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Governor Chris Christie recently signed a bill that changes how elections in Fair Lawn’s Radburn neighborhood are run — which will impact the approximately 7,000 common interest communities in New Jersey. The so-called “Radburn Bill” changes how residents are elected to Radburn’s board of trustees.

Radburn is one of the oldest planned real estate developments (PREDs) in the United States. There are approximately 3,100 people residing in Radburn. The development includes 469 single-family homes, 48 townhouses, 30 two-family houses and a 93-unit apartment complex. Radburn was created in 1929 as a “Town for the Motor Age,” and includes 18 acres of parks, a shopping plaza, and an elementary school. In Radburn, founders attempted to create a self-sufficient community.

Continue Reading Are Free Elections Guaranteed in New Jersey’s Planned Communities?

The New Jersey state Senate passed the bill 181, authored by Senator Christopher Bateman(Hunterdon, Mercer, Middlesex and Somerset), by a vote of 35-0 on January 23, 2017.

The bill, if passed by the Assembly and signed into law by the Governor, will render void and unenforceable any indemnification/hold harmless language in a contract with a snowplow vendor. This bill will not apply to the State or any municipal government.

Passage of New Jersey Senate bill 181 will have dire consequences for community associations. Continue Reading NJ S181-Act Concerning Snowplow/De-Icing Service Contracts in Community Associations

One of the largest line items in any condominium association’s budget is its insurance premium. Condominium associations are required, pursuant to their governing documents, to carry adequate property insurance to address common elements (and in many cases, unit owners’ improvements), liability insurance, and director’s and officer’s insurance coverage. Further, condominium associations budget for any insurance claims that may trigger the need to meet an insurance deductible. That deductible may be $10K per claim.

Continue Reading Condominium Associations May Recoup Insurance Deductibles

As of July, 2014, a change was made to an existing statute, NJSA 46:10B-51, that requires all creditors initiating a mortgage foreclosure proceeding against residential property to provide the municipality information related to that action. Creditors must provide the following information:
  • The name and contact information for the representative of the creditor responsible for receiving complaints of violations of code or property maintenance;
  • Street address, block and lot number of the residential property;
  • Name and contact information of an individual located in the state of New Jersey authorized to accept service on behalf of the foreclosing creditor; and,
  • Whether or not the residential property is subject to the Fair Housing Act.
Additionally, creditors must provide each municipality’s clerk a listing of all residential properties in that municipality for which the particular creditor has commenced foreclosure proceedings. “Creditor” is defined in Assembly Bill A347 as a federal or State chartered bank, savings bank, savings and loan association or credit union, any person required to be licensed under the provisions of the “New Jersey Licensed Lenders Act,” P.L.1996, c.157 (C.17:11C-1 et seq.), and any entity acting on behalf of the creditor named in the debt obligation including, but not limited to, servicers.

The thrust of this statute is to require a foreclosing creditor to abate nuisances or code violations if a residential property is abandoned or vacated after the foreclosure proceeding has been initiated. If a foreclosing creditor has been advised by a municipality to abate nuisances or code violations, and fails to do so within 30 days, substantial fines or imprisonment may occur.

Although the responsibility for maintenance of the outside of Condominium Associations belongs to the Associations, this law can be especially helpful to homeowner associations where the units are owned in fee simple. However, maintenance or code violations within a condominium unit should also be reported to the municipality to force the foreclosing creditor to address these issues.

Community associations continue to suffer from very high delinquency rates which is a reflection of the national trends of consumer debt.  However, because community associations need to be vigilant in keeping its delinquency rates manageable (as these monies are needed to provide promised services to its members), debt collection is a very big part of an association’s day-to-day activities.
 
It is not very difficult to obtain a judgment against a member for failure to pay the monthly maintenance fees since there is an irrefutable obligation to do so based on a community association’s governing documents, and as for condominiums, a statutory requirement to do so.  However collecting the judgment is where attorneys who represent community associations differentiate themselves.
 
Once a judgment is obtained, a number of expedient means to collect exist including a bank levy of the judgment debtor’s account (monies frozen so that the community association can "take" those sums), rent levy (rents paid to the judgment debtor are instead given to the community association), and wage garnishment (percentage of the judgment debtor’s pay is given to the community association). When these methods of collecting prove impossible or impractical, the community association can have its attorney "depose" the judgment debtor at an asset deposition.
 
In order to get an asset deposition the community association must obtain an Order from the Court.  These are typically freely given since the community association is entitled to relief.  The Order requires the judgment debtor to appear before the community association’s attorney at a given place, date, and time. If the attorney fashions the relief requested properly, it also requires the judgment debtor to bring to the deposition all asset information about the judgment debtor (tax returns, bank account statements, etc).  At the deposition, there is generally the attorney for the community association, the judgment debtor, and a court reporter.  The court reporter is there to make a transcript of the proceedings in the event additional Court action required. These proceedings are just like being in Court where the judgment debtor placed under oath to tell the truth.  The deposition then proceeds.
 
What happens if the judgment debtor disregards the Judge’s order to appear?  The community association immediately goes back into Court and seeks an Arrest Order for the judgment debtor disobeying the Judge’s Order.  Once the Arrest Warrant papers served upon the judgment debtors, most will then call to schedule the deposition. Others get arrested and the community association’s attorney generally travels to where the judgment debtor is being held so the deposition may be taken.
 
While the above could be a bit expensive in my experience, most judgment debtors are shaken enough to the point that they make payment arrangements. While there is no guaranty an asset deposition will yield asset depositions, it is a useful tool.
 
Community associations need to recognize the need to take their collections seriously, and make every "reasonable" effort to make judgment debtors understand they cannot walk away from every member’s payment obligations.
 
Christopher Florio is Chair of Stark & Stark’s Community Associations Group. For questions, or additional information, please contact Mr. Florio.
 
The New Jersey Supreme Court has recently decided that an outright prohibition of political signs in a community association is unconstitutional.  While the ruling will most likely result in future rulings with different facts, it does provide a concise rebuttal to political sign prohibitions dealing with free speech.
 
In Mazdabrook Association v. Wasim Kahn, the Association prohibited any type of sign other than a “For Sale” sign.  Kahn, who was running for Township Council, posted a couple of signs in support of his candidacy.  One was in the front of his window and the other inside of his front door.  The association demanded the signs be taken down, and Mr. Kahn complied.  Litigation ensued, the Trial Court found in favor of the association.  While the Appellate Division reversed, the New Jersey Supreme Court upheld the Appellate Division’s ruling.
 
Committee for a Better Twin Rivers v. Twin Rivers Homeowners Association, a 2007 New Jersey Supreme Court case, was the first case to weigh in on the free speech issue within a community association.  In Twin Rivers, the association, while allowing free speech as related to political signs,  placed certain “time, place, and manner” rules for displaying such political free speech.  The New Jersey Supreme Court found that while these sign restrictions were “minor”, these restrictions were such that “expressional” activities were still permitted.  Thus, the New Jersey Supreme Court found that the Twin Rivers political sign rules were constitutional.  
 
The difference in the Mazdabrook case is the Board enforced language within the governing documents prohibiting signs except “For Sale” signs.  The Mazdabrook rules regarding signs, when balanced with the constitutional right of free speech, were found to be unenforceable.
 
What does this mean for community associations in New Jersey?  It means that associations must follow the Twin Rivers Policy of “time, place, and manner” restrictions relating to political free speech.  An outright prohibition to political signs is an affront to constitutionally protected free speech and will not be enforced.

 

Christopher Florio is Chair of Stark & Stark’s Community Associations Group. For questions, or additional information, please contact Mr. Florio.

A recent Appellate Division case, approved for publication (which means it will have Statewide application and authority) was recently decided regarding the ability of a homeowner association to restrict the leasing of a home.  The case, Cape May Harbor Village And Yacht Club Association, Inc. v. Sbraga, et al., while a case of first impression in New Jersey, will probably be limited in scope and applicability throughout the State of New Jersey.       
 

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

On November 4, 2011, I was a panelist at the New Jersey Institute for Continuing Legal Education’s seminar located in North Brunswick, New Jersey. The topic was “Community Association Law Summit: Top Ten Topics for 2011".

The topic I presented in the afternoon session was centered around association financial problems, particularly collecting monies from members in order to keep the corporation solvent. The attendees were advised the underlying authority by which an association must and can collect maintenance fees, and I then proceeded to take the attendees through the process from the issuance of a collection letter, to obtaining a money judgment against a particular member, and how to successfully collect once that judgment is in place. As this is a heavily discussed and important topic during these trying economic times, interest was heightened as these attendees, mostly attorneys were able to take away certain nuances that may help them in their individual practices in representing their clients to successfully collect money.

Over 145 attendees were present for this all-day seminar. These types of seminars are terrific
vehicles for fellow attorneys to share various perspectives and approaches in achieving successful conclusions for a client.

On October 22, 2011, I was a panelist at the New Jersey Chapter of Community Associations Institute Annual Expo. The seminar focused on Rules and Regulations for community associations. Particularly, the seminar focused how best to reconcile rules and regulations in light of New Jersey and Federal statutes that may be in opposition to the association-implemented rule.

 

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 2010, during the peak of America’s high mortgage default rate, New Jersey’s Judiciary commenced a proceeding aimed at a variety of improper foreclosure practices. In the Matter of Residential Mortgage Foreclosure Pleadings and Document Irregularities, MER-F-59553-10. On December 20, 2010, the Supreme Court entered an order for these banks to show cause why their foreclosures, writs of execution and possession and sheriff’s sales due to mortgage default should not be prohibited in light of alleged improper practices. In March, the state’s six largest banks (Bank of America, JPMorgan Chase, CitiBank, Ally Financial, One West Bank and Wells Fargo), which account for the majority of New Jersey’s current foreclosures , agreed to a stipulation that allows residential mortgage foreclosures to continue if there is a default on mortgage.

By virtue of the stipulation, mortgage services had a deadline of April 1, 2011 to convince Retired Appellate Division Judge Richard Williams that all improper practices had been remedied. Also, evidence had surfaced that each of the six banks had engaged in what has become known as "robo-signing". "Robo-signing" is the term used to describe a bank’s assembly-line foreclosure process by which a foreclosure supporting affidavit is signed by an individual without confirming that the contents of the affidavit are true and correct.

By virtue of the stipulation, each bank must show that they now have procedures in place to eliminate “robo-signing” and that those procedures will be followed. Additionally, the banks must address the following: their authority to act when they are not the actual mortgagee; their record-keeping practices; their procedures for assuring that documents filed with the court are correct; and their procedures used to facilitate communication with their own lawyers. Under the terms of the agreement, once foreclosures restart, the Judiciary or its appointed representative will have the power to randomly test foreclosures to monitor compliance.

The speedy and proper foreclosure of a unit and/or home is often crucial to a community’s financial status.  The delay in “turning over” delinquent units and/or homes with bank foreclosures, caused by both the backlogged foreclosure unit and the Judiciary order to show cause, continues to burden community associations. New Jersey law provides that upon the conveyance of a unit and/or home via sheriff’s sale, the purchaser of that unit and/or home at the sheriff’s sale must begin the payment of their regular monthly assessment fees, condo fees, maintenance fees, and HOA fees, amongst others, for the common elements in the community going forward.