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

Florida law now permits homeowner associations to do what Stark & Stark has been encouraging its associations to do for years.  The Florida legislature recently passed a law that allows homeowner association's to go after renters for association fees when the homeowners fail to pay their monthly maintenance fees.  Interestingly enough, Stark & Stark has been obtaining similar recovery for its clients for several years now, without the help of New Jersey's legislature.
 

Associations are feeling the effects of the recession just like everyone else, and most Associations have at least a few owners who have not paid their dues in several months.  Amazingly enough, some owners have failed to pay their regular dues, but continue to accept rent from tenants who are living in the unit.  The Florida law permits homeowner associations to formally notify renters that their payments should be paid directly to the association, not to a landlord who has failed to pay the organization.  If the tenant is ordered to make a payment to the association, it counts as rent credit. The tenant pays the remaining balance to the landlord and can not be evicted for failure to pay rent. 
 

The process isn't as simple and straightforward in New Jersey, but nonetheless, lawyers in Stark & Stark have successfully argued to the court the inherent unfairness of a unit owner who refuses to pay his maintenance fees, but continues to collect rent from a tenant.  In many of these situations, the court has appointed a "rent receiver", typically the property management company, to accept the rent from the tenant each month, pay the outstanding associations fees, and give any balance of those fees to the unit owner/landlord.  This benefits not only the Association, but the tenant as well, who arguably should not be evicted or foreclosed upon when they are complying with the terms of their lease agreement.  Stark & Stark's New York clients have the benefit of a New York statute which permits the Association to collect rent from tenants, however, if the tenants do not pay, the statute does not give the Association the right to sue the tenant directly, which all but eliminates the Association's ability to enforce the statute.

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The New Jersey Court of Appeals has ruled in a case of first impression that a condominium association, when it is primarily residential, cannot be sued for injuries occurring on abutting public sidewalks.  The Appeals Court stated:

    “The principal, novel issue presented...is whether for sidewalk liability purposes, a condominium association has a duty to maintain an abutting public sidewalk as if it were a commercial landowner.  We hold that a condominium association does not bear such duty or responsibility.”
 

The published opinion can be found at Luchejko v. City of Hoboken, A-5702-07. 
 
In this case, the plaintiff, Richard Luchejko, slipped and fell in February 2006 on the public sidewalk outside of the Skyline Condominium Association located in Hoboken, New Jersey.  The plaintiff alleged that black ice covered most of the sidewalk and there was significant snow piled along the sidewalk following heavy snowfalls in the area.  Luchejko contended that the Skyline Condominium was a commercial entity for the purposes of sidewalk liability.  The Appeals Court disagreed.  The Court’s ruling significantly adds to the body of case law relating to poorly maintained adjacent sidewalks. 
 

The Skyline Condominium is a residential and owner-occupied condominium and run as a non-profit corporation under the New Jersey Condominium Act.  The Court noted that the Skyline Condominium was primarily residential, that it only had the option to increase common fees, and that the majority of the owners’ fees went toward upkeep.  Therefore, the Court determined that the condominium was unable to generate an overall income and spread the risk of loss by higher charges on goods and services and therefore should not be considered commercial property.  Appellate Division Judge Ariel Rodriguez wrote, “It is not the use to which the property is put that is determinative, but rather the nature of the ownership,...” adding that the Court must weigh the “ability to pass along the cost of liability.”  While balancing the relevant factors, the Court found that the “key issue” in determining whether a property is commercial is its “capacity to generate income.”  The Skyline Condominium’s attorney stated that the condominium was a “classic residential condominium association,” had no first floor shops, did not charge for parking and had “no commercial aspects at all.”  In light of the foregoing and counsel’s arguments, the Court found that the Skyline Condominium must be considered residential.
 

This ruling by the Appellate Division marks a contrast to the Supreme Court’s rulings dating back to the early 80's in which New Jersey courts have extended sidewalk liability to owners of apartment buildings, parochial school, fraternities, smaller multiple-family buildings that were not owner-occupied and other types of commercial and investment properties.  New Jersey courts have long held that for hybrid properties that mix residential and non-residential use, the test is whether they are predominantly owner-occupied.  It is unknown how the Court would rule if there was a restaurant or shop on the first floor of the condominium.  Plaintiff’s lawyer stated that she would seek an appeal of the ruling.

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A condominium located in Bergen County, New Jersey has accepted a total settlement of $1.2 million for various transition-related construction defects.  Mark M. Wiechnik, David J. Byrne and Thomas J. Pryor of Stark & Stark obtained the settlement on behalf of the third-party plaintiff condominium association, which experienced roof leaks, window problems and other construction related issues, shortly after the unit owners were elected to the Board of Directors of the Association.

The case began as a negligence and mold exposure personal injury action against the Association and the Developer by a unit owner in the building who experienced water intrusion into her unit.  The unit owner sued the Association and the Developer for failing to repair the roof in a timely fashion both before and after transition of control of the Association.  The plaintiff had argued that the Association failed to repair the roof in a timely fashion, which caused additional damage and permitted mold to grow.  The Association's attorneys successfully defended the owner's personal injury claims, by obtaining medical records which showed that the alleged mold related respiratory issues had been experienced by the plaintiff before she moved into the allegedly mold infested unit.  Further, the Association obtained expert reports from physicians who concluded that the skin and respiratory issues allegedly experienced by the plaintiff were a result of conditions other than mold exposure.  Ultimately, the Association and the Developer and their respective insurance carriers settled the owner's property damage claim for a nominal amount, including a contribution by the Association of $13,500. 

 
With regard to the construction defects, the Association was able to show through expert reports and deposition testimony, that the problems existed before transition of control took place, and that it was the fault of others to construct the roof properly.  The Association joined the roofer, window installer, parking garage manufacturer, facade repair contractor, air conditioning unit contractor and others as defendants for failures related not only to the roof, but other transition related construction issues, including a windows, facade and the parking garage.  The Association will be able to pay for a new roof and significant repairs to the building and the parking garage as a result of this settlement.

 
The names of the parties, Defendants' counsel as well as the identity of the Association are being withheld in accordance with confidential settlement agreements.  Much of the settlement was obtained through the mediation efforts of Judge John E. Keefe, J.A.D. (ret.) of Keefe, Bartels & Clark, LLC.  As always, Stark & Stark greatly appreciates Judge Keefe's time and efforts.

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On Friday, June 18, 2010, Richard B. Linderman, Shareholder and member of the Community Associations group presented a seminar regarding business continuity and survival planning for property management companies and community associations. The seminar was presented at the offices of JGS Insurance in conjunction with their presentation of the TrackMyCerts online program.  Also presenting were Vincent Hager and Ryan Fleming of JGS Insurance.

Vincent Hager is President of JGS Insurance.  Vincent has specialized in Community Association Insurance for the past 21 years.  He has earned the Community Associations Institute's (CAI) Community Insurance & Risk Management Specialist (CIRMS®) Designation in the first year it was available.  Vincent is a Past President of the New Jersey Chapter of CAI, Past Chairman of the National Insurance & Risk Management Committee of CAI, as well as the Past President of the Independent Insurance Agents of Monmouth County.  He has published several articles on Community Association Insurance in both local and national journals.

Ryan Fleming is a Producer and Service Specialist at JGS Insurance.  He has specialized in insuring community associations of all types for the past 7 years.  He understands the needs of the industry and in turn is able to use the extensive resources of JGS in order to create solutions that don’t exist anywhere else.  He is an active member in the NJ Chapter of Community Associations Institute as well as the Institute of Real Estate Managers and NJ Apartment Association.

JGS Insurance is an Independently Owned Insurance Agency for the past 91 years.  JGS has specialized in Insuring Real Estate Account and more specifically Community Association Insurance.  JGS has developed an Umbrella Product that offers high limits of coverage and inexpensive costs as compared to the market specifically for Community Associations throughout the Country.  JGS insures in excess of 17,000 customers nationwide through their program as well as insure in excess of 500 directly in New Jersey.

You can access a copy of Mr. Linderman's presentation materials online here. (PDF)

You can listen to Part 1 of the presentation online here, and Part 2 here.

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Shareholder and Co-Chair of Stark & Stark's Community Association & Co-Op & Condominium Group, David J. Byrne, presented materials on financial issues relating to community associations including reserves and loans.  The seminar was entitled "Community Associations, Reserves and Loans."  

The presentation was part of the ASSOCIA/RIVER Management "Boot Camp for Board Members" Program, held in Poughkeepsie, New York on June 7, 2010.  Mr. Byrne discussed reserve budgets and funds, and a community association's fiduciary duty in relation to reserves.  He also spoke to the attendees about the power of community associations to borrow money, the process involved with that and commitment and third-party opinion letters. 

You can listen to the full presentation online here. (13 MB)

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I recently returned from the Annual CAI Law Seminar in Tucson. As is the norm at these gatherings, attorneys (and some managers) from across the country assemble to take part in a three-day forum on cases of interest from the past year, and breakout sessions for legal seminars on a variety of topics.
 

From my point of view, one of the more beneficial facets of the Law Seminar is the morning sessions for case updates.  Two speakers provide a synopsis of reported cases in various areas of community associations (such as restrictive covenant issues, assessment collections, etc.).  These are always good to hear (and have copies of the cases) as it provides a reference for those issues that I may have to deal with in New Jersey.  It certainly provides a starting point for issue recognition in certain cases.
 

Of course, there are always cases discussed that leaves one shaking one’s head and saying to oneself, “Are you kidding me?”  One thing community association living does not have is a shortage of good stories that makes one smile.  A sample of the best of 2009 (none of these are from New Jersey, proving sanity did rule for the most part  in New Jersey this past year):
 

Lake Charleston Maintenance Association, Inc. v. Farrell, 16 So. 3d 182 (Fla. App., 2009.  A homeowner submitted an application to the development review board of the homeowner’s association requesting permission to repaint her house.  She received a letter stating that her application was pending and requested additional information.  She then attended a meeting of the development review board where she was advised that her application had been denied.  A couple of weeks later, the homeowner painted her house in the color she originally submitted in her application.  The association filed suit.  The court found that the defendant had violated the declaration by painting her house without first obtaining approval of the design review board.  The court found that she was informed of the denial of her application when she attended the meeting of the design review board which was held within the 30 day period within which the design review board was to approve or disapprove an application.
 

Schwartz v. Banbury Woods Homeowners Association, Inc., 675 S.E. 2d382 (N.C. App., 2009).  A homeowner’s association assessed fines against a lot owner for violating the parking restrictions in the recorded covenants.  The covenants stated that owners of lots shall not be permitted to park boats, trailers, campers and all similar property on the streets in the development.  The homeowner claimed that his motor home did not fall within the definition of “campers and all similar property” as stated in the covenants.  The court held that although the term “motor home” was not expressly listed in the covenants, based on the natural meaning of the term “camper” at the time the covenants were drafted and recorded, the court concluded that it would defeat the plain and obvious purposes of the restriction to exclude plaintiff’s motor home.

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Shareholders and Co-Chairs of Stark & Stark's Community Association Group, David J. Byrne and A. Christopher Florio, and Stark & Stark Construction Litigation Group Chair, Donald B. Brenner, presented materials updating everyone on recent and important legal decisions.  The seminar was entitled "Legal and Legislative Update:  Important Decisions, New Laws, and how they Impact Your HOA, Condo. and/or Co-Op".  

The presentation was part of the New Jersey Cooperator Expo which was held in Secaucus, New Jersey on May 5, 2010.  Mr. Byrne discussed the United States Fair Housing Act and a recent decision regarding its application to 'companion animals'.  Mr. Florio discussed two recent cases involving the fiduciary duties of board members and the business judgment rule.  Mr. Brenner discussed two key Appellate Division decisions published in 2009, both of which relate to the 'economic loss doctrine' and homeowners’ claims against sellers of defective building materials that were incorporated into the construction of their homes (Marrone v. Greer & Polman Constr. Inc., 405 N. J. Super. 288 (App. Div. 2009) & Dean v. Barrett Homes, Inc., 406 N. J. Super. 453 (App. Div. 2009))

You can listen to the full presentation online here. (27 MB)

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A Montclair, New Jersey Condominium lost its bid to force Montclair to maintain and otherwise care for the water lines between the public right of way along the public roads inside the condominium, and the relevant shut off valves.  A 'curb box' is the housing of an underground shut-off valve linking the main water lien to the service lines which, in turn, are linked to each dwelling.  Typically, curb boxes are located on a public right-of-way or as close to it as possible.  Traditionally, a municipality is responsible for the lines from the water main to the box and the property owner is responsible from the curb box to the dwelling.  As is far too often the case, this condominium's developer made a mistake, and placed the curb boxes away from the right-of-way and within the property of the owner.  Montclair permitted this error during the development stage and had no inspection reports relating to same.
 

Years after the condominium's development Montclair agreed to assume responsibility for the mains, sewer main and the fire hydrants on the condominium's property.  The water service lines were neither discussed nor addressed in the resulting agreement between Montclair and the condominium.  The relevant Montclair ordinance provided that the "consumer is responsible for the service from the shut off valve at the street to the structure, except for the meter, and that "such sanitary and water lines and service" were incorporated into Montclair's "overall municipal delivery system of such utilities."  Montclair argued that this ordinance was not intended to make itself responsible for the residential service lines.
 

The court first rejected the condominium's assertion that the ordinance required Montclair to maintain pipes running between the main line and the curb box, regardless of where the curb box is.  The most reasonable interpretation of the ordinance though was that Montclair's delineation is not curb box location, etc. but public and private land.  The ordinance did not require that Montclair maintain its service lines up the curb box without regard for the curb box's location. 
 

Lastly, the court rejected the condominium's argument that public policy demanded Montclair be responsible for the Association's water lines and that Montclair's failure to do constituted unlawful discrimination.  The Association argued that Montclair provides water service and maintains water lines throughout Montclair and that it cannot deny the condominium.  The condominium believed "services" included maintenance of water lines to the curb box.  The court, however, found that Montclair had never been inconsistent.  Its consistent service policy and maintaining water lines up to the public/private property line, whereupon homeowners are responsible for any maintenance on their own land.  While, the court felt, this "normally coincides with the curb box" where "it does not, Montclair's obligation terminates at the private property line."
 

This case helps to further reiterate to New Jersey's condominiums that municipalities are afforded broad discretion in their treatment of a private community's infrastructure - and that the standard "public land versus private land" distinction is often validated by our courts.

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As noted in relevant community association-related publications, like Community Association Management Insider, federal law mandates the posting of various signs setting forth information to their employees.  The necessary signs are available free of charge from the federal government.  Failure to post the signs can cost as much as $10,000 per violation.

The versions often change so it is important that the current sign be posted.  Your state’s Department of Labor will have the current version.

FEDERAL MINIMUM WAGE SIGN

Who must post sign.  Anyone who has one or more employees.
Content.  The content of the notice is prescribed by the Wage and Hour Division of the Department of Labor (DOL).  The sign exhibits the current federal minium wage and explains wh is eligible for it.  The sign must also include language explaining federal child labor laws and the overtime provisions of the federal Fair Labor Standards Act.  Under the act, employers are required to pay covered nonexempt employees a minimum wage of not less than $7.25 per hour.  This rate became effective July 24, 2009.
Location.  You must post the sign in a conspicuous place where employees are likely to see it.
How to get sign.  For a copy, contact the DOL at (866) 487-9243 or to go www.dol.govlelawslposters.htm.
Most recent version.  The latest version of this sign was issued in July, 2007.

EQUAL EMPLOYMENT OPPORTUNITY SIGN

Who must post sign.  Anyone with 15 or more employees.
Content.  The sign explains the various federal anti-discrimination employment laws, including the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Equal Pay Act.
Location.  You must post the sign in a conspicuous place where notices for employees and job applicants are generally posted.
Penalty.  The Equal Employment Opportunity Commission (EEOC) can fine you up to $100 per violation for not properly posting the sign.
How to get sign.  For a copy, contact the DOL at the above telephone number.
Most recent version.  The latest version of this sign was issued in August, 2008.

JOB SAFETY AND HEALTH PROTECTION SIGN

Who must post sign.  Anyone with one or more employees.
Content.  The sign explains that employers must provide their employees with a safe work environment, free from recognized hazards, and they must comply with Occupational Safety and health Administration (OSHA) regulations.
Location.  You must post the sign in a conspicuous place where notices for employees are generally posted.
Penalty.  The law sets no fine for not posting the sign.
How to get sign.  For a copy, visit the OSHA website, or call the local OSHA office - (800) 321-6742.
Most recent version.  The latest version of the sign says “OSHA 3165-12-06R” in the lower right-hand corner.

EMPLOYEE POLYGRAPH PROTECTION ACT SIGN

Who must post sign.  Anyone with one or more employees.
Content.  The sign explains that under most circumstances employers cannot require their employees to take a lie detector test.  In rare and controlled circumstances, the act permits polygraph testing of certain employees who are reasonably suspected of involvement in a workplace incident such as theft or embezzlement that resulted in specific economic loss or injury to the employer.  In these instances, the lie detector tests are subject to strict standards for the conduct of the test, including the pretest, testing, and post-testing phases.  An examiner must be licensed and bonded or have professional liability coverage.  And the act strictly limits the disclosure of information obtained during a polygraph test.
Location.  You must post the sign in a conspicuous place where employees are likely to see it.
Penalty.  The Secretary of Labor can bring court action to restrain violators and assess civil money penalties up to $10,000 per violation, including failure to post the sign.
How to get sign.  A copy of the sign can be obtained from the DOL.
Most recent version.  The sign was last updated in June, 2003; “WH Publication 1462" appears in the lower right-hand corner.

FAMILY AND MEDICAL LEAVE ACT SIGN

Who must post sign.  Anyone with 50 or more employees.
Content.  The sign must explain that covered employers are required to provide up to 12 weeks of unpaid, job-protected leave to certain employees for certain family and medical reasons.
Location.  You must post the sign in a conspicuous place where notices for employees and job applicants are generally posted.
Penalty.  The Wage and Hour Division of the DOL can fine you up to $100 per violation for not posting the sign.
How to get sign.  A copy of the sign can be obtained from the DOL.
Most recent version.  The latest version was revised in January, 2009; “WHD Publication 1420" appears in the bottom right-hand corner.  This latest version incorporates a rule that became effective on January 16, 2009.  The rule provides for special military family leave for employees to care for a related service member or employees who need to manage their affairs while the family member is on active duty in support of a contingency operation.

UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT SIGN

Who must post sign.  Employers of service members returning from a period of uniformed service, including those called up by the reserves or National Guard.
Content.  The sign explains the reemployment rights of individuals who voluntarily or involuntarily leave employment positions to undertake military service or certain types of service in the National Disaster Medical System.
Location.  You must provide the notice by posting it where employee notices are typically placed.
Penalty.  There are no citations or penalties for failure to post the sign.  However, an individual could ask the DOL to investigate and seek compliance, or file a private enforcement action to require you to provide the notice to employees.
How to get sign.  View online here, or call the DOL at (866) 487-2365.
Most recent version.  The latest version was published in October, 2008.

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David J. Byrne, Shareholder and Co-Chair of Stark & Stark's Community Association Group, presented materials related to those New Jersey communities that are "exempt" from New Jersey's Planned Real Estate Development Full Disclosure Act (PREDFDA) and the transition of them to owner control and responsibility. The seminar was entitled Using Governing Documents to Ensure the Smooth Transition of a 'PREDFDA-exempt' project.

The presentation part of the Atlantic Builders Convention which was held in Atlantic City, New Jersey on April 14, 2010.  Mr. Byrne discussed the non-applicable provisions of PREDFDA, a developer's remaining disclosure-related obligations and how all of that relates to a developer's creation of a private community's governing documents.  He addressed the types of provisions that developers should include within those governing documents to ensure a smooth transition, manage purchaser expectations and safeguard the rights of both the developer and owners.

You can listen to the full presentation online here.

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