New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

Very few things in life are “cut and dried” and the interpretation of words used in insurance policies is certainly no exception. Insurance policies can be difficult to read and interpret, even for the most skilled reviewer. To make matters worse, even a diligent attempt to decipher the policy’s ever alluring “definitions” section may often prove a frustrating exercise.  Yet, despite the convoluted terms and phrases, like it or not, insurance is something most of us cannot afford to ignore or live without.  The question becomes, how do we manage our affairs in reliance upon what is a “covered” claim?
 

Unfortunately, in many cases, the Courts have not made the daunting task of policy interpretation any easier for the lay person.  Insurance policy terms are generally interpreted by the Courts in  favor of the insured, where a fair interpretation, based upon the policy language, may be made, in accordance with the reasonable expectations of a policy-holder.  However, as is evidenced by two recent Appellate Division decisions, it isn’t always that easy. Despite the tendency of most Courts to favor policy-holder friendly interpretations, legal principals often dictate a different result which may have significant effects for both the insured and any third parties seeking indemnification from an insured. 
 

The New Jersey Appellate Division recently reaffirmed the finding that an “occurrence” does  not actually take place when a wrongful act is committed, but, rather, when the complaining party is damaged.  Often times these may not be one and the same.  On the surface, this tends to defy logic, since many insureds may assume that an “occurrence” takes place (or “occurs”) when the offending party does something wrong, thereby causing harm.  However, in legal terms, the resulting damage is the basis for a recovery, and, hence, that is what ultimately matters.  This principal is evident in instances where a party is not actually damaged until he or she learns of the wrongful act and/or its effects.  Unfortunately, since this may be weeks, months or even years later, there can be substantial insurance coverage implications as a result.
 

The importance of damages was the focus of two rather morbid cases recently reviewed by the Appellate Division involving schemes to pilfer tissue and bone from corpses. In both Adams-Stiefel Funeral Home v. Zurich American Insurance Company, No. A-0829-09 (March 10, 2011) and  Memorial Properties LLC v. Zurich American Insurance Co. No. A-0109-09 (March 10, 2011) the aggrieved family members were not alerted to the wrongdoing until years after it took place. Suits were ultimately filed, seeking damages for mental anguish and intentional and negligent infliction of emotional distress, among other things. 
 

Both funeral homes had different insurance policies in effect when the wrongdoing occurred, as compared with when the family members ultimately found out about the wrongdoing.  In the end, the Court held that the insurance policies that were in effect when the wrongdoing occurred were not implicated, even though there likely would have been coverage available under those policies, because the damage or harm (mental anguish/emotional distress, etc.) did not occur until the family members became aware of what had happened. 

 

The Court also determined that the policies that were in effect when the family members were notified, although implicated, were not obligated to respond to cover the claims or offer defenses to the insured because of relevant policy exclusions. Ultimately, the accused parties were found to have had no insurance coverage to pay the claims and the victims thereby lost a viable source of recovery. 
 

It is impossible for the eventual victims of wrongdoing to anticipate every possible action of those with whom they conduct business.  Requiring proof of insurance coverage from parties with whom you do business and consulting an attorney to review contracts and explain your rights is prudent advice and may save you time and frustration down the road.  Additionally, insureds should make every effort to understand the terms of the insurance policies they purchase and should be mindful of coverage exclusions which could leave them footing the bill in the event of a loss or lawsuit. It is always good practice to have a professional review your policies and explain your rights.  

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Faced with the burden of tough economic times, more and more homeowners are looking for ways to cut costs.  While some individuals have chosen to cut back, others have chosen to seek out economically advantageous alternatives.  In particular, the search for substitutes has become increasingly important when it comes to necessary household expenditures such as heat and electricity.  Although it has become common practice for local utility companies to power community homes, low cost alternatives such as solar panels may be the wave of the future.   Accordingly, Condominium and Homeowners Association Boards may soon find themselves faced with a new set of issues never before contemplated and an understanding of the legal obligations associated with this is essential. 
 

It is important to note that New Jersey statutory law, specifically, the Planned Real Estate Development Full Disclosure Act ("PREDFDA"), N.J.S.A. 45:22A-48.2,  lays out very specific guidelines governing the installation of solar panels in common interest communities. 
 

According to the Statute, the extent to which an Association can regulate the installation of solar panels largely depends upon the type of housing unit involved and the way “roofs” are defined in the Association’s governing documents. Overall, a prohibition against solar panels is permitted in communities where the unit roofs are considered “common elements.” Conversely, solar panels cannot be prohibited in communities with single family homes or communities where the unit owners are responsible for the roofs.  However, the law provides that Associations which are required to allow solar panels may also adopt rules and regulations governing their installation.
 

In particular, the Statute provides that an Association can adopt rules governing the following items:

1. The qualifications, certification and insurance requirements of personnel or contractors who may install the solar collectors;
2. The location where solar collectors may be placed on roofs;
3. The concealment of solar collectors' supportive structures, fixtures and piping;
4. The color harmonization of solar collectors with the colors of structures or landscaping in the development; and
5. The aggregate size or coverage or total number of solar collectors
    

If an Association decides to promulgate rules and regulations in this regard, the extent to which it may do so is limited.  The Statute states that an Association shall not adopt or enforce any rule if compliance would increase the solar panels’ installation or maintenance costs by an amount greater than 10 percent of the total cost of the initial installation, including costs of labor and equipment.  In addition, the Statute prohibits Associations from adopting or enforcing any rule which inhibits the solar panels from functioning at their intended maximum efficiency. Therefore, while an Association is given leverage to adopt certain rules and regulations, those rules and regulations must adhere to the specific guidelines expressed in the Statute. 
 

As a rule of thumb, if an Association is responsible for the roofs, it can ban solar panels.  However, if an owner is responsible for the roofs, the Association must allow solar panels, so long as the rules and regulations it has adopted are followed.  As always, it is advisable to have a professional draft or review any restrictions you intend to put into place to ensure your community’s compliance with the law.

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With delinquencies on the rise at most Condominium and Homeowners Associations and with an increasing number of Association foreclosure actions being filed daily, many board members and property managers are finding themselves playing an unexpected role, that of landlord.  In order to recover the mounting debt many Associations are faced with, the rental of units via rent receiverships and/or via title transfers at sheriff’s sales has become a common practice.  Rental units are a very effective source of recovery in the current economic climate.  However, taking on the responsibility of a landlord means complying with specific rules and regulations that Associations need to be aware of.  One area of particular importance involves window guards. 

 

New Jersey has very detailed laws when it comes to window guards in rental properties.  The requirements grow out of New Jersey’s Hotel and Multiple Dwelling Law, N.J.S.A. 55:13A-1 et seq. and the regulations promulgated in connection with it.  Most importantly, if a tenant requests window guards, the landlord must supply them.  Additionally, there are explicit rules dealing with the disclosure of this obligation to tenants and with ongoing inspection and maintenance requirements. 

 

First and foremost, landlords are required to include language in any lease agreement advising tenants of their rights with respect to window guards.  In particular, this lease provision should be in bold faced print and make clear that the landlord is responsible for providing, installing and maintaining window guards in units where the tenants have a child or children ten years of age or younger.  Further, the provision must advise the tenants that any window guard request must be in writing.  If the tenants want window guards to be placed in any building hallways, the Association must also comply. However, the cost for any window guard installation may be passed on to the tenants in the amount of no more than twenty dollars per window.


Aside from the lease disclosure, N.J.S.A. 55:13A-7.13 and 55:13A-7.14 place additional obligations on landlords.   Aside from having the required language in the lease agreement, a landlord must also:

1. Provide an annual orientation concerning the safe use and manipulation of window guards; and
2. Perform an inspection of the window guards twice annually and record the inspection in a log; and
3. Supply all tenants with notice twice annually of the landlord's obligation to install window guards upon request; and
4. A separate verification form should be signed by the tenants when they sign the lease advising them that they have been verbally informed of their right to window guards.
    

Also of importance are the applicable regulations found in N.J.A.C. 5:10-27.  According to the relevant provisions, window guards do not need to be placed in fire escape windows.  Additionally, in all "sleeping rooms" on the second or third floors, the guards must be releasable or removable from the inside without the use of a key or tool or excessive force.  For all other windows on the second and third floors and for any window on the fourth floor or above, the guards cannot be removed or dislodged without the use of a key or tool.  The regulations also list actual specifications for the guards themselves.   Any window guard installed in a rental unit must be up to code.
 

In addition to the above, N.J.S.A. 55:13A-7.14(b)(3) deals with common areas and provides that a notice advising the tenants of the landlord’s obligation with respect to window guards must be conspicuously posted and prominently displayed in the common areas. This notice should also advise tenants to check their window guards on a regular basis and to report any problems or concerns to the landlord. 
 

It is important to note that an Association’s duty is invoked in certain situations where it is not acting as a landlord.  If a unit owner is renting out his/her unit privately, he/she is responsible for the installation of window guards in the unit upon the tenant’s request.  However, if the tenant requests guards in any common area hallway, the Association must install them upon written request. 
 

Due to the complexity of the requirements, it is always advisable to have a professional draft or review any lease provisions and/or notifications being sent to tenants.  Associations should know and understand their obligations and do everything to guard against the expense of ending up in landlord/tenant court.

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"You can please all the people some of the time, and some of the people all the time, but you cannot please all the people all the time." 

 

There is an abundance of contexts in which this variation of the popular quote by Abraham Lincoln may seem wholly relevant.  Its applicability to the inevitable issues which arise out of the unique design of community living is one such example.   Faced with the challenge of balancing the management of common property with the competing interests of various unit owners, Condominium and Homeowners Association Boards often finds themselves in an impossible position. Having disgruntled unit owners is a common and unavoidable phenomenon at most Community Associations.  Whether the source of contention is a decision which was made by the Board or whether the Board is simply called upon to act as an intermediary in a disagreement between unit owners, the task is nonetheless a daunting one. 

 

So what do Association Boards do when an agreeable solution does not appear to be in sight?  The answer, in large part, is dictated by statutory law. The Condominium Act, N.J.S.A. 46:8B-1, et seq. provides in pertinent part, “An association shall provide a fair and efficient procedure for the resolution of housing related disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation.”   Similarly, the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 et seq. has nearly identical language.  So what does this mean for Association Boards? Overall, this means that Boards have the obligation to offer alternative dispute resolution (“ADR”) when a “housing related dispute” arises, regardless of whether this requirement is expressly listed in the Association’s Governing Documents.

 

The term “housing related dispute” is undefined and, therefore, can be open to interpretation.  However, it stands to reason that a “dispute” between the Association and a unit owner requires some affirmative action on the part of the Association against the aggrieved unit owner in the form of a restriction and/or penalty.   Thus, the Association must be taking some form of punitive action against the unit owner before an ADR must be offered.

 

In the event that an ADR is offered, the aggrieved unit owner and the Association have the opportunity to discuss the issues with a neutral mediator with the goal of resolving the dispute voluntarily.   The mediator will review the information presented and try to help the parties reach an accord.

 

In the case of a dispute between unit owners, the Association’s involvement should be limited. The Association should act as a conduit to resolving the matter by providing a forum where that resolution can be made, however the Association should not involve itself beyond that point. The Association should resist the impulse to take sides, regardless of the factual situation presented, unless there are rule violations involved and the Board wants to take a stand.

 

There are no mandatory procedures for ADR, and the only restriction is the prohibition in the Condominium Act against members of the Association’s Board serving as the mediator.  Some Associations have procedures which have already been outlined in their Governing Documents and those procedures should be followed if an ADR is requested.  For Associations without ADR provisions in their Governing Documents, it is advisable for the Board to consider a resolution outlining the ADR procedures it intends to utilize.  This will place everyone on the same page once an ADR situation arises and will help to keep confusion to a minimum.

 

It should be noted that nothing prohibits the Governing Documents of an Association from having broader requirements for ADR than are mandated by statute.  Therefore, some Association’s may be required to offer ADR in situations that would not typically be classified as “housing related disputes.”  For example, an Association’s By-laws may require it to offer ADR before suspending amenities as a result of a delinquency.  Although a suspension stemming from a failure to fulfill the contractual obligation to pay common charges would not normally classify as a “housing related dispute” the Governing Documents are permitted to be over-inclusive. Given this, it is always advisable to have a professional review your Governing Documents to ensure your Association’s compliance.

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