Haffert appealed.  On appeal, the court reiterated the dictates of Finderne Heights, an appellate court decision from 2007.  In Finderne Heights, the appellate court ruled that – because of the Act and its section 14(k) – all ‘qualifying disputes must be sent to arbitration if after suit is filed, either party chooses to invoke the alternative dispute remedy that must be made available under the Act.

It has been commonly understood that disputes involving unpaid assessments and/or maintenance fees were not ‘housing-related’ for the purposes of Finderne Heights and 14(k).  The court in Bell Tower disagreed.  This does not mean however that a condominium cannot commence a collection action at law and/or at equity without first offering and/or participating in, ADR.  It means only that once a debtor – after suit is filed – pleads and/or seeks through formal court papers that the delinquency be the subject of ADR, the condominium must oblige.  Since almost all disputes involving unpaid assessments and/or maintenance fees are uncontested, there should be no significant impact to the condominium’s assessment management and recovery program.  Additionally, I assume that efforts will be made to amend the Act to overturn that decision.  Before changing any process or program in light of the Bell Tower case, feel free to contact me to discuss and/or to clarify.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact David Byrne at 609-895-7365 or by email at dbyrne@stark-stark.com

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.

The existence of affordable housing-related rules, and how they are administered and/or enforced, is heavily connected with the extent and nature of New Jersey’s residential development.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact David Byrne at 609-895-7365 or by email at dbyrne@stark-stark.com

These cooperatives are intended for persons of low income. As such, the co-ops have both income rules for people becoming shareholders and caps on the resale prices when shareholders leave. The income rules will vary on a case by case basis, however, in all cases the income cap will not exceed 120% of the "Area Medium Income” when UHAB is the direct sponsor of the co-op.
 

Roughly, HDFC cooperatives converted prior to 1995, have an income restriction on new shareholders equal to 6 or 7 times the annual maintenance plus utilities. Families with less than 3 dependents use 6 times the annual maintenance plus utilities to determine eligibility of income and families with 3 or more dependents use 7 times the annual maintenance plus utilities for the calculation. HDFC Cooperatives converted after 1995 typically have an income restriction of 120% of Area Median Income as the maximum qualifying amount.
 

Purchase prices are unique and are personalized to a building based on that building’s renovation scope and the mortgage the building has to pay. In all cases the controlling documents should be consulted to determine the actual income restriction and re-sale policies.
 

Since the apartments are intended for low income residents, they are often sold at a heavily discounted purchase price. The apartments can be sold for such low amounts because they are often subsidized by housing grants. In the event, the apartment within the HDFC co-op is sold to someone who exceeds the income restrictions, the seller will have to pay back the housing grant that subsidized the apartment, ultimately resulting in no profit to the seller.
 

Due to all of the restrictions and rules governing the re-sale and purchase of HDFC apartments, Boards and sellers should contact their attorneys for guidance during this process.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact Ashley Newman at 212-279-9090 or by email at anewman@stark-stark.com

The new Bill would allow the BIDs to value the condominium building in full and then send the bill with the assessed value to the condominium association. The association would be responsible for billing each condominium owner based on their proportionate share of the condominium and this additional expense would be added into the common expenses.

 

A problem with the proposed alternative way for BID to bill the condominiums is that if an association has delinquent owners, the association would still be responsible for paying BID in full and all the other owners in the association would have the burden of paying the fee for the delinquent owners.  This would cause an additional financial burden on many unit owners in an already difficult financial time.

 

Another negative with the alternative was of billing by BID is that originally each unit was assessed individually based on the tax assessed value of the unit.  Following the alternative method, all of the units are lumped together as the building and assessed as one large property.  It is then up to the association for dividing up the amount per the proportionate share of ownership which means some unit owners may be paying more than if based on their tax assessed value.

 

As proposed, this new legislation will not be beneficial to condominium associations and in the long run will become a liability. 

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact Ellen Goodman at 609-219-7448 or by email at egoodman@stark-stark.com

Several experts in the field have opined that these types of window wall systems will generally fail within 5 to 15 years.  This is in stark contrast to concrete and steel buildings which have a 50+ year life span. Moreover, buildings with window walls require significant amounts of maintenance to ensure that they function as they should. Even if the system doesn't fail, Associations must hire engineers and other contractors to keep up with the maintenance of these systems.  Not surprisingly, these window wall systems are often cheaper and faster to install than a typical concrete or steel wall system.  This makes a window wall an enticing choice for a developer looking to maximize their bottom line.
 

For buildings with window wall systems only on the top most floors, the cost of replacement could be hundreds of thousands of dollars.  Buildings comprised entirely of these systems could be facing tens of millions of dollars worth of repairs.  For the Board Members of affected Associations, there are generally only two options: special assess the owners for the cost of the repairs, or file a lawsuit against the developer and contractors in an effort to have them pay for the repairs.  Stark & Stark has been very successful in recovering from developers and subcontractors the money that their clients need to repair or replace their own window wall systems.  Moreover, we can guide the Association through the complicated process of choosing experts, navigating insurance issues and fielding and responding to unit owner complaints which occur in virtually every lawsuit.  We have also counseled our clients on how to hire the right experts to ensure that the window wall systems are maintained in an effective, but cost efficient manner.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact Mark Wiechnik at 609-895-7249 or by email at mwiechnik@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

To resolve an ECB Violation, a building may agree to cure the violation or contest the violation: 

1. Cure the Violation. If you choose to cure the violation, you must admit the violation and certify correction by the “cure” date listed on the Notice of Violation.  This will require you to complete an “AEU2: Certificate of Correction” form, provide photographs and receipts to serve as proof of the correction and provide a notarized statement attesting to how the violation is corrected. 
2. Contest the Violation. If you choose to contest the violation, you must appear at a hearing before the ECB. You may bring witnesses or other evidence to substantiate a defense against an ECB Violation. After the hearing, the ECB Administrative Law Judge will make a decision with one of the following outcomes: (a) Dismissal – No Penalty Imposed

If you prevail in contesting your violation, you will not owe any penalties and your violation will be dismissed. However, the Department of Buildings may re-inspect, reissue a violation or appeal the decision; (b) In Violation – Standard Penalty Imposed. If you are found in violation, a penalty will be imposed. You have the right to appeal this decision. The appeal process is conducted entirely in writing, and therefore no further appearances are necessary; (c) Mitigation – Reduced Penalty Imposed For certain violations, if you attend the hearing, admit guilt and demonstrate that the condition has been corrected, the ECB Administrative Law Judge may impose a mitigated (reduced) penalty (½ the standard penalty); (d) Stipulation at Hearing – Standard Penalty Imposed Depending on the violation, you may have the option to enter into a stipulation with the Department during the first hearing. By entering into a stipulation, you admit guilt and agree to correct violating condition within 75 days; (e) Default – Five Times Standard Penalty Imposed

Hence, if guilt is admitted and the ECB Violation is cured, a hearing, as well as any penalties which may result from the hearing will be avoided. If the ECB Violation is contested and a hearing takes places, any one of the foregoing outcomes may occur.

Before deciding whether to cure an ECB Violation or to contest an ECB Violation, one must consider the type and class of ECB Violation because the monetary fines will differ depending on the type and class of ECB Violation . The ECB Penalty Schedule can be found under the ECB section of the website for the City of New York.  One must also consider whether a defense can be substantiated at a hearing before the ECB.  An ECB Violation should not be contested unless a defense, through witnesses and other credible evidence, can be substantiated at a hearing before the ECB Board. 

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact David Byrne at 609-895-7365 or by email at dbyrne@stark-stark.com

While Condominium Boards can take some solace in the fact that New York has given them the liberty to enforce the terms of the Associations’ Governing Documents, New York City’s locals laws require a Board to be more aggressive in enforcing the Association’s policies. Two types of laws essentially give an individual tenant, renter or cooperative shareholder the right to keep a pet, even if there is a "no pet" provision in the lease, Declaration, rules, and regulations.

In New York City (Administrative Code of the City of New York Section 27-2009.1) and Westchester County (Laws of Westchester County Section 694), statutes commonly known as the "Pet Law,” give tenants in cooperatives and most condominiums, as well as other types of dwellings, the right to keep a pet, even if there is an applicable "no pet" clause in the Association’s rules and regulations and Governing Documents. The same applies for restrictions to certain types of pets or certain breeds.

Under the "Pet Law", if a landlord or Association fails to enforce the provisions of their restrictive provisions within three months of its knowledge of a Unit Owner’s open and notorious harboring of a pet, then the restrictive provision is deemed null and void. The Association may no longer enforce that particular provision.

Condominium Boards must also be sure to balance their restrictive provisions with applicable federal and state laws against discrimination. Just as a landlord must accommodate a disabled tenant or Unit Owner who requires a wheelchair, a companion animal must similarly be permitted, even if it goes against the Association’s pet policy. The federal Fair Housing Act and the New York City Civil Rights Law require that a housing provider give a "reasonable accommodation" to a disabled individual to use and enjoy his or her home by keeping a medically necessary companion animal. Failure to provide this “reasonable accommodation” in the form of a companion animal could expose the Association to severe penalties including the assessment of fines, compensatory and punitive damages in state or federal court, as well as fines which may be levied by such New York State regulatory agencies.

In sum, a Cooperative or Condominium Board in New York State is free to adopt a pet policy as they see fit, even those restricting and prohibiting certain dog breeds. However, when it comes to New York City and Westchester, Associations must be sure to comply with the “Pet Law” which requires the Association to take action within three months of discovering a Unit Owner has a pet/dog in violation of the Association’s rules. Failure to take action renders that policy void. Furthermore, Associations must always be sure to comply with all Federal and State anti-discrimination laws. Where a companion pet is needed to treat a disability, an Association’s denial of that companion pet could lead to severe consequences.

If you would like to discuss this client alert in more detail or how it may affect your community association, please contact Zain Naqvi at 609-895-7288 or by email at znaqvi@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. 

The Expo highlights members of CAI and provides visitors with an opportunity to visit vendors’ booths, and more importantly, attend various educational seminars.

I will be speaking on a topic that is always timely when it comes to dealing with living in close quarters. The seminar is entitled “Community Rule Book - Avoiding Fouls & Costly Penalties”. The seminar will deal with how managers and attorneys need to work together in formulating rules and policies for associations. I will discuss my role as general corporate counsel to community associations. Another panelist is an attorney who is engaged by insurance companies to provide a defense during those times when associations are being sued by members as it relates to rules and regulations.

Be sure to visit us at booth #701 Saturday!

Mr. Byrne focused his presentation on relevant ethics-related definitions, guidelines, laws and authorities.  He also discussed various trade organization and other relevant ethical guidelines and standards.  Mr. Byrne was joined in the presentation by Irwin Cohen, A. Michael Tyler Realty Corp., Peter Von Simon, New Beford Management, and Stephen Beer, CPA, Czarnoski & Beer.

 

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.