that completing the work will not compromise the Association’s position in any pending or future litigation. When work is done without taking proper steps to ensure that all potential legal claims are protected, the potential value of a case could be significantly diminished.

It is important to work with contractors that are experienced with transition/litigation cases and capable of documenting evidence that may be necessary to present at trial. Such contractors will submit detailed estimates or proposals prior to completing work, take photographs and otherwise document what observations are made, and what work is done and submit detailed invoices after completing work. It is also important for the contractor to possess qualifications sufficient for him/her to testify at trial on the Association’s behalf, if necessary.

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In recent months, articles in numerous publications – including Time, The Wall Street Journal and The New York Times – have examined a growing environmental movement that has been dubbed “The Right to Dry”, namely, the right to utilize clotheslines and air-drying in community associations. Individuals and advocacy groups are taking sides – lining up over clotheslines, if you will – regarding the rights of residents to use clotheslines to dry clothes versus the rights of associations to ban or restrict such conduct.


On one side are the pro-clothesline advocates who assert that using clotheslines is energy efficient and environmentally friendly. According to the recent Residential Energy Consumption Survey by the federal Energy Information Administration, clothes dryers consume as much as six percent of total residential household energy usage in America, third behind refrigerators and lighting. In addition, the study found that dryers can emit up to a ton of carbon dioxide per household every year. Opponents of such air-drying rights argue against clotheslines on aesthetic grounds and claim that allowing the unfettered use of clotheslines would adversely affect property values. Some claim design issues in that there is nowhere to place a clothesline without being an eyesore, evoking urban blight, and taking up space in the backyard or encroaching on common elements.


In previous years, those adverse to allowing clotheslines have been successful in persuading community associations across the country to ban outdoor clotheslines. It is estimated that most private condominium and homeowners associations restrict the ability of residents to hang laundry outside; however, those numbers may soon be changing in light of the environmental concerns, proposed legislation and the ability to compromise regarding such restrictions. “Right to Dry” advocates are currently proposing legislation in many states that would limit the ability of associations to restrict the use of clotheslines. While as many as ten states currently have legislation allowing energy-saving devices such as solar panels, only three states – Florida, Utah and Hawaii – currently have laws that specifically protect homeowners’ rights to use clotheslines. Lawmakers in North Carolina, Vermont and New Hampshire are also proposing similar legislation as part of energy conservation measures. In addition, not all clothesline advocates are necessarily advocating doing away with clothesline rules. Some proponents of clotheslines and community associations have found a happy medium in relaxing such restrictions to allow air drying during certain hours – such as weekdays between 10 AM and 4 PM – and/or allowing either retractable or removable clotheslines to eschew neighbors’ aesthetic concerns.

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Very often communities and their boards believe that the benefits and/or protections afforded by what is commonly known as "Title 39", and the protections of New Jersey's Municipal Services Act, are available to communities only to the extent those communities' roads are public (i.e., dedicated to the municipality). While often it may be beneficial for a community to have public, as opposed to private, roads, the benefits and/or protections referenced above are not conditioned on that community having public roads. Briefly, N.J.S.A. 39:5A-1 allows a community to ask its local municipality to apply New Jersey's motor vehicle laws to the private roads and streets located within that community. Additionally, New Jersey's Municipal Services Act, N.J.S.A. 40:67-23.2 to -23.8, obligates every municipality to either provide certain services to a community located in that municipality, or reimburse that community for these services. The "services" include snow and/or ice removal, collection of trash, collection of recyclables and street lighting.


The application of Title 39 to a community's roads does not make those roads public. Quite to the contrary. The entire purpose of N.J.S.A. 39:5A-1 is to allow for the application of motor vehicle laws to the interior of a community, even though the roads therein remain private. Once Title 39 is applied, local police can issue parking tickets, speeding tickets, careless driving tickets, etc., and enforce them via the local municipal courts. The community, through its board, management or rules, no longer need to carry that burden. In fact, according to current law, a community, once Title 39 is applied is prohibited from enforcing any rules and regulations in place that relate to parking, speeding, manner of driving, etc. Throughout all of this effort and time, the roads and streets though remain private.


Similarly, private communities are entitled to either the services or reimbursements noted above even though the roads and streets of that community are private. This is self-evident when once remembers the purpose of the municipal services act - eliminate the double taxation of community association residents. In Briarglen II Condo. Ass’n, Inc. v. Township of Freehold, 330 N.J. Super. 345, 353 (App. Div. 2000), the court further articulated that the legislative intent of the Act was to “help eliminate double payment for some services which the residents of qualified private communities now pay through property taxes and fees to their association.” Importantly, this law specifically provides for and allows a municipality to provide these services (operate garbage trucks, snowplows, etc.) on roads and streets that remain private.


In the end, it is important that communities, their boards and management note that New Jersey's motor vehicle laws and those benefits afforded by New Jersey's Municipal Services Act are applicable to communities and their private roads and streets.

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More than a year has passed since New Jersey enacted its Smoke-Free Air Act (the “Act”) banning smoking in most public places. The smoking ban impacts community association owners because clubhouses fall under the “indoor public place” and “workplace” categories. The Act requires associations to place no-smoking signs at clubhouse entrances, which clearly notice fines for violators. Persons found smoking in non-smoking designated areas are subject to a $250.00 fine for the first offense; a $500.00 fine for the second offense and a $1,000.00 for subsequent offenses. These steep penalties are clearly meant to deter offenders.

In addition, there has been some interest and action to enforce a “25 foot rule”, which would prohibit smokers from coming within 25 feet of an establishment before lighting up. This proposal, however, was not made part of the April 15, 2006 smoking ban and will be left up to local businesses and entities to place such rules and restrictions in their establishments.

Since New Jersey enacted its limited ban on smoking, there has been a nationwide trend toward banning smoking in associations altogether. However, this trend is being met with some resistance. Many condominium boards and managers are hesitant to get tough on smoking homeowners for fear of trying to dictate how people live in their own homes. Some attorneys have argued that association boards have a fiduciary duty to enact and enforce rules to prohibit smoking in their communities to protect the health and well being of non-smokers.

In Golden, Colorado, a judge ordered that an association can prohibit smoking in its four unit building after a suit was filed against one set of smoking homeowners. The judge ruled that the smell of smoke constitutes a “nuisance”, which violates the association’s declaration. The statewide trend in California to ban smoking in many establishments is slowly trickling down to condominium and homeowners associations. We may soon see litigation in New Jersey supporting this idea.

This leads us to the question of whether an association can ban smoking in all areas of the community. The answer and law are unclear at this point. Regardless of your position on smoking however, you may be faced with a smoking dispute in your association, which may require board intervention. To stay ahead of this threat, the first step may be to thoroughly review your governing documents and consider polling residents to assess interest on amending the governing documents, if necessary. In your review of governing documents, look for language such as “noxious and/or offensive conduct”, which may provide legal justification to withstand a court challenge.

We will continue to monitor this law and provide updates as necessary.

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