Litigating against a community’s developer over construction defects and other issues is a long, slow and expensive process. An average transition lawsuit can take between five (5) and seven (7) years to reach conclusion. As if the glacial pace were not bad enough, if an association pays for its transition litigation “out of pocket”, attorney fees could cost $750,000 or more, even if the matter does not reach trial.
The transition process involves an engineering evaluation of the Association’s common elements to determine if there are defects. The engineer’s evaluation typically identifies defects within the site improvements, for example, the landscaping, roadways, sidewalks, detention basins, etc. These site improvements are often subject to performance bonds with the municipality.
On July 13, 2017, the State enacted P.L. 2017, Ch. 106 often referred to as the Radburn bill, a supplement to the Planned Real Estate Development Full Disclosure Act intended to ensure Condominium, HOA, and Cooperative elections are conducted in a fair and open manner. The new Law contains important new procedural and substantive requirements for: (1) Membership Voting Rights; (2) Board Elections; and (3) Bylaw Amendments. Management and Boards must navigate these new requirements carefully, else they may face costly challenges to the validity of Association elections and Bylaw Amendments.
In an October 21, 2016, published decision titled In Majorca Isles Master Ass'n, Inc., 560 B.R. 824 (Bankr. S.D. Fla.) (“Majorca Isles”), the United States Bankruptcy Court awarded a Florida Master Association with an incredible $16.3 million judgment against a developer and its appointed trustees, in what the Court described as a “modern day story of David and Goliath.” Setting aside the transition aspects of the case, the decision provides an excellent guide for boards and property managers – particularly those involved with master associations – facing issues of poor record keeping and conflicts of interest.
What happens when a unit is in collections and then upon a title search, we determine there is no mortgage on the property?
This is a common situation when the property was bought a long time ago, and the debtor recently fell on hard times or the debtor is a relative that inherited the unit from the deceased owner. Although the mortgage is paid, the debtor cannot pay their monthly maintenance fees.
Access Property Management
Eric Koehler, Vice President of Falcon Drone Services and Fran McGovern from McGovern Legal Services along with Access Property Management presented the benefits of using drones in community associations on Wednesday April 12. The demonstration was open to both board members and property managers in the Hills Communities. All were excited to see how the new technology worked. The presentation provided a demonstration of the drone in use. All participants were encouraged to provide comments and questions.
Become a Notary: It Helps Your Association! It’s Easy! It’s Cheap!
By: Fran McGovern, Esquire
“Transition” is the due diligence process required by the board members’ fiduciary duty. In sum, the homeowner-elected board members must determine if the sponsor did what it was supposed to do and, if not, take action to get the deficiencies corrected. Upon assuming board control homeowner-elected board members must:
1) evaluate the association’s physical and financial condition;
2) communicate the findings to the members and the sponsor;
3) negotiate for repairs, money or a combination of repairs and money.
In Birch Glen Condominium Association, Inc. v. Boahene, the motion judge denied the association’s motion to sell the unit because the mortgage company was in the process of foreclosing and the motion judge did not believe the association should be able to sell or rent the property after the mortgage company started the foreclosure process. On appeal, we successfully argued and won a reversal of that ruling and affirming the right of associations to sell units to satisfy money judgments, so long as the debtor has no other personal assets.
New Jersey, along with many other states, has adopted a Smoke-Free Air Act (the “Act”) that bans smoking tobacco or electronic cigarettes in the workplace and in indoor public places. Most people are aware that this ban extends to restaurants and stores, but the definition of “indoor public place” also includes an “apartment building lobby or other public area in an otherwise private building.”