Business & Commercial Law Blog
Several different legal authorities govern condominium associations in New Jersey. These authorities include statutory law as well as an association’s own governing documents including its Master Deed and By-Laws. Below is a brief synopsis about the significance of each legal authority:
The New Jersey “Condominium Act” originally enacted in 1969, provides the statutory framework governing condominium associations in New Jersey. The Condominium Act, in-part, significantly defines common elements, limited common elements, and outlines the requirements necessary for the creation and establishment of condominiums and condominium associations. Furthermore, the Condominium Act specifies the legal requirements and contents to be included in a Master Deed, Unit Deeds, defines the responsibilities of associations for the administration and management of the condominium property, the requirements for transition of control from a developer led condominium association board to a unit owner led condominium association board, and finally details the requirements to be included in an association’s by-laws. A number of other terms and requirements are also fully detailed in the Condominium Act, which is undoubtedly the preeminent statutory framework governing condominium associations in New Jersey.
The “Planned Real Estate Development Full Disclosure Act”, commonly referred to as “PREDFDA”, originally took effect in 1978, and has been subject to multiple significant amendments in recent years impacting condominium association board elections and member voting rights. PREDFDA largely provides consumer protection through public disclosure such as requiring real estate developers to provide public offering statements to fully and accurately describe the characteristics of a real estate development, the parcels, units, and interests offered therein, and mandates that real estate developers disclose other specific information relevant to shared interest communities such as condominiums.
PREDFDA also imposes significant legal requirements on condominium associations regarding their reserves and requires that any association of a planned real estate development undertake and fund a capital reserve study to assess the adequacy of an association’s capital funds to meet the anticipated costs or replacement or repair of the capital assets of common interest communities that associations are obligated to maintain.
As noted above, in 2017 PREDFDA was amended, commonly known as the “Radburn Law”, resulting in significant changes to condominium association board election procedures and member voting rights. These changes have impacted the way condominium associations count ballots, provide for the inspection of ballots, provide for anonymous voting, and mandate notice of board meetings and notice of good standing before members may vote in elections. It also includes a number of other regulations relevant to association governance.
The “New Jersey Nonprofit Corporation Act” provides the statutory legal framework governing nonprofit corporations in New Jersey such as condominium associations. This law provides the fundamentals for how nonprofit corporations are formed and ran in New Jersey, including, but not limited to, requiring nonprofit corporations to file a certificate of incorporation with the Secretary of State, requiring an organizational meeting of the board named in the certificate of incorporation to adopt bylaws, elect officers, and provide for initial members if there are to be members of the nonprofit corporation. Moreover, the general powers of a non-profit corporation are detailed at length under N.J.S.A. 15A:3-1.
A condominium association’s “Governing Documents” commonly consist of a Master Deed, Exhibits to the Master Deed, the Certificate of Incorporation, and By-Laws. Each document bears its own significance and legal importance. Primarily, the two most-referred documents impacting a condominium association’s governance are the Master Deed and By-Laws.
The Master Deed is a foundational legal document for condominium associations. The Maser Deed often documents property rights and obligations for condominiums and details the respective responsibilities of both the association and the unit owners.
This document defines not only terms, but often defines property boundaries, the common elements of a condominium community, the limited common elements, unit percentage interests in the common elements, shared common expenses, and significantly defines the respective legal rights and responsibilities of the association and its members.
The Master Deed will also detail assessments that may be imposed by a condominium association, the procedure for imposing said assessments, how annual meetings are held, how notice of meetings are provided, as well as the legal ramifications for violations of a condominium’s rules and regulations, the consequences of not paying assessments, and the remedies an association may avail itself to for unpaid assessments by unit owners.
Moreover, the Master Deed may be amended in certain respects depending on its provisions and often also provides detail about the procedures and requirements for amendment.
The Master Deed and any amendments thereto must be recorded with the county clerk in the county where the property is located. Accordingly, this is a crucial legal authority for a condominium association but will almost always yield to statutory legal requirements.
The By-Laws are also a significant component of any association’s governance as they provide how a condominium association is governed and administered by the Board of Directors or Trustees. The By-Laws contain provisions including, but not limited to, how frequently board meetings occur and the process of how the board meeting is conducted. The By-Laws also often detail the powers, duties, and terms of the Board and provide for the specific rules and regulations governing the association as well as the fining structure for violations of said rules and regulations.
Ultimately, condominium association board members and property managers should always consult with experienced attorneys regarding any questions or concerns that they have instead of trying to interpret what at first glance may appear like a confusing legal maze of complicated and nuanced legal statutes and governing document provisions. While a condominium association’s governing documents are extremely important foundational documents, they are not the only prevailing legal authorities and often yield to statutory law. Accordingly, it is always best to consult with attorneys experienced in New Jersey Condominium Association law with any questions you may have about your community.
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