On April 14, 2020, Governor Murphy signed Assembly Bill 3903 into law. The text of the Bill may be reached by clicking here: https://www.njleg.state.nj.us/2020/Bills/A4000/3903_R1.PDF  The new law provides for notarizing documents remotely during the public health emergency and state of emergency.

Among other things, notaries confirm from personal knowledge or from satisfactory evidence that the person appearing before them is the person whose true signature is on the document. In New Jersey and certain other states, lawyers may also acknowledge documents.

Although it is easy to become a New Jersey notary. Acknowledging documents and performing the other duties of a notary is serious business. In his article Signed, Sealed, Delivered…Disbarred – Notarial Misconduct by Attorneys, available by clicking here: https://repository.jmls.edu/cgi/viewcontent.cgi?article=1644&context=lawreview   Christopher B. Young surveyed improper notary practices by attorneys and the sanctions that followed such activity.  31 J. Marshall L. Rev.1085 (1998). In especially egregious cases attorney discipline has been severe.

Mr. Young’s article, highlights instances where lawyers attempted to defend themselves by claiming that it was common practice for attorneys to have notaries notarize clients’ signatures without the client being present, such arguments were rejected. A quick review of New Jersey Attorney Disciplinary Decisions reveals that the New Jersey Supreme Court has reprimanded at least two New Jersey attorneys for execution of improper acknowledgments.

The above being said, notary duties must be taken seriously and the new law, in sum provides:

During the public health emergency, except with respect to the exceptions in the law, notaries may take acknowledgements remotely via communication technology that allows the individuals to communicate with each other via sight and sound if:

  1. The notary has (a) personal knowledge of the identity of the person appearing, (b) has evidence by oath via a credible witness also appearing before the notary or (c) has obtained satisfactory evidence of the identity of the remote-located individual by using at least two different types of required identity proofing and
  2. The notary is reasonably able to confirm that the document before the notary is the same document on which the remotely located person executed a signature and
  3. The notary creates and maintains for ten years an audio-visual recording of the performance of the actions required.

Further, the acknowledgement shall state that the document was notarized using communication technology. Consult your lawyer for details. This law helps during the crisis, but the process must be followed.

I hope you and your family had a nice weekend despite the social distancing.  I write to follow up on my April 10th e-mail.  This morning the Senate met virtually and tabled S2330.  You may read the bill by clicking here: https://www.njleg.state.nj.us/2020/Bills/S2500/2330_I1.PDF.   A3908 is currently identical.  My understanding is that, when the Assembly meets this afternoon, it will table A3908.

Thank you to everyone who reached out to their Senators and Assembly Members and voiced concern on these bills.  They could cripple Condo. Co-Op and HOA cash flow.

The fact that these bills are tabled for the moment however does not mean that we should rest.  Versions of these bills will likely resurface shortly.

If you have not done so already, please reach out to your State Senator and Assembly Members and voice your concerns.  Contact information for State Senators and Assembly Members may be found here:  https://www.njleg.state.nj.us/members/legsearch.asp

I have written the following: “Dear Senator and Assembly Members:  Please revisit the above bill and either exempt or make specific provision for collection of Condo, Co-op and HOA assessments.  These Associations are financed on zero-based budgets.  There is no profit built in.  The annual expenses are distributed among the members.  If the assessments are not collected, the Associations will not have the funds to pay their expenses.”

I cited the below as language some associations are using when considering forbearance requests:

•          Arrearage will accrue for May and June 2020’s assessments (the “Accrued Assessments”).

•           Late fees will accrue for May and June 2020’s assessments (the “Accrued Assessment Late Fees”).

•           Membership rights will not be suspended for failure to timely pay May and June 2020’s assessments so long as they are paid as provided for in this agreement.

•           Unit Owner must timely pay all Association obligations arising on July 1, 2020 and thereafter beginning on July 1, 2020 and thereafter.

•           Unit Owner must also pay Accrued Assessments in six equal payments beginning on July 1, 2020 and on the first day of each month thereafter until all Accrued Assessments are paid in full.

•           So long as the Accrued Assessments are timely paid in six equal payments beginning on July 1, 2020 and on the first day of each month thereafter and all Association obligations that arose on July 1, 2020 and thereafter are timely paid in full, the Association will waive Accrued Assessment Late Fees;

•           So long as this agreement is timely complied with, the Association will forebear from collection action with respect to the Accrued Assessments.

•           So long as the Accrued Assessments are timely paid in six equal payments beginning on July 1, 2020 and on the first day of each month thereafter and all Association obligations that arose on July 1, 2020 and thereafter are timely paid, the Association will take no legal action with respect to the Accrued Assessments.

I noted that Associations are addressing forbearance agreements depending on their populations and financial positions.  So, for example, certain Associations are forbearing for May and June while others may be forbearing for longer.

I advised that, although we may or may not represent an Association in their District, the Associations in their district work hard to keep the Associations on sound financial footing.  I suggested that the Legislators contact the President of one of the Associations in their district for feedback.

Again, please reach out to your State Senators and Assembly Members.  Emphasize the great work that you do, emphasize that your Association is showing flexibility via forbearance agreements (if true) and emphasize that, though perhaps well-intentioned, hampering Associations’ ability to collect will do more harm than good.  Thank you.

I write to follow up on my April 3, memo suggesting assessment forbearance agreements for certain Association Members. Late in the day yesterday State Senators Joseph P. Cryan and Nellie Pou introduced Senate Bill S2330; State Assembly Members Mila Jasey, Verlina Reynolds-Jackson and John McKeon introduced Assembly Bill A3908. The Senate and Assembly Bills are identical for the time being. A copy of Senate Bill S2330 may be found here: https://www.njleg.state.nj.us/2020/Bills/S2500/2330_I1.PDF

The proposed legislation will impact Association cash flow. It could make it more difficult or impossible for Associations to perform their critical functions. It could make it more difficult or impossible for Associations to pay the individuals and small businesses Associations employ.

There is speculation that these bills may be voted on this Monday, April 13, 2020. The timing of this proposed legislation is a great concern. Among other things, Passover, Good Friday and Easter have justifiably drawn Association Members’ attention to family and spiritual commitments.

Assessment revenue is the lifeblood of every Community Association. There should be adequate time for Association Members and others to consider and comment on this legislation. To a degree, the crisis has already hobbled collection efforts.

We have advocated forbearance agreements and encouraged flexibility. We continue to do so. We ask that you reach out to your State Senators and Assembly Members and request that they not vote on this proposed legislation until Association Members and others have had time to consider and comment on it.

You may find your legislators by clicking here https://www.njleg.state.nj.us/members/legsearch.asp

Thank you.

Why isn’t the pool open? What am I paying my assessments for anyway!?

The Fourth of July is a little less than 100 days away.  Memorial Day, a little less than 60 days away.  The Coronavirus crisis continues.  Why are we talking about the pool now?

Some contracts are already in place.  What do we do with them?  Should we modify?  Should we cancel?  Should we breach? Will we be sued?  What will the damages be?

Pool vendors want contacts signed now.  Understandably pool vendors want to plan their season, staffing and financials.

Memories are short.  As every property manager and board member knows, memories are short.  Even after a national crisis, manager and board member appreciation cannot be expected.  Why isn’t the pool open again?

Pool Demand: We May Want the Pool Open at Some Point. People have been shut in their homes for weeks and will likely be shut in their homes for weeks to come.  If the coronavirus crisis abates, residents will want to use the pool immediately.  Pool vendors may not be able to get pools open in a timely manner.

Pools require maintenance anyway. 

Pool contractors have an interest in making money and keeping their employees working.  While allowing for their self-interest, some pool experts recommend opening, operating at a minimum level and closing even if the pool is never open to swimmers in 2020 (the “No Swimming Option”).

Reasons cited include:

-pools that are not maintained can become a breeding ground for mosquitos and other pests,

-pools that are not opened and maintained become swamps and will take longer to open,

-equipment works better when it is runs rather than when it idles for more than a year and a half,

-last year’s winterization may only be good for last year: plugs may have fallen out, lines may have filled with water, chemicals may have dissipated. The pool should be winterized again.

So?  Communicate the conundrum to your residents.  Attempt to understand consensus.  Do not underestimate the value of relationships.  Pool vendors want to work with you and with your management company.  You should want to work with them.  My experience has been that there is not an overabundance of good pool vendors.

Be optimistic about the coming pool season.   The Associations and the vendors should consider their BATNAs.  What’s the best alternative to a negotiated agreement?  Fighting is a lose-lose.  Incorporate a No Swimming Option in agreements.  Although I strongly prefer guarded pools, under certain circumstances, Association pools may go without guards anyway.  Estimate damages in case of breach.  Damages are often far less than the contract price and may justify the No Swimming Option anyway.  Negotiate a discount for prepayment – vendor cashflow is key to many or, negotiate a longer payment period – association cashflow is key to many. Regardless, the coronavirus crisis will pass, and Association management, counsel and pool vendors should be able to reach accommodations acceptable to all.

The above information is not legal advice and shall not create an attorney-client relationship.  This information is general and may not be applicable to your particular circumstances.  You should review your particular circumstances with Association counsel.

Contractor Relations & Disputes

1.         Do not sign the contractor’s proposal.
2.         Have an attorney prepare anything larger than a nominal contract.
3.         Make sure any conflicts of interest are fully disclosed and acknowledged in writing.
4.         Review the contract’s termination language carefully – how do you get out if you have to
5.         Keep current proof of insurance on file.
6.         Communicate dissatisfaction in writing.
7.         Terminate the contract according to the contract’s termination provision.
8.         Do not hire a replacement contractor until the old contractor is terminated.
9.         Keep the money if performance has been unsatisfactory.
10.        Advise your attorney of any dispute early.
11.        Bite back if you have a claim against the contractor.
12.        Preserve all evidence if possible.
13.        Notify your insurance carrier of damage, dispute and/or lawsuit.
14.        Get signed release agreements before paying anything toward disputed sum.

We are regularly asked how Associations can save money on attorney fees.  Some argue: “go with an hourly agreement, that way the Association can control the attorney’s work.”  Others might argue: “flat-fee retainer agreements are best; budgeting will be easier.”  Still others might say: “a contingent fee arrangement is best, that way the Association won’t have to pay unless the attorney wins.”

While these answers and others may be right in certain circumstances, the real answer, sure to save attorney fees in virtually every Association, is: “Hire strong management, pay fair management fees and use management personnel properly.”

Seems like a simple answer but, counterintuitively, at a time when few manager resumes are circulating, management fee proposals are bent on a race to the bottom.  I do not know what is driving this. Board demands?  Desire for market share?  Ability to sell ancillary services?  Increased technology usage?  A combination of these factors?  Regardless, isn’t it a matter of pay management today or pay way more in legal tomorrow?  Worse, isn’t it a matter of pay management today or pay way more in legal, audit, engineering, contractors etc. tomorrow?

Experienced, trained and dedicated managers are effective.  Among many other things, they help with risk management and insurance; specifications, bidding and moving projects forward, managing the budget, collecting delinquent fees, managing personnel, maintaining books and records, resolving disputes, etc., etc.

Failure to properly deal with risk management leads to more insurance claims.  Failure to properly deal with insurance claims means coverage denial.  Failure to properly deal with specifications, bidding and project management leads to flawed projects, cost-overruns and lawsuits.  Failure to properly budget and collect Association fees leads to lack of reserves, special assessments, large increases, borrowing and collection lawsuits.  Failure to properly manage human resources leads to unnecessary costs, work not getting done and lawsuits.  Failure to properly maintain books and records leads to an inability to manage, member suspicion and lawsuits.  Failure to promptly address disputes leads to lawsuits.

We do not own a management company, but we work with most of them.  Associations should be keenly aware that the management fee supports the manager and much more.  When considering a management company proposal, the cost should be one selection factor but not the primary factor.  We perform great legal work and appreciate Associations paying our legal fees, but we encourage Associations to hire strong management, pay fair management fees and use management personnel properly.