The article discusses the steps New Jersey municipalities have taken over the past several years in an attempt to increase the safety of their residents, specifically for the children's safety in these areas. The article addresses "Pedophile-Free Zones" ordinances which prohibits sex-offenders from residing in or loitering within 500 feet of schools, parks or playgrounds.

You can read the full article here.

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.

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.

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.

   
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.

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

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.

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.

  
 Indemnification, however, allows a lawsuit against a Board Member to continue, and at the end of the case, if a judgment is entered against the individual Board Member, the Association generally pays it.  Pursuant to New Jersey statutes, as well as most Association By-laws, the Association has the ability to indemnify an agent of the Association when the agent acts in good faith, and does not make decisions that are adverse to the interests of the Association.  Like anything else there are exceptions, and in New Jersey, the Association is not required to indemnify the Board Member in the event that the Board Member committed fraud, engaged in self-dealing, willful misconduct or in some instances acted grossly negligent.  If the Board Member satisfies this standard and is found to have acted in good faith and in the best interests of the Association, the Association will generally pay the Board Member’s legal bills and pay any money necessary to satisfy any judgment entered against that Board Member.  Typically, Plaintiffs sue both the Association and the individual Board Members.  Often times they will all be represented by the same attorney, the cost of which is borne by the Association.  This is preferable given that the Association and the Board usually have the same interests and is advisable in order to mount a successful joint defense to protect the interests and assets of the Association.  Further, in some instances, a defense will be provided by an insurance carrier for both the Association and the individual board members.

   
Prospective Board Members should know and understand the difference between immunity and indemnification long before they throw their hat into the ring.  Inevitably, legal issues arise in the course of governing a community and it is best to understand your duties and responsibilities before getting involved.

The Mortgage Forgiveness Debt Relief Act of 2007, signed by President Bush in December 2007, relieved co-ops from having to give up money in rental income or risk losing their status as a housing cooperative under federal tax laws.  The new law requires a co-op to pass one of three tests to enable the shareholders to qualify for tax benefits.  The first test is the original 80/20 rule.  The second test requires 80 percent or more of the total square footage of the corporation’s property is used or available for use by the tenant for residential purposes.  The third test requires at least 90 percent of the income be for the benefit of the shareholders (including but not limited to maintenance, management or care of the property).   This new law makes it easier for co-ops to qualify for the tax benefits.  It increases the co-ops’ ability to charge market-rate rents for commercial space, keep maintenance charges lower for shareholders and still receive the same tax benefits of an owner of a condominium or single family residence.  This new law will ultimately increase the value of the co-ops and will make many shareholders of co-ops very happy.

You can read the full article here (PDF).

As specified in the text of the legislation, the obligation to remove snow and ice is imposed upon a person “who owns or controls a parking area which is open to the public or to which the public is invited ... ”.  Although it is arguable as to whether the parking areas in a private community association would be considered “open to the public”, and thus fall under the requirements and potential penalties associated with this law, the prudent approach for all community associations with handicapped parking spaces on common property is to comply with these new requirements.  In addition, associations should consider incorporating these requirements into any contracts regarding snow removal services.

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

Unlike New York, New Jersey addressed this issue of double taxation by enacting the Municipal Services Act, N.J.S.A. 40:67-23.2 to -23.8, which was the first legislation in the country to address municipal services equalization for common interest communities.  Pursuant to this Act, every municipality in New Jersey is required to either provide certain services to each qualified private community within its borders or reimburse the association for these services, including snow removal, trash collection and recycling.  The purpose of the Act is to require “that a municipality enact ordinances to provide the same services along the roads and streets of a qualified private community as it provides to other residents along its public roads and streets” and to eliminate “double payment for some services which the residents of qualified private communities now pay through property taxes and fees to their association.”

While not unique, New Jersey is one of only a few states that provide for such benefits to its residents. New York has not yet followed suit, but the Piedmont lawsuit may begin to change people’s opinions about how condominium associations are taxed and receive municipal services.  Only time will tell how New York will address the issue of municipal services equalization and the problem double taxation of common interest communities. It is possible that the elected representatives in these states will enact legislation similar to that of New Jersey’s Municipal Services Act, which provides at least some relief to community association members.  Until then, owners in these communities continue to pay the same property taxes as single family homeowners on top of their respective common expense assessments, essentially paying double for their municipal services.

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

Evidence shows that the states hardest hit by foreclosures are Nevada, Florida, Michigan and California.  In 2007, New Jersey saw 53,652 foreclosure filings, up 34% from 2006.  New Jersey's foreclosure rate for 2007 was 0.9% (or, less than one property in foreclosure for every 100 properties in New Jersey).  In contrast, the foreclosure rate in 2007 for Nevada was 3.4% and for Florida it was approximately 2%.  Historically, and fairly obviously, the number of defaults in association and cooperative fees increase as well during times of increased mortgage defaults. 

In turn, it is even more imperative that associations and cooperatives act aggressively to ensure payments, early in any deficiency.  For associations, it is essential that liens be recorded early to ensure protection in the event of an owner's bankruptcy and to secure a better position in the face of any mortgage foreclosure.

– Dr. Seuss – “How the Grinch Stole Christmas”

With apologies to Dr. Seuss, and with the holiday season fast approaching, many community association boards find themselves in the unenviable position of having to balance enforcing their rules and consider the safety of their residents while trying not to come off looking like Ebenezer Scrooge (before the visits from the ghosts of Christmas past, present and future, of course).  While an association of single-family homes may be less concerned about restrictions than a high-rise condominium or townhouse association, here are some obvious – but often overlooked – rules to think about when it comes to regulating holiday decorations:

(1)     Be Reasonable and Consistent – Unless your Governing Documents require it and there is a compelling reason to do so, do not prohibit residents from decorating the exteriors of their homes for the holidays.  Associations should adopt uniform rules and communicate these rules to the residents so everyone is on the same page as to what they can and cannot display.  Further, if your association does ban holiday decorations, it is essential to be consistent and ban all decorations and displays. 

(2)    Set Reasonable Restrictions – It is reasonable and appropriate to require residents to regulate the time that decorations may be displayed and, sometimes more importantly, when they should be removed.  It is also reasonable to regulate the time of day that lights or other features may be illuminated so as not to create an unreasonable nuisance for neighbors or additional safety issues.  Avoid, if at all possible, venturing into unchartered territory of restricting religious displays, which may open up a proverbial (no pun intended) can of worms.

(3)    Do Not Argue Over Aesthetics – We all know that not everyone has exquisite taste in decorating, but if the board or architectural review committee are arguing over what is tasteful and what is not, it may be time to take a closer look at your rules regarding decorations and open a dialogue with the community about what changes they would like to see.

(4)    Be Mindful of Decorations on Common Elements – While it is not advisable to prohibit homeowners from decorating their own homes, it is perfectly acceptable to ban residents from decorating general common elements without association approval or that could cause damage.  It is also advisable to limit homeowners from affixing decorations to limited common elements if the association is responsible for their maintenance.  And again, associations that do choose to decorate common areas, such as clubhouses, entrance ways or lobbies, should avoid religious displays and be mindful to either keep such decorations general – lights and wreaths, for example – or to take extra care to give equal treatment to all religious affiliations.
           

Overall, it is important to make your holiday decorating rules reasonable and even-handed.  Concentrate on what is most important: location, time and place, size and safety, but not content or aesthetic appeal.  And just remember, as long as they are not dangerous, the ten-foot tall inflatable Santa, Rudolph or Frosty the Snowman won’t hurt anyone (and won’t be on display forever).

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

The article discusses the ways in which power can be abused in a homeowners association, and the warning sings one can use to determine if the power given to a board member is being abused. The article also addresses ways in which residents can fight back against an abusive board member.

You can read the full article here.