On July 13, 2017, a new law was enacted in New Jersey amending the Planned Real Estate Development Full Disclosure Act (PREDFDA). PREDFDA governs homeowners associations, condominium associations, and co-ops. The new PREDFDA provisions apply to trustee elections and certain by-laws amendment procedures. They also permit an association’s board of trustees to amend the association’s by-laws without a vote of the unit owners. This may be very helpful to an association that needs by-laws amendments to operate more efficiently but cannot get apathetic unit owners to vote. There are two circumstances in which a community association board may amend the by-laws without the majority vote or procedures required by the by-laws: Continue Reading A Board of Trustees May Now Amend the By-Laws Without a Vote of the Unit Owners
On July 13, 2017, a new law was enacted in New Jersey amending the Planned Real Estate Development Full Disclosure Act (PREDFDA). While the new law was created in reaction to litigation involving a community called the Radburn Association, which lacked by-laws that mandated fair and open trustee elections, it also includes provisions relating to amendments of the by-laws which will apply to all community associations. Here is what you should know about these by-laws amendment provisions which are effective immediately: Continue Reading New By-Laws Amendment Procedures Mandated by PREDFDA
On July 13, 2017, a new law was enacted in New Jersey amending the Planned Real Estate Development Full Disclosure Act (PREDFDA). While primarily governing the development of community associations (homeowners associations, condominium associations, and co-ops) PREDFDA also has many requirements relating to their operation and governance. The new amendments to PREDFDA were created in reaction to litigation involving a community called the Radburn Association, which lacked by-laws that mandated fair and open trustee elections. However, the amendments will also apply to community associations which do have by-laws with seemingly-sufficient election procedures, and that may be a surprise to many community association board members and managers. A few of these important provisions which relate to board elections are summarized below. Continue Reading New Trustee Election Procedures Mandated by PREDFDA
As drone technology advances and the number of drones in the air increases, managers and board members in community associations are asking about drone policies. If drones are being used in your community or if there is a plan for their use, whether recreational or commercial, your board should adopt a drone policy. When thinking of drone use, most people may think of recreational drones operated by “those darn kids.” Recreational drones are certainly something associations should stay on top of, with privacy and safety of residents being paramount. Also, recreational drone use is not limited to children and policies should be neutrally applied to avoid running afoul of the law. There are limited government regulations relating to this type of drone use and association policies are an important supplement. Drone delivery service has been hyped for some time now. Who wouldn’t want to order cold and flu medicine from the comfort of your couch and have it on your doorstep within the hour? Drone delivery is almost certainly on its way to your community one day and we can expect to see further government regulation as it arrives. When it does, your community policies can be adopted once you know what this operation looks like and how it is otherwise being regulated. There are other business applications for drones that likely require more immediate attention in your community association. These include vendors hired by homeowners and the association, but also entities such as utilities who may have the right to enter association property for certain purposes. The FAA has enacted rules for the use of commercial drones but many community association residents may be concerned that they do not go far enough to protect individual privacy, safety concerns, or the right to quiet enjoyment of one’s home. Managers and board members are right to evaluate and address these concerns through written drone policies which are consistent with current law. If your board is considering a drone policy, it should work with legal counsel because local, state, and federal regulations are expected to continue to change.
Community associations in New Jersey which have pet restrictions may need to permit a disabled resident to maintain an animal in his or her unit depending on needs. This rule could even apply to a visiting guest who is disabled.
Most people understand that the blind are entitled to use a guide dog wherever they go. However, there are other types of animals that also assist individuals with different types of disabilities and these also must be allowed despite any community pet restrictions. This could range from a monkey which performs tasks for a person with a spinal cord injury to a cat that provides emotional support to an individual with PTSD. Even if your association prohibits pets (or has weight or size restrictions for pets) they may be required to permit such animals for disabled residents or guests.
The bylaws of most community associations permit members to vote “in person” or “by proxy.” Voting “in person” means just what it sounds like: a member attends a meeting and casts their vote while physically in attendance. But what does voting “by proxy” mean? Black’s Law Dictionary defines a “proxy” as the written authorization given by one person to another so that the second person can act for the first.
Thus, when a member of a community association votes by proxy, they give written authorization for another person to vote for them. It may be tempting to take short cuts in this process, but if your members are voting by proxy, they must actually execute a proper proxy.
It is reasonable to think that owners of real property are responsible for maintaining and insuring that property. In community associations, however, the maintenance and insurance obligations are often not entirely consistent with ownership. Knowing the maintenance and insurance obligations for your community association and its unit owners is critical.
Ownership. Ascertaining who owns what property in a community association depends on the structure of the community – condominium, townhomes, cooperative, single-family home, etc. – and how it was created: by master deed, declaration, or proprietary lease. The owner of a single family home may own everything that is on his lot while the owner of a condominium unit may only own everything within her unit boundaries. In a co-op, the shareholders own no real property, just shares of stock in a corporation which owns the real property. While a homeowners association owns all of the common property, in a condominium association the common and limited common property is owned proportionately by each of the unit owners.
Maintenance. Unit owners may or may not be responsible for maintenance, repair and replacement of the property they own in a community association. A homeowners association may mow lawns on individual single family home lots or maintain, repair, and replace the roofs and exteriors of a townhome. A condominium association may be responsible for maintenance, repair, and replacement of pipes and wires which are part of the unit and a condominium unit owner may be responsible for maintenance and repairs of limited common elements adjacent to the unit. Ownership of property in a community association does not necessarily dictate the maintenance obligations.
Insurance. The insurance requirements in community associations may also be inconsistent with property ownership. Condominium associations and unit owners should be most concerned about insurance requirements because poor interpretation can result in duplicative insurance or even gaps in insurance. An association may be required to insure portions of the unit such as drywall, appliances, cabinets, and floor coverings or it may only be required to insure the building from the “studs out” (excluding drywall and all interior furnishings). Understanding the insurance requirements for unit owners and associations is essential to ensure sufficient coverage in the event of a casualty loss.
The association master deed/declaration and by-laws must be carefully reviewed to understand the ownership interests, maintenance obligations, and insurance requirements of unit owners and the association. A thorough understanding of these important provisions is fundamental to proper administration and management of a community association.
As busy volunteers, often with full-time jobs, families, and other commitments, community association board members may not be able to attend all meetings of the board. When this happens, particularly when an important vote is pending and the trustees are divided on the issue, a board member may wonder if they can authorize another board member to act as their proxy at the meeting. Such a practice is impermissible and/or inadvisable under the law and most governing documents.
The confusion arises because unit owners are often entitled to vote by proxy at meetings of the members. There is no statutory authority allowing trustees to vote by proxy at a board meeting. Trustees may only vote or otherwise participate in a board meeting when they are present in person or by conference telephone or other means of communication by which all persons participating in the meeting are able to hear each other. Trustee voting by proxy may also be inconsistent with the open meetings requirement of New Jersey law which requires that all meetings of the board except conference or working sessions at which no binding votes are to be taken, shall be open to attendance by all unit owners. This open meetings requirement intends that unit owners be entitled to observe the decision making of the board. Giving a proxy to another trustee would thwart these requirements.
More importantly, board members owe a fiduciary duty to the association. By giving their vote to another, a trustee may be breaching that duty. Similarly, a trustee who is not present at a meeting at which a matter is discussed has no opportunity to change their vote based on information learned during the discussion and this may also result in a breach of their fiduciary duty. Since the standard for board actions should be ensuring board policy is in the best interests of the Association, allowing trustees to vote by proxy may fall short of that standard.
If you would like to learn more about community association boards or if we can assist your community association, please contact Stark & Stark’s Community Associations group.
While it was widely assumed to be so, a recent Ocean County trial court decision has held that claims under the Municipal Services Act are governed by the 6 year statute of limitations for contract claims. This means that a community association seeking past municipal services reimbursements may only be entitled to those which have accrued within the last 6 years. If your community association has not been receiving municipal services reimbursements or if you believe it has not been receiving all of the reimbursements for which it is entitled, you may have a limited time in which to formally pursue them.
If you have any questions about the Municipal Services Act, please Stark & Stark’s Community Associations group.
As technology permits more individuals to work at home, the issue of in-home businesses in community associations continues to be debated. Most community association master deeds and declarations include a restrictive covenant that prohibits a residential unit from being used for anything other than a residential purpose. There is no question that business uses such as a doctor’s office or retail store are prohibited by such a use restriction. The debate gets interesting when businesses are run out of an in-home office and are otherwise undetectable. Are such in-home businesses considered a private residential use or are they a violation of the use restriction? As strong advocates for community associations we support broad enforcement powers for associations and their boards but understand that policing certain uses is impractical.
New Jersey case law requires that community association use restrictions be strictly construed. Despite this requirement, the obvious purpose of the restriction must be maintained. Thus, when interpreting a use restriction it must be given a rational meaning that is consistent with its express general purpose.
A restrictive covenant prohibiting a residential unit to be used for any purpose other than a private residence certainly exists to ensure that the community maintains its private residential nature. Any use which is inconsistent with this general purpose should not be permitted. Incidental in-home business uses that are limited to the interior of the residence, do not produce additional traffic or noise, and are otherwise undetectable may have no impact on the private residential nature of the community. It could be reasonably argued that if a use is undetectable and does not impact the residential nature of the community that it is in keeping with the general purpose of the use restriction.
If you want to know more about this issue and how it applies to your community, please contact us.