The Entire Controversy Doctrine “is intended to be applied to prevent a party from voluntarily electing to hold back a related component of the controversy in the first proceeding by precluding it from being raised in a subsequent proceeding thereafter.”  Oltremare v. ESR Custom Rugs, 330 N.J. Super. 310, 315 (App. Div. 2000).

For example, if a condominium association sues a residential developer for construction defects but fails to plead under the Consumer Fraud Act (which carries lucrative treble damages), the Entire Controversy Doctrine would likely prevent the association from recovering in a later lawsuit under the Consumer Fraud Act. By contrast, if the developer and the association’s president get into a car accident after a deposition about the construction defect suit, the personal injury claims from the car accident would not have to be joined in the construction defect suit because those two claims do not arise out of the same transaction or event.

It is therefore invaluable for litigants to identify all possible causes of action related to a transaction or event, preferably before commencing suit.

Stark & Stark’s Litigation Group has extensive experience navigating such complex issues, to maximize your relief and avoid legal pitfalls like the Entire Controversy Doctrine. If you have questions regarding this, or other similar complex issues, please feel free to contact me: ckvitka@stark-stark.com.

Cape May Harbor And Yacht Club Association, Inc. (the “Yacht Club”) adopted an amendment to its governing documents that prohibited homeowners from leasing their homes to third parties.  Deborah Sbraga (“Sbraga”) sued, and at trial, the trial court ruled in favor of the Association and its enforcement of the leasing restriction.  Sbraga appealed.
 

The Yacht Club is a very exclusive enclave consisting of twenty-four single family homes, common areas and a marina.  The homes range from $2.5 Million to $2.7 Million.  Sbraga and her husband purchased a lot and built a home in 2005; however, because of a divorce the property was placed in Sbraga’s name only in 2007.  Subsequent to this, Sbraga, although intending to occupy the home full-time, decided to sell the home.
 

The documents in its original form allowed the leasing of homes and boat slips.  However, the governing documents were amended to prohibit leasing of homes shortly after Sbraga inquired with the Board about her ability to lease her home.  The Board President testified that none of the other members ever leased their home and that Sbraga would be the first.  As a consequence of Sbraga bringing this issue up, the Association presented before its membership an amendment prohibiting the leasing of homes.  The amendment was approved by a vote of 20 in favor and 3 opposed.  The meeting minutes reflected that members were concerned with  living in a homeowners association where rentals were permitted, the potential of a negative impact on home values, potential problems with renters, parking problems, the lack of responsibility and ownership for noise, and infractions of the Association’s rules and regulations.
 

While the amendment did not affect the leasing provision of the boat slips, the Board President did testify that previous experience with renters of the boat slips resulted in numerous occasions where the Association had to advise people not to live on their boats, children misbehaving in the marina area and children going onto other boats.  The police were called on a couple of occasions due to the inappropriate behavior of the children.  The Association used these incidents as evidence that there existed the potential for these types, or more serious types, of problems if homes were allowed to be leased.  
 

The trial judge needed to consider a number of factors,  the restrictions under review that were the result of an amendment and not the original governing documents, the restriction occurred after Sbraga bought into the community, that there were no prior restrictions on renting the homes, and that it affects property right.  Thus, a determination that the amendment needed to be given less credibility than it might otherwise.  Using this more stringent standard, the trial judge did determine that the amendment was a reasonable amendment.  The trial judge noted that the community was a small, exclusive community with no history of prior home rentals.  The trial judge also found that it was a legitimate concern that having tenants in such a community could impact the neighborhood and its image, and that the members were reasonable in not wanting a “transient” community.  The trial judge did concede that the analysis may be different if there were a history of homeowners renting, and/or if the Association were larger and not a small, exclusive community.  Thus, the trial judge found in favor of the Association and the amendment.
 

Although the Appellate Court did agree that the restriction is a significant one and that it does affect the fundamental right to utilize one’s real estate as one sees fit, the Appellate Division needed to go through the various factors to determine whether or not the “alienation” of Sbraga’s right to lease the home was so significant that the Court should overturn the trial judge’s decision to uphold the amendment.  The Appellate Division decided that a restraint on the leasing provision accomplishes a worthwhile purpose by preserving the residential nature of the community.  Since the nature of the community has never before been affected by rentals, the members of the Association had a reasonable basis to believe that the community would not be disrupted by the leasing of homes.  Further, the Appellate Division opined that leasing to homeowners had not occurred in the past and that some of the members did not even know that they were allowed to lease under the Declaration.  Because Sbraga only intended to lease the unit for a short time until she was able to sell, the duration of this restraint against her ability to rent would be limited in scope.
 

Further, the Appellate Division set forth that Sbraga cannot claim that she had a vested right that could never be affected.  Since Sbraga conceded that she took title to the property in accordance with the terms of the Declaration, she was presumed to have known that the governing documents could be amended. 
 

The Appellate Division, in its conclusion, opined that the trial judge’s use of the “reasonableness standard” was valid, and that the trial judge found appropriate reasons why the amendment was to be considered to be reasonable and enforceable based upon the facts presented at trial.
 

While at first glance this case may appear to provide the authority community associations need to prohibit leasing of homes or condominium units, I believe the law of this case will be narrow in its scope.  That is, great pains were taken to make specific mention that the outcome may be different if the history of leasing of homes is present, and stating that the size of the community is important.  Thus, I believe that a very narrow set of facts needs to be present in order for any leasing restrictions to be upheld.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact Chris Florio at 609-895-7335 or by email at cflorio@stark-stark.com

After initial inquiries regarding the timing of the replacement of their aging roof, the unit owners were advised that roofs were replaced when they leaked. Associations generally have a duty to repair, replace and maintain the Association’s common elements in an effort to prevent damage to unit owner property, and thus a policy which requires association members to incur property damage to their home before the Board will even investigate the integrity of a Common Element may be a per se violation of the Association’s fiduciary duty to each and every unit owner. Moreover, Associations hire experts in various fields to give them advice on many issues of governance. Board members should generally rely upon the opinions of the Association’s experts, unless there are compelling reasons to ignore those opinions.
 

Sworn testimony in this matter established that after complaints of leaks, the board hired a roofer to make a minor repair only, with specific instructions not to evaluate the overall condition of the roof. More problematic for the Association, was evidence that showed when the Association’s roofer later recommended a complete replacement of the roof, the board ignored that opinion, and instead hired a different roofer who provided them with an opinion that the roof would last several more years. Although the Association was replacing newer roofs in the community, these unit owners were forced to endure ever increasing leaks. 
 

Deposition testimony obtained in the matter appeared to point to a personal animus against these unit owners, rather than an objective determination of the condition of their roof, as conducted by the Association’s experts.  After months of litigation and expense, and faced with unfavorable testimony from various sources, the Association ultimately agreed to replace the unit owners’ roof and to pay a significant cash-settlement.
 

This matter should serve as a cautionary tale to all Associations. Notwithstanding their volunteer status, board members have a fiduciary duty to each and every unit owner, which requires them to treat constituents equally and set personal feelings aside to when rendering business decisions that affect everyone in the community. Boards that operate outside of these boundaries run the risk of inviting lawsuits and potentially paying money to aggrieved unit owners.
 

Stark & Stark represents over 300 condominium and homeowners associations in New Jersey, Pennsylvania and New York, and can advise your Association of ways to ensure that your Association’s Board operates properly and legally.

Cary Kvitka is a member of Stark & Stark’s Lawrenceville, New Jersey's Litigation Group. For more information, please contact Mr. Kvitka.

For example, some discussion was centered around service animals in light of an association rule that prohibits animals of any type. The attendees were advised that even though actual notice was given to the members those animals were prohibited by virtue of receipt of the governing documents, Federal law allows service animals to live within associations if various parameters are met. As this runs counter to the association’s rules, the attendees were advised that Federal statute would prime the association prohibition.

You can listen to the full presentation online here. 
 

In this particular case, Giambanco (the “Debtor”) owed money on her credit card to creditor Midland Funding LLC. Midland Funding filed a complaint against the Debtor. The Debtor and Midland Funding reached a settlement, which was memorialized in the form of a consent judgment. When the consent judgment was signed by the parties and forwarded to the trial judge for his signature, the trial judge removed that portion of the consent judgment which stated that if Debtor defaults on the terms of the consent judgment, that Midland Funding can immediately seek wage execution without further notice to the Debtor.

Midland Funding filed a motion to vacate the order, which was altered by the trial judge, and sought for its original provision permitting the wage execution without notice to be included in the consent judgment. The trial judge denied Midland Funding’s motion, holding that the Debtor may be prejudiced by not being notified of wage execution, and that such waiver was against public policy.

The Appellate Division agreed that the proposed form of language in the consent judgment did not clearly set forth that the Debtor was waiving her notice, and that such waiver was “knowing and informed” so as to comply with R. 4:59-1 and N.J.S.A. 2A:17-50(a). The Appellate Division stated, however, that if a trial court finds that a proposed consent judgment does not comply with statute or court rules, the trial court must reject the consent judgment, or return the case to its prior status. This case is important, particularly for attorneys, when drafting proposed forms of consent judgments. 

Other states with high rates of mortgage defaults were Florida and Nevada.  The Survey found that Florida had the highest mortgage delinquency rate with 18.68%, and Nevada had the second highest rate with 14.3%.  States with the lowest mortgage delinquency rate were North Dakota with 1.6% and Alaska at 2.24%.  There will likely be a surge in foreclosure filings now that Courts have allowed major mortgage servicers to resume their foreclosure filings.
 

On December 20, 2010, Judge Jacobson, a judge in Mercer County, New Jersey, issued an Order for mortgage servicers to show cause as to why foreclosures should not be halted. Since the December 20, 2010 Order was entered many Court rules relating to foreclosures were changed, which in effect, put pending uncontested foreclosure actions on hold.

Some of the changed included new certifications attesting to the fact that legal counsel for the mortgage companies communicated with the mortgage companies to ensure the authenticity of their documents. The rules also require that any papers filed by an attorney must attach evidentiary support.

Another Order was entered by Judge Jacobson on March 29, 2011, requiring the mortgage companies to address their record-keeping practices, to implement procedures for making sure that any Court-filed documents are accurate, and to implement a process for interacting with attorneys. The March 2011 Order also provides for the mortgage companies to be monitored by having random files reviewed one year after the uncontested foreclosures restart.

Last week, five of the six largest mortgage servicers received approval to continue with their uncontested foreclosure actions. The five mortgage servicers are Bank of America, CitiBank, JP Mortgage, Chase Bank and Wells Fargo. These mortgage servicers were found to have implemented better practices. Ally Financial, formerly GMAC Mortgage, is the only mortgage servicers whose uncontested foreclosure actions remain on hold for the time being. Associations will now begin to see the mortgage companies completing their existing foreclosure actions.

If you have questions regarding how these Orders may affect you, please feel free to contact me here in my firm's Lawrenceville, New Jersey office.

In In re Brown, Bankruptcy Judge Donald Steckroth held that a debtor remained liable for post-petition association assessments in a Chapter 7 proceeding. This liability remained, even after the unit was abandoned by the Trustee and the debtor did not live at the unit, so long as the debtor held legal title. 
 

The matter was brought before the Court on the debtor’s motion to compel the Association to release monies levied in a bank account, post-petition, after the bankruptcy case was closed. As background, the Association had received a state court judgment for only post-petition amounts, and subsequently levied on the debtor’s bank account. Prior to filing the motion, the debtor requested the bankruptcy case be reopened so that she could list the Association as a creditor, since she had failed to provide initial notice to the Association. After the bankruptcy case was reopened, the debtor then filed the motion against the Association, claiming that the subsequent levy was improper.

2005 Amendments to the Bankruptcy Code
After extensive oral argument, the Court found that the 2005 Amendments to the Bankruptcy Code clearly widened the scope of non-dischargeability under § 523(a)(16). The statute provides that a chapter 7 discharge:                       

“...does not discharge an individual debtor from any debt...for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor's interest in a unit that has condominium ownership...for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot...” (Emph. added).

As such, the Court ruled that the debtor remained liable for post-petition assessments.

Know Your Collection Rights in a Bankruptcy Case
Unit owners often feel that once they file a chapter 7 bankruptcy case and vacate the unit that they are free from the duty to pay their assessments to the Association. This decision validates and supports an Association’s efforts to ensure owner payment of these assessments.

Associations should not “give up” when bankruptcy is filed. When an Association knows its rights, and has counsel experienced in representing Associations vis-à-vis bankrupt owners, it can successfully navigate an owner’s bankruptcy and recover unpaid assessments.

Most association by-laws require that the association’s insurance policy include  a waiver of subrogation.  This waiver of subrogation within the insurance policy will prohibit the insurance company from  seeking reimbursement of monies paid to the association from any party, as that party is defined within the insurance policy.  However, in this recent case,  the association’s insurance policy did not have the wavier of subrogation anywhere and therefore the insurance carrier was able to proceed against certain parties.

Association managers needed to make certain the insurance professional provides the association a writing, after the policy has been obtained, indicating where exactly within the policy the appropriate waiver of subrogation language is set forth.  Knowing this information will provide the association with the level of comfort it is entitled to under the terms of the insurance policy.
 

Under the Rules of Court, an objection to confirmation of a Chapter 13 plan must be filed with the court and served within a defined time period. A properly filed proof of claim that asserts a claim that is greater than the scheduled amount of the claim or the amount of the claim designated in the plan by the unit owner, serves as an objection to confirmation as to the amount of the claim. The trustee will confirm the plan based upon the higher amount set forth in the proof of claim, but that is not the end of the matter. The unit owner has sixty days to challenge the amount of the Association’s claim by filing a motion with the court. Thus, the Association must take affirmative action to secure its rights at the time notice of a Chapter 13 petition is received and during the confirmation proceedings. The Association must also monitor the case for sixty days following confirmation of the plan in case the unit owner decides to challenge the Association’s claim.
 

Stark & Stark’s Bankruptcy Group has filed numerous proof of claims in Chapter 13 matters and has monitored the claims process from start to finish. To ensure that your Association is protected, contact us as soon as notice of the filing of a Chapter 13 case is received.
 

On June 22, 2010, the Appellate Division affirmed the trial court's order, finding that the trial judge properly applied the doctrine of res judicata to bar relitigation of the validity of a sublease fee imposed by a co-operative, which was determined valid and enforceable in a prior litigation.

 

The plaintiff is a nonprofit corporation responsible for the administration, maintenance and operation of a community of residential cooperative units (the “Corporation”). The defendant is a shareholder of the corporation, holding a proprietary lease to a residential unit.

 

The Corporation’s Board adopted a resolution that imposed a monthly sublease fee on all unit owners who rented their units (the “Sublease Fee”). The defendant refused to pay the Sublease Fee on the grounds that he felt it was unfair and discriminatory. The plaintiff filed a complaint against defendant for unpaid Sublease Fees, late fees and attorneys’ fees and costs incurred in the collection of the Sublease Fee.

 

Following a bench trial, the trial court found the Sublease Fee fair and properly adopted and entered judgment against the defendant. Rather than appeal the judgment, the defendant satisfied the judgment and then refused to pay any further Sublease Fees. The plaintiff filed a second complaint against the defendant for unpaid Sublease Fees, late fees and attorneys’ fees and costs incurred in the collection of the Sublease Fee. The defendant filed an Answer and Counterclaim again challenging the Sublease Fee as being unfair and discriminatory. The Court granted the plaintiff’s motion to dismiss the defendant’s pleadings on grounds of res judicata, and subsequently granted the plaintiff summary judgment for unpaid Sublease Fees, late fees and attorneys’ fees and costs.  

The defendant appealed the order granting summary judgment to the plaintiff. On June 22, 2010, the appellate panel affirmed the order, finding that the trial judge properly applied the doctrine of res judicata to bar relitigation of issues determined in the prior litigation.

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.

In addition to the foregoing, the pay for performance program provides advanced measure incentives for combined heat and power and incentives for new construction provided that the project contains at least 50,000 square feet of planned conditioned space, is located in a smart growth area and achieves energy costs that are at least 15% below the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) standards 90.1-2004.

In order to be eligible for the Pay for Performance Program, (1) an applicant must be a customer of a regulated electric utility and/or gas utility in New Jersey, including Atlantic City Electric, Jersey Central Power & Light, Rockland Electric Company, New Jersey Natural Gas, Elizabethtown Gas, PSE&G and South Jersey Gas, and (2) the project for which an application is made must consist of one or more preexisting commercial, industrial, institutional or multi-family residential structures having over 200 kW average annual peak demand electrical usage, except for affordable housing, which is exempt from the requirement of having over 200 kW average annual peak demand electrical usage. Individual buildings, as well as multiple buildings in complexes owned by a single person or entity, may qualify for benefits under the program provided that they meet the above criteria.  Condominium associations may also be eligible to receive incentives for energy-efficient measures relating to common elements under this program.

Both the STSA and VRRA were amended and re-codified in 1994 and became known as the Uniform Services Employment and Re-Employment Rights Act of 1994 (38 U.S.C. 4301 - USERRA).  The main purpose of USERRA was: 1) to make certain that persons serving in the armed forces, reserves, national  guard or other “uniformed  services” are  not disadvantaged in their civilian careers as a result of their military service; and 2) to make certain service members were promptly re-employed upon their military service conclusion; and 3) to make certain service members were not discriminated against in their civilian jobs as a result of their military service.
 

In order for USERRA to apply,  an employer only needs one employee.  See  Cole v. Swint, 961 F2nd 58, 60(5th Cir. 1992).
   

In construing USERRA and prior laws, Courts have followed the Supreme Court’s admonition that “This legislation is to be liberally construed for the benefit of those who left private life to serve their country in its hour of great need.”  Re-employment rights extend to persons who have been absent  from employment because of “service in the uniformed services.”  “Uniformed Services” consists of the following:

• Army
• Navy
• Marine Corp.
• Air Force
• Coast Guard
• Army Reserve
• Naval Reserve
• Marine Corp. Reserve
• Air Force Reserve
• Coast Guard Reserve
• Army National Guard or Air National Guard
• Commission Corps of the Public Health Service
• Any other category of persons designated by the President in time of war or emergency

In order for an employee to give notice to an employer of military service, all notice may be written or oral.  Notice will not be required if:

• Military necessity prevents the giving of notice; and/or
• The giving of notice is otherwise impossible or unreasonable.

Upon return to work after military service, the employee has certain time frames to report back to work depending upon the length of service  (assuming the military member is not injured during military service).  Ninety days after military service is the longest time line upon a service member’s return to make an application for re-employment with the employer.  This ninety-day period is for those members who have served in excess of 181 days or more.
   

One of the more interesting provisions of USERRA is a provision that is colloquially known as the  “escalator position”.  That is, USERRA requires that an employee returning from military service be placed back into a position, with limited exception, to a level of employment that the person would have enjoyed if the individual had been continuously employed.  For example, if an employee left for three years of military service, if all of his or her colleagues in similar jobs and pay scale were given promotions and pay raises based on length of service, the returning service member would  also be entitled to the same promotion and pay raises as if he or she had never left continuous employment. 

   

Hand in hand with the “escalator” clause is the returning service member’s right to all seniority rights and benefits a service member would have obtained had the service member been continuously employed.  The test to determine whether or not rights are seniority rights is whether or not those seniority rights are determined by the length of service.  If it is not, the employer is not required to provide the returning service member with the particular seniority right. 
   

Since the beginning of the “First Gulf War”, the Country’s National Guard has been called upon time and time again.  The question that frequently  arises is if  these “week-end warriors” are covered by USERRA when these National Guardsmen must report for the one week-end a month and two-week training in the summer.  The “week-end warrior” is covered under USERRA,  and any employer prohibition against National Guardsmen performing his or her duties is prohibited under USERRA (this is not to say that the Guardsman is allowed to abuse the rights afforded to Guardsmen under USERRA. If an employer feels an employee is abusing the USERRA rights, the employer is well within his or her right to contact the employee's commanding officer to discuss the situation. Further, there is a national organization called the ESGR (Employer Support for the Garden Reserves), including its local chapter here in New Jersey to assist both employers and employees regarding USERRA rights). While service members may use vacation time to fulfill the service member’s obligation to the military, an employer is prohibited from requiring a service member to utilize vacation to do so. 
 

An aggrieved service member may bring an action against an employer privately, or utilize an attorney in the Department of Justice if VETS refers a matter to the Department of Justice.  Once a service member chooses the path he or she wishes to take, the service member is barred from using the declined option if the chosen path is unsuccessful.  While the Department of Labor  is charged with overseeing the law and implementing its requirements (The Department of Labor has a specific sub-group within the Department called the "Veterans Employment and Training Services (VETSS)" which investigates complaints and attempts to resolve these complaints. If a complaint cannot be resolved in an amicable fashion, VETS can refer the matter to the Department of Justice).   
   

While this article has dealt with the service member once employed, employers should be aware that it is also unlawful to deny an employee-candidate based solely on his or her involvement in the Uniform Services.  The burden of proof to prove other factors resulted in denial of employment is rested squarely on the employer.   
   

While USERRA is a law that may be difficult to navigate and understand, the rationale for its implementation certainly is very clear.  Individuals who are willing to leave their safety nets for higher service to the country need to be valued and protected upon his or her return to civilian life.  While the law does recognize the sacrifice employers make to allow service-member employees to perform his or her duties, it is very difficult to argue against the safety net that USERRA provides.

For Associations, such a scenario often means that the debtor stops paying their post-petition assessments.  But what happens to all the money that the debtor paid the Chapter 13 Trustee during the  bankruptcy? Does this money get distributed to creditors, the debtor or does the Chapter 13 Trustee keep it?  And importantly, can the Associations get any of those funds back?

 

Opportunity to Recoup Post-Petition Assessments
During the life of a Chapter 13 case, the Chapter 13 Trustee has a duty to hold onto all plan payments made by the debtor.  Upon conversion to a Chapter 7 case, the Chapter 13 Trustee is required to account for these funds and notice creditors that these funds will be returned to the debtor. When this occurs, Associations have one last chance to get some or all of this money back, rather than letting the debtor get a windfall.
 

Questions for Associations to Ask Bankruptcy Counsel
It is imperative that the Associations take quick action and file opposition to the Chapter 13 trustee’s notice so it can possibly recoup these funds. Sometimes there may be a few thousand dollars held by the Chapter 13 Trustee. The Associations should talk with their bankruptcy attorney immediately.  Following are some questions to ask:

1. How much is owed post-petition?  It is advisable for the Association to provide its attorney an account history for the post-petition fees due and owing.  For instance, if it will cost $500 to file an objection and make an appearance, but there is only $100 held by the Chapter 13 Trustee for a $200 post-petition claim, it may not be worth pursuing.                      
2. Is there a consent order providing for an administrative claim?  There may be a consent order with the debtor providing for an administrative claim.  Bankruptcy Code §1326(a), specifically provides that the Chapter 13 Trustee is to pay all allowed administrative claims by such a consent order. 
3.  Will an objection automatically mean allowance of the administrative claim?  The short answer is no.  The Associations still needs to prove the validity of the post-petition claim.  The debtor may assert a defense to the claim.  As such, sometimes the Associations may wish to negotiate with the debtor to avoid unnecessary litigation expenses.

These and many other issues should be addressed by your bankruptcy attorney as soon as possible.  Although the bankruptcy process is complex, thoughtful and sound legal advice throughout the bankruptcy case can help address many thorny issues that Associations regularly face as a creditor in a bankruptcy proceeding and, hopefully, not leave money on the table.

The seminar will cover the all-important topic of assessments and collections in New Jersey’s common interest ownership communities. Topics to be covered include an extensive overview of collections procedures and applicable state law, how to handle collections when owners are in bankruptcy or facing foreclosure and tips on developing a collections policy for your community.

You can access additional information online here.