There are caveats and/or exceptions to these policies and/or rules.  According to Fannie Mae, the 70% rule does not apply to loan applications suubmitted through an underwriting program used by major lenders.  Fannie Mae added that hundreds of projects submitted through that exception since March 1, 2009 have been approved even though their sales levels are below 70%.  Further, developers can seek exemptions with respect to loans that are manually underwritten. 

Debates in Congress are ongoing with respect to whether these policies ought to be further amended, as everyone continues to try to find the right balance between the need to facilitate the creation and purchase of housing, and the need to avoid another round of mortgages for individuals that cannot afford them.

You can read the full article here. (PDF)

The Mendham Knolls Condominium Association is a small condominium situated in Mendham.  Access to the condominium is achieved only via Boundary Oak Lane, an approximately 156 foot long road that empties into the condominium's parking area.  New Jersey's Municipal Act provides for certain enumerated services or reimbursement for the cost of services to a qualified private community in "the same fashion as the municipality provides these services on public roads and streets."  Mendham argued that it need not provide either services, or reimbursements, in relation to Boundary Oak Lane as it was more akin to a driveway and Mendham does not provide any services in relation to driveways.  The condominium argued that Boundary Oak Lane is a road and eligible for services or reimbursements as Mendham does provide services on township roads.
 

The court first found that the applicable road-related standards are those in place currently, not at the time of the road's original construction.  The court then relied upon pictures of the road and neighborhood as well as how it had a "drive" for a name along with some other factors.  It concluded and ruled that Mendham must comply with the Municipal Services Act with respect to Boundary Oak Lane.  This condominium will now have the snow and ice removed from Boundary Oak Lane as well as have their related street lighting costs reimbursed.  This will certainly help the community balance its budget in upcoming years, without assessments.
 

Condominiums and associations must assert their rights under the Municipal Services Act even in the face of often dismissive municipalities.

Condominiums, cooperatives and homeowners associations should consult with counsel once it receives any owner or resident request for a "reasonable accommodation" pursuant to the United States Fair Housing Act.

In or around 2007 a condominium board of managers contracted for certain construction work on its buildings.  Owners within that condominium filed a suit against the condominium arguing that the contract called for "alterations" or "improvements", which required approval of the owners per the condominium's governing documents.  The resulting suit was captioned William F. Helmer, et al v. Marc A. Comito, et al.
 

As the matter involved an owner challenge to a board action, the court relied upon the business judgment rule.  The court wrote that under "'the business judgment rule, the court's inquiry is limited to whether the board acted within the scope of its authority under the bylaws (a necessary threshold inquiry) and whether the action was taken in good faith to further a legitimate interest of the condominium.  Absent of showing of fraud, self=dealing or unconscionability, the court's inquiry is so limited and it will not inquire as to the wisdom of soundness of the business decision.'"  In this case, the board determined that the work involved constituted "repairs" and "maintenance", which was within the board's sole authority to address.  There was an overwhelming amount of evidence that the buildings continued to suffer from leaks, and that experts hired by the condominium recommended repairs.  Further, the Village of Nyack Building Department opined that "the proposed scope of work is of a repair/maintenance nature and does not require a building permit".   As a result, the court found, the board was "within its authority in entering the construction contract without the unit owner approval required for 'alterations' or 'improvements' costing more than 25% of the estimated annual budget, such that the owners' complaint should be dismissed.
 

The case continues the longstanding applicability of the business judgment rule in matters involving challenges to board decisions.  It is imperative that boards ensure that the authority for a particular action is set forth in the governing documents or applicable laws, and that said action is motivated by good faith.  It is equally as important that a board document the evidence supporting its decisions and/or actions. 

• Periodic statements must clearly state the required due date and late payment penalty.
• Credit Card issuers must disclose the period of time and total interest it will take to pay off a card balance if only minimum monthly payments are made.
• Credit Card issuers must provide 45-day written notice before raising APR or before making any other significant change to the card agreement.

First twelve months of new card
Credit Card issuers are restricted from raising interest rates in the first twelve months after a credit card account is opened, except:

• When the increase is under a variable interest rate agreement.
• At the end of the promised time period for a promotional rate. For example, the Credit Card issuer can offer 5 percent for eight months and then 12 percent after that. (The promotional period must be at least six months.)
• If the required minimum payment is not received within 60 days after the due date.

Existing balances
Credit Card issuers cannot raise interest rates on existing balances unless:
 

• The increase is under a variable interest rate.
• It is the end of a promised time period for a promotional rate.
• The required minimum payment is not received within 60 days after the due date.

Notice of future rate hikes
After the first twelve months, the Credit Card issuer can only raise the rate on future purchases upon providing 45 days notice of the increase. No notice is required for increases due to one of the reasons stated above.
 

Paying off under old terms
Credit Card issuers can’t change the terms for repaying a balance, except that the Credit Card issuer may give the cardholder either five (5) years to pay off the outstanding balance at the old rate; or an increased minimum payment that has no more than twice as much of a contribution to paying down the balance as the old minimum payment.
 

Limits on fees and penalties
 

• If the interest rate is increased because the minimum payment is not received within 60 days after the due date, the rate must go back to the original lower rate if the consumer makes on-time minimum payments for six months.
• An over-the-limit fee may be imposed only once per billing cycle if the balance is above the limit on the last day of the cycle.
• Credit Card issuers who increases the interest rate must review the account every six months and decrease the rate if indicated by the review.
• Two-cycle billing is prohibited. Credit Card issuers cannot reach back to an earlier billing cycle when calculating the amount of interest charged in the current cycle.

These new restrictions and protections are expected to dramatically change the way Credit Card issuers treat consumers. These changes should create an environment wherein consumers can better understand and interact with Credit Card issuers.

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.

Mr. Lasser focused his presentation on the practical and legal considerations involved with filing liens, commencing lawsuits for money judgments, sheriff and foreclosure sales and collecting rent from tenants residing in non owner occupied units.  Mr. Lasser also discussed pending laws, which will affect condominiums and homeowners associations, and how the courts in New York have applied the Business Judgment Rule to condominium and homeowner association boards. Mr. Byrne presented materials related to collections and the impact of various federal and New York on community associations (you can listen to Mr. Byrne's portion of the seminar here).

You can listen to Mr. Lasser's portion of the seminar here. 

As discussed in several Superior Court opinions, the New Home Warranty Program is ineffectual at best and is rarely an advisable option. Therefore, homeowners and condominium associations are often times forced to sue the developer of their property in an effort to obtain money for necessary repairs. Unfortunately, it often happens that home builders and condominium developers create a corporation or limited liability company for a specific project. The company is minimally funded, and it hires only independent subcontractors. The company is then shut down when the project is completed. A judgment against this company would be completely worthless. In other instances, if a project is not particularly profitable, the developer company may file for bankruptcy protection and whatever limited assets it has would be disbursed to the various creditors. In these situations, if the homeowner or association discovers defects in the construction after several years, there would be no source of recovery. The warranty program provides almost no assistance, and suing a defunct corporation is a waste of time. Therefore, the homeowner or association would be stuck paying for costly repairs. However, if the developer had general liability insurance in place during the project, those insurance policies could provide coverage for the construction defects. Unfortunately, in New Jersey and many other states, builders are permitted to develop land and build homes with minimal or no insurance in place.

In order to prevent these problems and protect new homeowners, the Nevada Assembly has proposed a bill that would require all licensed contractors to carry liability insurance. The bill would require all contractors to carry between $300,000 and $3 million worth of insurance, depending upon the size of the contract. According to the bill's sponsor, Majority Leader John Oceguera, this would protect homeowners from having to sue and/or negotiate with shell companies that are no longer in business, or companies that have filed for bankruptcy protection. Not surprisingly, the Associated General Contractors organization in Nevada objects to the proposed requirement, claiming that insurance is an expensive product, that it would put a significant burden on the contractors and that the cost would be passed directly to the homeowners. The bill has not yet passed, and faces strong opposition as well as a competing bill from the Nevada Senate.

In the last several years, the New Jersey legislature sought fit to require home improvement contractors to carry liability insurance, but has thus far not applied such a requirement to new home builders and developers of cooperatives and condominiums. We will continue to monitor the situation, and update our readers in the event that additional information becomes available.

The Plaintiffs had several responsive arguments, each of which the court rejected.  The court found that the statute of repose began to run upon substantial completion of the McGinty's unit, not the completion of the entire 2,663 unit development nearly ten years later, as argued by the Plaintiffs.  The court relied upon the Supreme Court cases of Daidone v. Buterick Bulkheading, 191 N.J. 557, 564 (2007), in which the Supreme Court found that the Statute of Repose began to run upon "substantial completion" of their unit, not the entire project.
 

The court also found that although Hovnanian performed repairs after the certificate of occupancy was issued, those repairs were "temporary and cosmetic" and thus did not constitute a separate improvement to the property, and even if they were separate improvements, the complaint was not filed within ten years of those repairs.
 

Interestingly, the plaintiffs further argued that the statute of repose was not meant to deny recovery to a person who is in direct privity with the negligent party, but was intended only to apply to a third-party social guest, with no direct privity to the owner-builder.  The court rejected this argument as well, finding no such language in the statute.
 

All of the claims, including the personal injury claims were extinguished within 10 years of the date of the certificate of occupancy.  This decision reinforces the strict nature of the statute of repose and the New Jersey Judiciary's strict adherence to the letter and intent of the statute as drafted by the legislature.  If you or your Association has incurred damage related to the construction or improvement of real property, contact the author of this article to discuss your rights under the statute of repose and other applicable statutes and rules. 

Mr. Lasser's portion of the seminar covered the topic Minimizing Acrimony & Conflict While Collecting Carrying Charges and Assessments.  Mr. Lasser's presentation included discussions on the different types of debtors, the statutory warranty of habitability, common management back office mistakes and legal pitfalls. You can listen to Mr. Byrne's portion of the seminar here.

You can listen to Mr. Lasser's portion of the presentation online here. (17.5 MB)

No action . . . arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained on account of such injury, shall be brought against any person performing or furnishing the design, planning, surveying, supervision of construction or construction of such improvement to real property, more than 10 years after the performance or furnishing of such services and construction.
[N.J.S.A. § 2A:14-1.1]

The statute applies to, among others, building contractors, whose professional work is functionally related to and integrated with a building plan or design, which gives rise or contributes to a defective and unsafe condition.   E.A. Williams Inc. v. Russo Development Corp., 82 N.J. 160, 169; (1980).   However, the New Jersey Supreme Court, in Greczyn v. Colgate-Palmolive, 183 N.J. 5 (2005), addressed the interplay between the fictitious party practice and the Statute of Repose.  In doing so, the court allowed plaintiffs to join defendants in a lawsuit after the expiration of the statute of repose as long as the plaintiff was diligent in determining the identity of the responsible party.  In Society Hill, supra, the New Jersey Superior Court relied upon the Greczyn case in allowing the Condominium Association to continue its case against one of the contractors, in part, because the Association relied upon another defendant, the Developer K. Hovnanian, for information and documents related to the construction of the buildings.  Given that the Association did not construct the buildings, it was at the mercy of the Developer and others as to information related to construction.  Once that information was provided and thoroughly reviewed by the Association, the contractor was joined by name in the lawsuit.  The Judge found that it is at least a question of fact as to whether or not the Association was diligent in joining the contractor, thereby leaving the issue to be determined by the jury.

If your association has building issues and have been told that your claims are barred by either the statute of limitations or statute of repose, contact my office to discuss.  Your community may have options and other means of recovery for construction defects caused by negligent construction.

You can read the full article here. (PDF)

Over the years, a large body of adverse possession caselaw developed in New York, which helped flesh out the sparsely worded statutory requirements of an adverse possession claim.  As the caselaw developed, the doctrine of adverse possession started to be used more frequently as a sword to help owners acquire their neighbors’ property rather than being used as a shield to protect owners from stale encroachment claims as was originally intended.  In July 2008, the New York State legislature revised the statute governing adverse possession by adding some of the elements of adverse possession created by caselaw and specifically excluding other aspects of the caselaw.  These revisions were made in order codify the caselaw and to prevent adverse  possession claims made in bad faith.

Adverse Possession Alive and Well in the Suburbs and Cities
Property law professors in New York cover the legal concept of adverse possession during the first year of law school, and adverse possession used to be a topic that appeared occasionally on the New York State Bar Exam.  The cases discussed in educational settings mostly involve boundary disputes in rural areas where landowners often own many acres and it is understandable that a landowner might not notice that a structure was built on her property and take appropriate action to have the structure removed.  Even though most lawyers are vaguely familiar with the concept of adverse possession from their law school days, many remember it as an arcane doctrine that is only relevant to lawyers who practice in rural counties.

To my surprise, the doctrine of adverse possession is invoked frequently in the real world of real estate litigation, not only in rural areas but also in suburban and urban areas settings where there is high building density and population density.  Instead of fighting over who owns woods and fields, these property boundary disputes typically involve the use of shared driveways or alleyways between two houses or buildings, or arise when one neighbor decides to erect a fence along a property line.  Although the size of these areas may be relatively small, the value of this suburban or urban real estate can be quite large, resulting in bitter disputes between neighbors.

The Elements of Adverse Possession
Regardless of whether property is located in the country, a suburb or a city, the law in New York governing adverse possession is the same, and is contained in Article 5 of the New York Real Property Actions and Proceedings Law (hereafter abbreviated as "RPAPL 5").  Although not spelled out explicitly in RPAPL prior to the July 2008 revisions, the caselaw interpretations of the statute held that in order to succeed on an adverse possession claim, the adverse possessor had to demonstrate that his possession was

1. under claim of right;
2. hostile;   
3. actual;
4. open and notorious;
5. exclusive; and
6. continuous

The actions required to be taken by an adverse possessor to satisfy any one of these elements will typically satisfy several others as well.  Basically, if you openly and exclusively occupy someone else’s property for ten years, all of these elements, except for the claim of right element, are satisfied.  Historically, an adverse possessor satisfied these elements by enclosing the land in controversy with a fence, building a structure on it, or cultivating it if it was farmland.

The Claim of Right Controversy
The element of adverse possession that has received the most attention from courts and the legislature in New York during recent years is the element known as a claim of right.  A claim of right is the adverse possessor’s basis for claiming an ownership interest and possessing land not actually belonging to her.  Prior to 2006, the rulings by New York courts on the issue of whether an adverse possessor’s knowledge that someone else owned the land they sought to take was relevant to establishing a claim of right were inconsistent.  This inconsistency encouraged litigation because without a firmly established caselaw precedent, plaintiffs and defendants both felt they could win challenges concerning a claim of right on any given day.

Finally, in the landmark 2006 case of Walling v. Przyblo (Walling v. Przybylo, 7 N.Y. 3d 228. 2006.),  the highest appellate court in New York, the Court of Appeals resolved the claim of right controversy and held that actual occupation, not subjective knowledge, determines whether the claim of right element of an adverse possession claim is satisfied.  In other words, if you act like you are the owner of the property, you have established a claim of right even if you knew you were not the owner of the property when you took possession of it. 

Although many legal scholars and real estate lawyers viewed the Walling decision as unjust because it seemed to reward people who took possession of and erected structures on property they knew the did not own, at least the law concerning a claim of right was finally settled in New York.  Unsurprisingly, the caselaw precedent set by the Court of Appeals in the Walling decision did not last long.

2008 Amendment of Article 5 of the New York Real Property Actions and Proceedings Law
On July 7, 2008, two years and five days after the Walling decision by the Court of Appeals, the New York State Legislature amended RPAPL 5 in order to overturn the precedent set by Walling.  In her memo in support of the amendment, Senator Elizabeth Little stated that “A person who attempts to possess land that they know all too well does not belong to them should not be encouraged.  If a person desires land, they can buy it. … Adverse possession should be used to settle good faith disputes over who owns land.  It should not be a doctrine which can be used offensively to deprive a landowner of their real property.” (New York State Senate Introducer’s Memorandum in Support S7915-C.)

The 2008 amendment to RPAPL 5 attempts to eliminate bad faith adverse possession claims by using a reasonableness standard to determine whether a claim of right has been established.  The statute now defines a claim of right as “a reasonable basis for the belief that the property belongs to the adverse possessor.”  (New York Real Property Actions and Proceedings Law Section 501.) In other words, if you know or should know you are occupying someone else’s land, you cannot establish a claim of right.  Occupation is no longer determinative to establishing a claim of right.

In addition, the amendment codifies the other elements of adverse possession previously only established by caselaw as follows: adverse, open and notorious, continuous, exclusive, and actual.” (Id.)  The amendment also makes it more difficult to demonstrate these elements by specifically stating that “non structural encroachments, including, but not limited to fences, hedges, shrubbery, plantings, sheds and non-structural walls, shall be deemed to be permissive and non-adverse.”  (New York Real Property Actions and Proceedings Law Section 543.) This is a significant departure from the standard set by prior caselaw where fences often served as the cornerstone of adverse possession claims.  

Conclusion
The doctrine of adverse possession has played a vital role in property boundary disputes in the countryside, suburbs and cities of New York for a long time.  The July 2008 amendment to RPAPL 5 codified the elements of adverse possession established by many years of caselaw, but also made a significant departure from the caselaw by establishing a reasonableness standard for the claim of right element.  The amendment also made it more difficult to establish an adverse possession claim by specifically excluding fences and other non-structural encroachments from comprising part of the basis for an adverse possession claim.  As a result of the amendment, a property owner in New York who sleeps on his rights by failing to action to remove encroachments on his property has a better chance now of defeating an adverse possession claim than at any previous time in history.  Nonetheless, it is still possible to acquire property through adverse possession, so an owner who believes that his neighbor is encroaching on his property should promptly consult with an attorney in order to take measures, which will nullify any potential adverse possession claim.  Similarly, an owner who believes that he may have acquired his neighbor’s property by adverse possession should consult with an attorney in or to determine whether his claim is viable, and if any further steps should be taken to strengthen the claim.