Under the New Jersey Condominium Act and related case law, the boards that manage condominium or homeowners associations are required to treat their members fairly and equally. Most boards conform to that standard as a matter of course – they are, after all, made up of volunteers who want to maintain their community and help their neighbors. However, board members are regular people and as such, are capable of making decisions based upon personal feelings, bias and other improper basis, which, if challenged, could cause the Association to incur significant expense. A matter with similar issues was recently litigated by Stark & Stark, which acquired a cash-settlement and a new roof on behalf of its clients, amidst evidence that the Board refused to replace the unit owner’s roof contrary to the advice of the Association’s long time roofer.
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.