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Golf Carts & Low Speed Vehicles

Posted on Author By Francis J. McGovern, Jr., Esquire

Do they really mean “golf carts” or are they talking about “low speed vehicles” a/k/a “neighborhood electric vehicles”.  Golf carts in the strict sense are “off road vehicles”, that being said, LSVs and NEVs are not.  LSVs and NEVs are typically limited to 25 or 30 miles per hour and are subject to National Highway Traffic Safety Administration regulations as well as to certain Federal Motor Vehicle Safety Standards.  We represent many active adult communities and although we have not had to prepare such a resolution yet (some just allow golf carts), we encourage our age restricted communities to seriously consider golf cart/LSV/NEV resolutions.  Not only are these vehicles, if properly regulated, convenient, as residents “age in place” there is a strong probability that such vehicles will permit residents enhanced mobility and/or be required as “reasonable accommodations” for certain handicapped people – we have already seen such cases come out of Florida courts

Protecting Against Slip & Fall Claims

Posted on Author By The Association Lawyers

It happens every winter. The Association is hit with yet another bad snowstorm. The snow removal crew arrives early and is attempting to clear the snow faster than it falls. Meanwhile a resident has decided to take his daily constitutional around the Association. The resident slips at the end of his driveway on a patch of ice and breaks his wrist during the fall. He sues the Association and is awarded significant damages. In addition to a snow assessment to cover the unpredicted snowfall, owners can now expect increased insurance premiums due to the slip-and-fall lawsuit.

This situation occurs frequently within associations.  However, an association can protect itself from this expense by passing a Tort Immunity Amendment. A Tort Immunity Amendment helps insulate an association from liability in a lawsuit filed by one of its members for a personal injury, such as a slip-and-fall claim.  Without this amendment in place, if an owner slips and falls on the association’s common property, the association often times is held liable for damages. This expense is then passed on to all owners through increased insurance premiums.

With a Tort Immunity Amendment in place, an owner’s ability to be successful in a lawsuit against the association is limited. It is important to note that this amendment does not grant the association complete immunity to act without the potential for liability.  The association may still be held responsible for any willful, wanton or grossly negligent act or failure to act.

With the winter months quickly approaching, it is imperative to review your association’s governing documents to ensure that the association and its members are protected against personal injury claims that frequently arise during this season and the resulting expenses. If an association does not yet have tort immunity, it can adopt an amendment to its bylaws providing for such immunity. By statue, at least 2/3 of the membership must vote to approve such an amendment.

Easing The Burden Of Vacant Units

Posted on Author By The Association Lawyers

In these tough economic times, it seems no association is immune to the burden of vacant units. While failure to pay assessments is the most obvious problem, vacant units can introduce a host of other problems from squatters to burst pipes. While there is no quick fix or magic formula to correct the scourge of vacant units, there are steps that every association can take to ease and even eliminate the financial and maintenance burden vacant units can create.

If the association is willing to rent units, often the best option is to contact the owner of a vacant unit to see if they would consider signing a quitclaim deed or a rental agreement. A quitclaim deed transfers ownership of the unit to the association, subject to any mortgage or other liens on the property. A quitclaim deed offers two enormous benefits. First, the association can rent the unit and begin recouping the arrears that have been accumulating. Second, the association can monitor and control the unit and ensure that it does not become a health and safety hazard in the community. A rental agreement provides the association with the authority to rent the unit on behalf of the landlord and collect the rents. It offers many of the same benefits as a quitclaim deed, but without the permanency of actually transferring ownership. In either case, the association should ensure that the unit is in rentable condition – or can be made rentable for a reasonable cost – prior to entering into any agreements.

In New Jersey, a mortgagee who takes possession of a unit is responsible for pay ongoing assessments throughout its possession. If a mortgagee has taken possession of a unit, the association can pursue the mortgagee directly for unpaid assessments. It is a fact sensitive inquiry as to when a mortgagee has taken possession. Whenever it appears that a mortgagee has become involved with a unit, it is best to contact the association’s attorney to determine what options the association may have.

Beyond collections, vacant units also can create nuisances and even health and safety hazards. N.J.S.A. 46:10B-51 requires foreclosing mortgagees to maintain vacant and abandoned properties. While the mortgagee does not have to keep a property in pristine condition, it is responsible to ensure that the property does not become a nuisance or violate any state or local code. If a vacant unit is in disrepair, the association can demand that the mortgagee make the necessary repairs and, if it fails to do so, notify code enforcement who should then force the mortgagee to make necessary repairs and perform necessary maintenance.

Lastly, with the temperature continuing to drop, associations may be forced to take some maintenance and repairs into their own hands. If a vacant property has not been winterized by the mortgagee, every association with attached units should hire a plumber to winterize any vacant units. Pursuant to the Condominium Act, N.J.S.A. 46:8B-15(b), an association has the right to enter a unit during reasonable houses “to perform emergency repairs necessary to prevent damage to common elements or to any other unit or units.” Therefore, the association may step in to winterize properties in order to prevent the extensive damage that can be caused by a burst pipe. The association can also bill back the costs of the repairs to the unit owner. While this may seem like an added cost to the association, the cost of winterization is minimal compared to the costs of repairing the area surrounding a burst pipe, not to mention the inconvenience to the surrounding units. This same logic can be applied to other unit owner responsibilities, like a broken window or door. Keeping vacant units secure is the best way to protect the entire association and to prevent much greater costs down the road.

While vacant units are never welcome, they can be controlled and even become income generating assets if the association is proactive.

Winterize Vacant Units

Posted on Author By Michael Polulak, Esquire

It’s that time of year again… when extreme cold can cause pipes to burst in vacant units.  In light of this, it is important that managers gain access into known vacant units to winterize them.  This avoids unnecessary insurance claims and premium increases caused by ruptured water lines.

The Condominium Act provides authority for condominium associations to gain access into a unit for the purposes of protecting the common elements and adjoining units.  The statute, N.J.S.A. § 46:8B-15(b), also permits the condominium association to charge any costs incurred in gaining access and winterizing the unit back to the unit owner.  However, prior to gaining access into the unit, the Association should provide reasonable notice to the unit owner and advise that the unit owner that they will be liable for any costs incurred in gaining access and winterizing the unit.

Further, N.J.S.A. § 45:22A-44(b) authorizes homeowner and townhome association boards to exercise its powers in a way that protects the health, safety and general welfare of the residents of the community.  In addition, each association’s governing documents typically provide additional authority permitting the Association to gain access into units in the event of an emergency.  Between the authority granted  in the association’s governing documents and N.J.S.A. § 45:22A-44(b),  homeowner and townhome associations generally have sufficient authority to gain access into vacant units upon reasonable notice to the owner to winterize them for the purpose of protecting adjoining units and common elements.

So, if there is any indication that a particular unit is vacant and not winterized, then we advise that management or our office send a notice to the owner advising that the Association will gain access to the unit to determine whether it is vacant and whether it has been winterized.  If vacant and not winterized, then the association will winterize the unit and charge the unit owner back any costs incurred.

Rules. Rules. Rules.

Posted on Author By The Association Lawyers

 

You hated them as a kid. You wish they were no longer necessary as an adult. But in community living, having some rules is a necessity. Many of these rules are established in the process of creating a condominium, homeowners or cooperative association. To change these initial rules, which are most often found in the declaration, master deed, bylaws or proprietary lease, associations must typically obtain a vote of the membership to amend the governing documents.

However, Boards of Trustees are also empowered with certain rule-making authority. Such rules are best adopted via a board resolution, which must be voted on by the board at an open meeting of the membership – whether any members show up to the meeting, or not. Each association may have unique needs that have to be addressed with unique rules, but almost every association can benefit from implementing certain standard rules and regulations.

Rules that May Reduce Increases in Insurance Premiums

Although there is no direct correlation between these rules and an association’s insurance premiums, when associations implement policies that reduce the likelihood of lawsuits and insurance claims – two important factors in determining insurance premiums – there is a strong chance that their future premium increases will be lower. Some of these rules are:

  1. Adopt a board resolution requiring owners to conduct dryer vent and chimney cleanings and inspections at least every two years. This reduces the risk of lint and soot-related fires – fires that could result in increased insurance premiums.
  2. Adopt a board resolution requiring owners to replace water heaters after a specific number of years. Water heaters are generally expected to have useful life of eight to twelve years. Unfortunately, without a rule requiring timely replacement, many people will wait until their water heater malfunctions before replacing it, and water heater malfunctions frequently result in insurance claims for water damage and increased premiums.
  3. Adopt a board resolution requiring owners to install burst resistant washing machine hoses. Along with failed water heaters, leaking or burst washing machine hoses are probably the top causes of insurance claims for water damage in associations. Stop this problem before it happens.
  4. Pass a Tort Immunity Amendment to the Bylaws. This limits an association’s liability for injuries that occur on the association’s property, but it does require at least a two-thirds vote of the membership. The two-thirds requirement is a minimum set by statute, but if the bylaws that are being amended have a higher amendment threshold, then the higher voting percentage will apply.

Rules that May Increase Revenue

Assessments are the financial lifeblood of associations. Unfortunately, over the past five to six years, delinquencies have increased substantially. Some people just do not have the money to pay, but others may simply have put their assessments further down their list of priorities. In order to increase collections and revenue from other sources, associations should consider the following rules:

  1. Adopt a Parking and Towing Resolution. Not only should this resolution contain parking rules, but it can – and should – contain provisions that permit the towing of delinquent unit owners’ vehicles. It is amazing how often a payment plan is proposed after a trip to the vehicle impound. (Of course, it is critical to ensure that all towing is conducted in compliance with the Predatory Towing Prevention Act.)
  2. If an association has the authority to fine unit owners, it should set up a system and schedule of fines for violations of the rules. Ideally, the bylaws permit the board to set the amount of fines, and in such cases, it is possible to establish an escalating system of fines, such as $50 for the first violation, $75 for the second and $100 for the third and subsequent violations. However, it is important to remember that, before these fines can be collected, the member charged with the violation(s) must be given an opportunity to participate in alternative dispute resolution (ADR).
  3. Associations that do not have the authority to assess fines, charge late fees or accelerate assessments should attempt to adopt an amendment to their governing documents to establish these powers. Since these powers must generally be in the bylaws, master deed, proprietary lease or declaration, an amendment is necessary to add them. Without the “teeth” of a fining authority, it is very difficult to enforce rules. Without the ability to charge late fees, it is very difficult to enforce timely payment of assessments, and without the ability to accelerate assessments, associations’ liens and judgments will almost always be less than the amount truly owed within a month.
  4. Adopt a leasing amendment to empower the association to immediately collect the rents of delinquent owners who lease their units. Not only can a leasing amendment allow associations to collect tenants’ rents, but it can also increase associations’ ability to enforce rules against the tenants. If a landlord does not evict his problem tenants, the association can step into his shoes and conduct the eviction – charging the costs back to the landlord.

These lists are just a sampling of the strategies that associations can implement when making rules that can lead to reduced expenses, improved enforcement and increased revenue. We have an expansive fixed fee “menu” of various resolutions we could discuss with the board.

How a Leasing Amendment Pays for Itself

Posted on Author By The Association Lawyers

Passing a leasing amendment is desirable because it helps to maintain the quality and character of the community.  A leasing amendment benefits a community in two main ways:

  1. By providing an association with a means of evicting nuisance tenants
  2. By enabling the association to collect rent directly from tenants when unit owners become delinquent.

A leasing amendment will also pay for itself in the time and money saved in these two scenarios.

Scenario 1: The Problem Tenant

Every association encounters problem tenants.  However, without a leasing amendment, many associations are limited in their ability to evict such tenants.  A leasing amendment provides an association with the authority to evict a nuisance tenant if the owner fails to do so in a timely manner.  Thus, a leasing amendment enables an association to quickly and effectively remove problem tenants from the community.  This not only saves time, it also maintains a pleasant community atmosphere which helps to attract and retain good unit owners and tenants.

Scenario 2: The Delinquent Unit Owner

Unit owners who fail to pay assessments have a huge effect on an association’s bottom line.  A leasing amendment permits an association to collect rent directly from a unit owner’s tenant when the unit owner becomes delinquent.  This is particularly beneficial to an association because the association can do so without taking on the duties of a landlord.  Instead, the owner remains responsible for all duties as landlord.  Once the association has collected enough rent from a tenant to satisfy the owner’s obligations, the owner simply resumes collecting the rent.

Without a leasing amendment, an association will usually be forced to file a complaint against the landlord, obtain a judgment and attempt to execute a rent levy. Compared to the automatic assignment of rents that can be implemented through a lease amendment, this is a long and expensive process.   A leasing amendment solves the collections problem when a tenant is paying rent in a delinquent unit.  Not only can the association avoid going to court, the association has automatic access to a source for collections.  The collections obtained based upon adopting a leasing amendment can easily pay for the amendment itself—usually with the first rent check collected.

Why Not Just Pass a Resolution instead of an Amendment?

An amendment to an association’s governing documents takes more time and effort than the board passing a resolution.  Why not pass a resolution to deal with the issues outlined above?  The simple answer is that while a resolution may be easier to pass in the short term, it can create enforcement challenges down the road.  In order to be able to enforce the same type of provisions outlined above with a resolution, every tenant would have to sign a lease rider permitting the association to collect rent directly.  This creates excess administrative work and takes up valuable time—if it can even be accomplished.

Borrowing For Large Projects

Posted on Author By Damon M. Kress, Esquire

Embarking on projects that are so costly that the association is required to finance the project through a bank loan.  The first mechanism limits the association’s “power to spend.”  In these instances a provision is included within the governing documents limiting the association’s ability to spend, more than a predetermined sum, on any given project without first securing approval from a specific percentage of the community’s membership.  These provisions provide the membership an opportunity to pass upon what the governing documents classify as “large” projects before the board obtains the authority to spend those funds.  These provisions also protect the membership against being compelled to pay for a large project unless a sufficient percentage of the community agrees that that the project is necessary.

The second mechanism that may be included within an association’s governing documents limits the association’s “power to borrow” in order to fund a specific project. In these instances a provision is included within the governing documents limiting the association’s ability to borrow more than a predetermined sum without first securing approval from a specific percentage of the community’s membership.  These provisions provide the membership the opportunity to pass upon whether the association should be permitted to borrow funds to complete what the governing documents classify as “large” projects before the board obtains the authority to borrow those funds.  These provisions also protect the membership against being compelled to repay loans for large projects unless a sufficient percentage of the community agrees that that the project is necessary.

Although your governing documents may not include both provisions, if either provision is present, the association’s board of trustees should be cautious about attempting to secure a bank loan to finance a large project without first securing the membership’s approval.  In an Unpublished Opinion issued on January 22, 2013 in Claridge House One Condominium Association, Inc. v. Claridge House Owners for Justice, et al., 2013 N.J. Super. Unpub. LEXIS 135 (App. Div. 2013) the Appellate Division of the New Jersey Superior Court affirmed the trial court’s decision limiting the association’s power to borrow money unless it first obtained the membership’s approval to spend the money on the project for which the funds were borrowed. This “Unpublished Opinion” is not officially binding on any courts throughout the state.  However, it should provide board members insight in what it likely to happen should their association fail to heed its warning.

Open Board Meetings

Posted on Author By Francis J. McGovern, Jr., Esquire

Open Board meetings are generally the most stressful part of any board member’s tenure.  We all know that people who come to open meetings are usually not there to let the board know what a wonderful job they are doing.  Instead, at best, they are there to listen, note problems and offer suggestions and, at worst, they are there to complain, berate and embarrass.  In spite of this, open board meetings should be embraced.

Open meetings are required by law. Both the Condominium Act, N.J.S.A. 46:8B-13, and the Planned Real Estate Full Disclosure Act, N.J.S.A. 45:22A-46, require that, with limited exception, if the Board is going to make a binding decision, that decision must be made at a public meeting open to attendance by all unit owners1.  This means that the membership must be allowed to watch.  This does not mean that the membership participates in the decision.  Further, all unit owners must have been given adequate prior notice of the meeting.  The notice requirements are ordinarily specified in each association’s by-laws although N.J.A.C. 5:20-1.2 actually defines “adequate notice” in the condominium context and this section might be applied by analogy to home owners associations.

Topics specifically excluded from having to be decided upon at an open public meeting and reserved for executive session are:

(1)  Any matter the disclosure of which would constitute and unwarranted invasion of individual privacy.  Often this involves debtor account collection decisions.

(2) Any pending or anticipated litigation or contract negotiations.  Often this involves transition decisions and vendor negotiations.

(3) Any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer.  This generally includes attorney-client communications.  Although there are exceptions, when in doubt, attorney communications and decisions requiring substantive attorney involvement should not be made at open meetings.  Note that involving the attorney in a decision cannot be used as a sham to permit decisions that would otherwise be required to be made at an open public meeting to be made in a closed session.

(4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association.

Besides open meetings being required by law, they are the keystone of Association  communications.  Association members can hear, first hand, what the Board is doing.  Further, open meetings provide a forum where Board members can stay in touch with membership concerns via the public comment session.  Although associations are not compelled to have public comment sessions, not having public comment sessions is unwise.  Although it must be explained that the membership does not participate in the decision making and they do not vote, excluding public comment is a recipe for mistrust, unrest and resentment.

Particular open meeting formats vary and are beyond the scope of this article however, each association should work with its manager, attorney, accountant, engineer etc. as the case may require to formulate the format that works best.  If it is anticipated that uncomfortable issues will be raised, they should be discussed with management and professionals prior to the meeting.  Often board members and other residents hear of “hot topics” long before others do.  Anticipation and preparation are essential to smoothly addressing “hot topics”.  In fact, more often than not, “hot topics” are better first raised by the board at open meetings rather than the members.  Membership generally appreciates this preemption.  The Board appears more informed and involved and it often steals the thunder of those who may be lying in wait to spring a hot topic on the Board.  In the end, open board meetings are required, are good and should be viewed as an opportunity to inform the members, listen to the members and showcase the board’s work.

1  Note that the board may meet in workshop sessions but may not make decisions at these workshop sessions.

How Is Your Association’s Immune System?

Posted on Author By Francis J. McGovern, Jr., Esquire

Around this time each year many people get vaccinated against the common but debilitating illness, the flu. If you ask these people why they get their annual flu shot, they may respond with that common expression, “an ounce of prevention is worth a pound of cure.” Since prevention is at the forefront of so many people’s minds this time of year it is also a good time to determine whether your association is properly immunized against a common but debilitating condition affecting so many communities, the slip-and-fall or trip-and-fall personal injury lawsuit.

One of the most powerful tools an association can use to protect itself against these claims is the tort immunity afforded to community associations pursuant to N.J.S.A. 2A:62A-12. et seq. According to these statutes, as long as the necessary language is included within the Association’s bylaws, the association will not be liable in any personal injury lawsuit brought by a unit owner for bodily injury occurring on the association’s property. See, N.J.S.A. 2A:62A-13(a). However, the immunity afforded under these statutes will not apply if the association’s willful, wanton or grossly negligent conduct causes the unit owner’s injury. See, N.J.S.A. 2A:62A-13(b).

The power of this statutory immunity to insulate an association from liability was recognized by our State Judiciary as recently as September 25, 2013. In the Unpublished Decision in Marion Costa v. Shadow Lake Village Condominium Association, Inc., et al., 2013 N.J. Super. Unpub. LEXIS 2342 (App. Div. 2013) the Appellate Division of the New Jersey Superior Court affirmed the trial court’s decision to dismiss a unit owner’s claims against the association, and the association’s property manager, for injuries arising out of a slip-and-fall on the common property, because a tort immunity provision was included within that association’s bylaws. In Shadow Lake, both the Appellate Division and the trial court concluded that the circumstances leading up to the unit owner’s injuries may, at worst, be characterized as simple negligence. Fortunately for the association in Shadow Lake, the language within the association’s bylaws rendered it immune to such claims.

Although the tort immunity afforded by N.J.S.A. 2A:62A-12. et seq, is a powerful tool against personal injury claims, the overwhelming majority of bylaws implemented by developers during original construction do not include the language that is necessary to secure this protection. If that is the case in your community, tort immunity is only one simple amendment away. According to N.J.S.A. 2A:62A-14(a) tort immunity can be added to any set of bylaws by an amendment approved by a two-thirds vote of the association’s membership. Once adopted, the immunity will then apply to any actions for injuries sustained after the date the new bylaw provision becomes operative. See, N.J.S.A. 2A:62A-14(s). Please give us a call if you would like to discuss implementing tort immunity in your association.

DCA Regulations Positive or Punitive?

Posted on Author By Francis J. McGovern, Jr., Esquire

On June 3, 2019, the New Department of Community Affairs (the “DCA”) proposed regulations that would significantly impact Association governance. Many of you raised concerns with respect to the proposed regulations.
On Monday, May 18, 2020, with few modifications, the proposed regulations became effective. The DCA issued a 112-page document outlining the public comments and the DCA’s responses. That document is available by clicking here: PREDFA Regulations May 18, 2020 The DCA declined requests for hearings on the public comments.
The good news is that, decades before the proposed regulations, most Associations, Board Members and Managers worked hard to provide transparency, member participation and good governance. Theoretically, not much should change for them.
The bad news is that, because of the relatively few bad-apple Associations, all Associations, Board Members and Managers are now saddled with micro-regulation backed by the threat of fines and penalties.
It is hard to know where this will lead. Increased transparency, member participation and good governance? I hope so. Increased administrative expenses? Yes. Increased D & O claims? Most likely. Decreased volunteer participation? I hope not. “Wag the dog” politics? Sadly, probably.
Let’s be positive and hope that the DCA will, as it historically has done, use a constructive approach rather than a punitive approach to assisting Associations and their members. A lightly marked up copy of the original proposed regulations may be seen by clicking here: Mark-up Copy
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