Does A Condominium Association Have Any Recourse When A Court Denies Its Request For Legal Fees?

Kate Muscalino aims to answer that question in her recent article, "You May Have Recourse When A Court Denies Your Board Attorneys's Fees,"  which begins:

Collections have become an area of increasing concern for condominium associations, as some unit owners struggle to pay their common charges on time and in full. As unit owners' debt continues to rise, associations are left with few options to collect: a lien on the unit and a lawsuit against the individual unit owner.

Many condo associations have been frustrated in their attempts to collect from a unit owner individually, as judges are often sympathetic to delinquent unit owners, offering extensions, scrutinizing certifications of amounts due and reducing or eliminating the association's ability to collect attorneys' fees.        

Click here for the rest of the article.

When Do Condominium Associations Have Standing To Sue Under The Consumer Fraud Act?

by:  Peter J. Gallagher

In a recent decision, the Appellate Division restated and clarified the rules regarding when a condominium association has standing to sue a developer.  In Belmont Condominium Association v. Geibel, an association sued the sponsor/developer/contractor of the Belmont, a seven-story, thirty-four unit condominium in Hoboken, asserting common law fraud and negligence claims along with statutory claims under both the New Jersey Consumer Fraud Act (“CFA”) and The Planned Real Estate Development Full Disclosure Act (“PREDFDA”).  The claims arose out of the allegedly faulty construction of the Belmont, and certain pre-construction statements from the developer, including that it had “overseen the building and renovation of Over 400 Single Family & Condominium Homes.”  (Although largely irrelevant to the issues addressed by the Appellate Division, it turned out that the Belmont was actually the first building that the developer’s owner and general manager had ever constructed.)  As it relates to the faulty construction, the association alleged that the building was “plagued by water leaks” almost immediately after construction was complete.  These leaks impacted both the individual units and the common elements.  After years of repairs that did not correct the problem, the association sued the developer.  The association argued that construction defects were the cause of the water filtration, while the developer blamed the problems on poor and inadequate maintenance.        

Among other things, the developer in Belmont argued that the association lacked standing to bring claims under the CFA.  At the outset, the Appellate Division observed that New Jersey courts take a liberal approach to standing, and  have historically given wide recognition to suits by condominium associations.  It then analyzed the language of the New Jersey Condominium Act (“NJCA”) to determine whether the association had standing.  As it related to claims arising out of damage to the common elements, the Appellate Division held that the association had standing to sue because the NJCA vests condominium associations with the “exclusive right”(emphasis in original) to sue a developer for defects pertaining to the common elements, and generally prohibits individual unit owners from doing so. 

The Appellate Division rejected the developer’s argument that the association lacked standing because it could not demonstrate reliance by the original purchasers on any of the alleged misstatements.  On this point, the Appellate Division noted that reliance is not an element required to sustain a claim under the CFA.  The Appellate Division also rejected the developer’s argument that the association could only recover damages for the unit owners who actually sustained damage as a result of the developer’s alleged misrepresentations.  The Appellate Division held that because the NJCA allows associations to sue for damages to the common areas sustained by “any or all” of the unit owners, it was entitled to recover all of the damages necessary to repair any damages, not a prorated amount based on the number of unit owners who identified damages. 

However, the Appellate Division held that the association lacked standing to sue for damages to the individual units because the NJCA only vests it with authority to sue or be sued in connection with damages to common elements.  In Belmont, the damages associated with individual units all related to the windows, which the Appellate Division held were “personal to the unit owners,” and therefore not part of the Belmont’s common elements.  On this point, the Appellate Division reviewed the definition of common elements contained in both the NJCA and the master deed for the Belmont, neither of which identified windows as common elements.  Once the Appellate Division concluded that the windows were unit elements, not common elements, its decision on standing was a simple one because it had already concluded that an association has standing to sue for damage to common elements, but lacks standing to sue for unit elements.   

New Jersey Supreme Court Considers Condominium Association’s Ban On Window Signs

 by:  Katharine A. Muscalino

On September 1, 2010, a three-judge panel of the New Jersey Appellate Division struck down, as an unconstitutional limitation on free speech, a condominium association’s governing documents’ prohibition on posting signs in unit windows, with the exception of a single “For Sale” sign.  On October 24, 2011, the New Jersey Supreme Court heard argument on these issues, and is expected to issue an opinion either upholding the Appellate Division’s rejection of such restrictions or overturning the Appellate Division and finding that such signs may be banned.  Because many Associations’ governing documents include bans like the one at issue in Mazdabrook, the New Jersey Supreme Court’s opinion could have a wide-ranging impact, and should likely inspire condo associations to review their by-laws so as not to run afoul of its holding.

 

Continue reading “New Jersey Supreme Court Considers Condominium Association’s Ban On Window Signs”

Slip Sliding Away: NJ Supreme Court Rules That Condominium Has No Duty To Clear Snow And Ice From Public Sidewalks

by:  C. John DeSimone, III

 It has long been settled common law that commercial landowners have a duty to clear snow and ice from public sidewalks abutting their land, but that residential landowners have no similar duty (Stewart v. 104 Wallace Street). In Luchejko v. City of Hoboken, decided on July 27, 2011, the New Jersey Supreme Court described the commercial/residential dichotomy as a bright-line rule. Commercial landowners have a common law duty to clear snow and ice from abutting public sidewalks, residential landowners do not. The Luchejko Court held that a residential condominium building, because it is residential, does not have a common law duty to clear snow and ice from abutting public sidewalks. The Court found that the form of the property ownership, in this case, a corporate condominium entity, did not subject the Association to the same liability that would have fallen on a commercial landowner. In doing so the Court affirmed the dismissal of the plaintiff's personal injury action at summary judgment. The Court also held that the management company, as the agent of the Association, owed no duty to the plaintiff and affirmed its dismissal.

Good News For Condo Collections

by:  Katharine A. Muscalino

Collections have become an area of increasing concern for condominium associations, as unit owners struggle to pay their maintenance fees on time and in full during the current economic downturn.  As unit owners’ debt continues to rise, associations are left with few options to collect: a lien on the unit and a lawsuit against the individual unit owner.

Many condominium associations have been frustrated in their attempts to collect from a unit owner individually, as Special Civil Court judges are often sympathetic to delinquent unit owners, offering extensions, scrutinizing certifications of amounts due, and reducing or eliminating the association’s ability to collect attorneys’ fees.  Grandview at Riverwalk Port Imperial Condominium Association is one such association, but its frustrations were recently assuaged on appeal in Grandview at Riverwalk Port Imperial Condominium Association, Inc. v. Han

In this case, the association sued a unit owner for failure to pay maintenance fees, only to have the Special Civil Court inexplicably deny their demand for attorneys’ fees.  The Association appealed the judge’s rejection of their demand and the Appellate Division reversed the Special Civil Court, finding that the fees were authorized by statute and by the Association’s governing documents.  Noting that the unit owner had not objected to reasonableness of the attorneys’ fees and that the Appellate Division itself perceived “nothing unreasonable” in the attorneys’ fees, the Appellate Division remanded the matter to have the judgment amended to reflect the attorneys fees.