Recent Blog Posts

• The Top Five Ways Condominiums Get Into Trouble 1.  Condominiums always assume any interior damage to a unit is NOT its responsibility.  It may be.  The board and management must investigate and determine the cause and the surrounding facts regarding the damage.  If the Association was negligent, and the damage was proximately caused by that negligence, the Association could be responsible for the interior damage to the unit.  Every complaint in this regard should be handled with that in mind and investigated.    2.  Boards and/or Management often sign vendor proposals and think they ARE NOT contracts as a result.  An agent’s execution of a vendor proposal constitutes an acceptance of the terms laid out by the contractor and creates a binding contract.  We suggest not signing those proposals until your attorney reviews same and has advised you regarding any issues related to those terms.  Your attorney may want to draft his own contract for the association’s ....
• Court Finds Limited Coverage for Condo under D&O Policy Language Further evidence that coverage under D&O policies is extremely narrow, the 11th Circuit determined once again that a D&O carrier did not have an obligation to defend an Association that was sued for, among other things, breaching its fiduciary duty to the unit owners.  The Eastpointe Condominium Association was sued by one of its unit owners for failing to maintain and repair the roof and the air conditioning system.  The unit owner complained of water intrusion, interior damage and mold growth, and sued the Association for negligence and breach of its fiduciary duties.   The Association notified both its general liability carrier as well as its directors and officers carrier ("D&O") of the claim.  The liability carrier accepted defense of the Association but the D&O carrier denied defense and indemnity, claiming that the policy contained a "property damage" exclusion.  After a trial and verdict in favor of the Association, ....
• Appellate Division Affirms Order Relating to Doctrine of Res Judicata Northgate Tenants Corporation v. Tsai, App. Div. (per curiam) On June 22, 2010, the Appellate Division affirmed the trial court's order, finding that the trial judge properly applied the doctrine of res judicata to bar relitigation of the validity of a sublease fee imposed by a co-operative, which was determined valid and enforceable in a prior litigation.   The plaintiff is a nonprofit corporation responsible for the administration, maintenance and operation of a community of residential cooperative units (the “Corporation”). The defendant is a shareholder of the corporation, holding a proprietary lease to a residential unit.   The Corporation’s Board adopted a resolution that imposed a monthly sublease fee on all unit owners who rented their units (the “Sublease Fee”). The defendant refused to pay the Sublease Fee on the grounds that he felt it was unfair and discriminatory. The plaintiff filed a complaint against defendant for unpaid Sublease ....
• Florida Law finally catches up with Stark & Stark Florida law now permits homeowner associations to do what Stark & Stark has been encouraging its associations to do for years.  The Florida legislature recently passed a law that allows homeowner association's to go after renters for association fees when the homeowners fail to pay their monthly maintenance fees.  Interestingly enough, Stark & Stark has been obtaining similar recovery for its clients for several years now, without the help of New Jersey's legislature.   Associations are feeling the effects of the recession just like everyone else, and most Associations have at least a few owners who have not paid their dues in several months.  Amazingly enough, some owners have failed to pay their regular dues, but continue to accept rent from tenants who are living in the unit.  The Florida law permits homeowner associations to formally notify renters that their payments should be paid directly to the association, not to a landlord who has failed to ....
• Appeals Court Grants Sidewalk Liability Protections to Residential Condominium Associations The New Jersey Court of Appeals has ruled in a case of first impression that a condominium association, when it is primarily residential, cannot be sued for injuries occurring on abutting public sidewalks.  The Appeals Court stated:     “The principal, novel issue presented...is whether for sidewalk liability purposes, a condominium association has a duty to maintain an abutting public sidewalk as if it were a commercial landowner.  We hold that a condominium association does not bear such duty or responsibility.”   The published opinion can be found at Luchejko v. City of Hoboken, A-5702-07.    In this case, the plaintiff, Richard Luchejko, slipped and fell in February 2006 on the public sidewalk outside of the Skyline Condominium Association located in Hoboken, New Jersey.  The plaintiff alleged that black ice covered most of the sidewalk and there was significant snow piled along the sidewalk following heavy snowfalls in the ....
• Stark & Stark Obtains $1,200,000 Settlement in Condominium Construction Defect Case Including Mold, Window and Roof Defects A condominium located in Bergen County, New Jersey has accepted a total settlement of $1.2 million for various transition-related construction defects.  Mark M. Wiechnik, David J. Byrne and Thomas J. Pryor of Stark & Stark obtained the settlement on behalf of the third-party plaintiff condominium association, which experienced roof leaks, window problems and other construction related issues, shortly after the unit owners were elected to the Board of Directors of the Association.   The case began as a negligence and mold exposure personal injury action against the Association and the Developer by a unit owner in the building who experienced water intrusion into her unit.  The unit owner sued the Association and the Developer for failing to repair the roof in a timely fashion both before and after transition of control of the Association.  The plaintiff had argued that the Association failed to repair the roof in a timely fashion, which caused additional damage ....
• Business Continuity and Survival Planning for Property Management Companies and Community Associations On Friday, June 18, 2010, Richard B. Linderman, Shareholder and member of the Community Associations group presented a seminar regarding business continuity and survival planning for property management companies and community associations. The seminar was presented at the offices of JGS Insurance in conjunction with their presentation of the TrackMyCerts online program.  Also presenting were Vincent Hager and Ryan Fleming of JGS Insurance.   Vincent Hager is President of JGS Insurance.  Vincent has specialized in Community Association Insurance for the past 21 years.  He has earned the Community Associations Institute's (CAI) Community Insurance & Risk Management Specialist (CIRMS®) Designation in the first year it was available.  Vincent is a Past President of the New Jersey Chapter of CAI, Past Chairman of the National Insurance & Risk Management Committee of CAI, as well as the Past President of the Independent Insurance Agents of Monmouth ....
• Stark & Stark Shareholder Presents Seminar With Respect to Community Associations, Reserves and Loans Shareholder and Co-Chair of Stark & Stark's Community Association & Co-Op & Condominium Group, David J. Byrne, presented materials on financial issues relating to community associations including reserves and loans.  The seminar was entitled "Community Associations, Reserves and Loans."   The presentation was part of the ASSOCIA/RIVER Management "Boot Camp for Board Members" Program, held in Poughkeepsie, New York on June 7, 2010.  Mr. Byrne discussed reserve budgets and funds, and a community association's fiduciary duty in relation to reserves.  He also spoke to the attendees about the power of community associations to borrow money, the process involved with that and commitment and third-party opinion letters.    You can listen to the full presentation online here. (13 MB) ....
• 2010 CAI Law Seminar I recently returned from the Annual CAI Law Seminar in Tucson. As is the norm at these gatherings, attorneys (and some managers) from across the country assemble to take part in a three-day forum on cases of interest from the past year, and breakout sessions for legal seminars on a variety of topics.   From my point of view, one of the more beneficial facets of the Law Seminar is the morning sessions for case updates.  Two speakers provide a synopsis of reported cases in various areas of community associations (such as restrictive covenant issues, assessment collections, etc.).  These are always good to hear (and have copies of the cases) as it provides a reference for those issues that I may have to deal with in New Jersey.  It certainly provides a starting point for issue recognition in certain cases.   Of course, there are always cases discussed that leaves one shaking one’s head and saying to oneself, “Are you kidding me?”  One thing ....
• Stark & Stark Shareholders Present Legal Update on Important and Precedent-Setting Legal Decisions and how they Impact Condominiums, HOAs and Co-Ops Shareholders and Co-Chairs of Stark & Stark's Community Association Group, David J. Byrne and A. Christopher Florio, and Stark & Stark Construction Litigation Group Chair, Donald B. Brenner, presented materials updating everyone on recent and important legal decisions.  The seminar was entitled "Legal and Legislative Update:  Important Decisions, New Laws, and how they Impact Your HOA, Condo. and/or Co-Op".   The presentation was part of the New Jersey Cooperator Expo which was held in Secaucus, New Jersey on May 5, 2010.  Mr. Byrne discussed the United States Fair Housing Act and a recent decision regarding its application to 'companion animals'.  Mr. Florio discussed two recent cases involving the fiduciary duties of board members and the business judgment rule.  Mr. Brenner discussed two key Appellate Division decisions published in 2009, both of which relate to the 'economic loss doctrine' and homeowners’ claims ....
• New Jersey Appellate Court Rules Municipality is not Responsible for Water Lines, Within a Private Community, Situated in Private Property A Montclair, New Jersey Condominium lost its bid to force Montclair to maintain and otherwise care for the water lines between the public right of way along the public roads inside the condominium, and the relevant shut off valves.  A 'curb box' is the housing of an underground shut-off valve linking the main water lien to the service lines which, in turn, are linked to each dwelling.  Typically, curb boxes are located on a public right-of-way or as close to it as possible.  Traditionally, a municipality is responsible for the lines from the water main to the box and the property owner is responsible from the curb box to the dwelling.  As is far too often the case, this condominium's developer made a mistake, and placed the curb boxes away from the right-of-way and within the property of the owner.  Montclair permitted this error during the development stage and had no inspection reports relating to same.   Years after the condominium's development ....
• Post Required Federal Signs for Association Employees As noted in relevant community association-related publications, like Community Association Management Insider, federal law mandates the posting of various signs setting forth information to their employees.  The necessary signs are available free of charge from the federal government.  Failure to post the signs can cost as much as $10,000 per violation. The versions often change so it is important that the current sign be posted.  Your state’s Department of Labor will have the current version. FEDERAL MINIMUM WAGE SIGN Who must post sign.  Anyone who has one or more employees. Content.  The content of the notice is prescribed by the Wage and Hour Division of the Department of Labor (DOL).  The sign exhibits the current federal minium wage and explains wh is eligible for it.  The sign must also include language explaining federal child labor laws and the overtime provisions of the federal Fair Labor Standards Act.  Under the act, employers ....
• Stark & Stark Shareholder Presents Seminar on a Developer's Use of Governing Documents to Ensure the Smooth Transition of a "PREDFA-EXEMPT" Project David J. Byrne, Shareholder and Co-Chair of Stark & Stark's Community Association Group, presented materials related to those New Jersey communities that are "exempt" from New Jersey's Planned Real Estate Development Full Disclosure Act (PREDFDA) and the transition of them to owner control and responsibility. The seminar was entitled Using Governing Documents to Ensure the Smooth Transition of a 'PREDFDA-exempt' project.   The presentation part of the Atlantic Builders Convention which was held in Atlantic City, New Jersey on April 14, 2010.  Mr. Byrne discussed the non-applicable provisions of PREDFDA, a developer's remaining disclosure-related obligations and how all of that relates to a developer's creation of a private community's governing documents.  He addressed the types of provisions that developers should include within those governing documents to ensure a smooth transition, manage purchaser expectations and safeguard the rights of both the ....
• Condominiums and Second Hand Smoke Claims The issue of second hand smoke in a condominium setting has been brought to the forefront recently in several significant ways.    Recently, a lawsuit related to second hand smoke claims in a condominium setting was decided in Massachusetts.  In Burrage v. DeAngelo, et al., a condominium unit owner sued her neighbor, the condominium association and her real estate agent for causing or allowing a hazardous or noxious activity, namely smoking in an adjacent unit.  All but the agent settled with her before trial.  At trial, the Plaintiff claimed that her real estate agent knew that her neighbor was a smoker, but failed to disclose that to her before closing.  The second hand smoke allegedly exacerbated her asthma, causing her significant personal injuries.  The jury found in favor of the agent in less than an hour, and awarded the Plaintiff nothing.  Obviously, real estate brokers and agents must disclose known hazards such as toxic waste sites, ....
• An Ounce of Prevention.... An ancient proverb states that "an ounce of prevention is worth a pound of cure".  Generally, this means that it is easier to forestall a disaster than to deal with it.  Little advice could be more important to condominium associations than this.  Many associations are plagued with a disease more devastating than termites, more troublesome than bed bugs and more financially damaging than delinquent unit owners.  The plague is apathy.  Living in an association requires a different way of thinking, and those of you who live in a community that is affected by uninvolved and disconnected unit owners know how frustrating it can be.  Apathetic communities create an environment where incompetence, greed, fraud and lawlessness are permitted to grow unchecked.      For example, apathetic communities may be unable to amend the governing documents or do significant repairs in a timely fashion because they can't get a quorum of unit ....
• HOA Wins Lawsuit and is Allowed to Maintain it's Gates and Controlled Access in Relation to its Public Roads Many, many years ago the developer of a New Jersey HOA secured township approval of a development plan by which market rate single family homes would be constructed along streets intended to be public.  Thereafter, this developer obtained approval from the township to change the community into an active adult community.  Notwithstanding the change to an active adult community, the roads remained designated as public as no amended site plan or revised developer’s agreement or otherwise was made, filed or recorded.  This developer did however amend its subdivision and site plan to include a gatehouse and gate arm control devices at the community's main entrance and rear entrances.  The developer advised the township at the planning stage that the roads would be public, with this controlled access, but that the public would not be denied access.  The developer eventually represented in the Public Offering Statement that all streets would be municipal roads ....
• Increased Foreclosure Judgments - Getting the Association All It's Owed In 2009, a Stark & Stark condominium client entered a foreclosure judgment against an owner.  After foreclosure unit delays and a breached payment plan, the unit was scheduled for sheriff's sale.  Prior to that sheriff's sale, the unit owner paid the full amount of that judgment plus all sheriff's fees.  Instead of canceling the sheriff's sale and dismissing the foreclosure, we filed a motion before the court seeking to amend the 2009 foreclosure judgment so it would include all of the legal fees, late fees and assessments that accrued since 2009.  During the pendency of the motion, we continually adjourned the sheriff's sale.  The court granted our motion adding $11,000 to the previously paid foreclosure judgment.  The sheriff's sale was then fixed and scheduled with respect to the new and increased foreclosure judgment.   This success and creativity saved the Association from having to commence an entirely new foreclosure.  ....
• StarK & Stark Shareholders to Present Seminars at the 2010 Atlantic Builders Convention Gary S. Forshner and Vincent J. Mangini, Shareholders in Stark & Stark's Real Estate, Zoning & Land Use Group, and David J. Byrne, Shareholder in Stark & Stark's Community Association Group, will present seminars at the 61st Annual New Jersey Builders Association's Atlantic Builders Convention. The convention will be held April 14-16, 2010 at the Atlantic City Convention Center in Atlantic City, New Jersey.   Mr. Forshner will present a seminar on Wednesday April 14th entitled, Converting 55+ to Market Housing, and will present a second seminar Thursday April 15th entitled, Legal Trends - Part I, Land Use Law. Mr. Mangini will present two seminars Wednesday April 14th. The first entitled, Financing & Negotiating Development Contracts and the second entitled, The Legal & Selling Aspects of Building Green. Mr. Byrne will present a seminar Wednesday April 14th entitled Transition - Developer Control to Condo Ownership.   For additional ....
• Handling and Protecting the Association, With Respect to an Owner's Bankruptcy Almost everyday we go online, read the newspaper or watch the news without hearing about our recession, declining real estate values, lending institutions in trouble and the rise in residential foreclosures.  During times like these, it is essential that every community create and maintain an effective, efficient and aggressive collection policy.  Any such collection policy must account for an owner’s bankruptcy. For a bankruptcy filed after October 17, 2005, an owner must pay post-petition fees and assessments due to condominium associations, homeowners associations and cooperative corporations (collectively “Associations”) after that bankruptcy is filed.  If the debtor’s bankruptcy was filed before October 17, 2005, the post-petition assessments must be paid by that debtor only if he either occupies the unit or rents it.  In October of 2005, Congress extensively amended the Bankruptcy Code via a law that was known as the Bankruptcy Abuse ....
• Handling and Protecting the Association, With Respect to the Mortgage Company Foreclosure Undoubtedly, your community and/or building has seen its share of mortgage company foreclosures.  While mortgage foreclosures generally accompany unpaid assessments, and thus may not be welcome, they are in actuality, opportunities for associations.  Knowing what to do, and how to do it, in the face of a mortgage foreclosure is crucial to a community's overall collection policy, and its financial security.  First, a successful and finished mortgage foreclosure results in exactly what an association needs - a paying owner in the unit.  The mortgage company must pay the assessments attributable to that unit from the date of the judicial sale forward. Thus, depending on the circumstances, a quick and successful mortgage foreclosure and judicial sale is a welcome development.  When an association becomes aware of a mortgage foreclosure in its community, and/or building, it must file a responsive pleading, or a notice of appearance.  Because the judicial sale ....
More