Tuesday, February 7, 2017

NO BANK ACCOUNT, NO EMPLOYMENT, NO PROBLEM

 
Once a judgment for condominium arrears is entered and various post judgment enforcement remedies have proved unavailing to locate assets, i.e. there are no bank accounts in the debtor’s name and no employment information can be located, there is one more tool in the toolbox!

New Jersey Court Rule 4:59 - 1 (d) (1) permits a judgment creditor to file a motion for an order to sell real property where the judgment debtor's assets are insufficient or cannot be located. The Appellate Division recently reversed an order denying such relief where the lower court held that notice to the mortgagee was a prerequisite. The relevant consideration under the rule is whether the judgment creditor made reasonable efforts to locate personal property. If you have an unsatisfied judgment, this remedy may be available as an alternative to a lien foreclosure. This strategy has been effective to bring delinquent condominium owners to the table when no bank accounts or employment can be located.

Submitted by :  Angela M. Morisco, Esq.

Thursday, January 12, 2017

Q&A: Disclosure of Tenant Information


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Q:        Does a condominium association board have an obligation to disclose information to an owner about an individual who is leasing a unit? If the lessee has a permanent guest with a criminal background does the board have an obligation to disclose this to the owner? 

A:        Typically, a condominium association in New Jersey would not have an obligation to disclose information to an owner about another resident who is renting a unit or is a guest in a unit. The New Jersey Condominium Act sets forth the duties of a governing board of a condominium association. With respect to disclosures, the Condominium Act specifically requires the association to maintain accounting records, in accordance with generally accepted accounting principles, open to inspection at reasonable times by unit owners. See N.J.S.A. 46:8B-14(g). Such records include (i) a record of all receipts and expenditures and (ii) an account for each unit setting forth any shares of common expenses or other charges due. The Condominium Act further states that the board shall have such other duties as set forth in the master deed or bylaws. N.J.S.A. 46:8B-14(i). Therefore, unless the master deed or bylaws set forth disclosure obligations in addition to those above, there is generally no duty to disclose information with respect to tenants.

Nevertheless, the Condominium Act still requires the board to exercise its power and discharge its functions in a manner that protects and furthers or is not inconsistent with the health, safety and general welfare of the residents of the community. Thus, where there is a risk of foreseeable criminal harm, an association has an obligation to take reasonable action.  What that reasonable action may be depends on the particular facts. Therefore, the board must balance the possibility that any specific notice to other residents of the community may result in the resident that lawfully resides in the community being harassed by other residents, thereby creating a potential liability for the association. This is a very complex balancing act for the board and it should not be undertaken without the advice of the association’s attorney. 


It would be a rare case in which notice of past criminal history of a resident should be reported to the other owners in the community. That determination should be made in consult with the association’s attorney and consider the type of crime committed (such as whether the crime was violent in nature), the age of the person at the time the crime was committed, the length of time since the crime was committed, and the amount of time during which the person has not been subject to incarceration and has not committed another crime. Even where the decision to disclose such matters is made, the board should ensure that the notice is limited to purely factual matters. 

Monday, August 8, 2016

Landmark Decision by New Jersey Supreme Court Finds Developer's Insurance Covers Consequential Damages Caused by Faulty Workmanship of Subcontractors

The New Jersey Supreme Court has finally joined the majority of other states by holding that the standard developer/general contractor commercial general liability insurance policy (“CGL policy”) covers consequential damages caused by the faulty workmanship of their subcontractors.  The ruling is significant for condominium and homeowner associations that suffer from construction deficiencies because it provides an avenue to satisfy a judgment or otherwise recover funds necessary to repair construction deficiencies left behind by a defunct or assetless developer or general contractor. 

All too often developers and general contractors form assetless “shell” entities that have no means to satisfy a judgment for construction deficiencies.  In these circumstances, the only hope for recovery for community associations is through the developer or general contractor CGL policy.  However, prior to the ruling in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC, et al., insurance carriers routinely refused coverage by relying on the “damage to your work” or “your work” exclusion in CGL policies which excluded coverage for property damage to the work of the developer or general contractor.  Insurance carriers argued that the “your work” exclusion was inclusive of the entire building or property because that is what the developer or general contractor was responsible to construct.  Thus, carriers steadfastly refused to settle or pay for damages caused by construction deficiencies -- such as those resulting from water infiltration or leaks.

Attorneys for community associations throughout New Jersey have long argued that the “subcontractor exception” found in standard CGL policies provided a clear exception to the “your work” exclusion. Nevertheless, carriers still refused to provide coverage to developers or general contractors.  At last, the New Jersey Supreme Court finally weighed in and agreed that the “your work” exclusion was unequivocally narrowed by the “subcontractor exception” because it expressly declared that the exclusion did not apply if the damage or work out of which the damage arose was performed by a subcontractor.  Thus, so long as the damage alleged arose out of faulty workmanship performed by the subcontractor of a developer or general contractor, it is a covered loss.  


Monday, May 9, 2016

Q&A: Accomodating Requests for Support Animals





Q:           I live in a condo. We are having some issues with residents that are moving into the building and requesting a companion dog. They always say they can a letter from their doctor.  Please advise, your help is greatly appreciated.

A:      The Federal Fair Housing Amendments Act (FHAA) requires “housing providers,” such as a condominium association, to make “reasonable accommodations” to disabled persons in rules, policies, practices or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling.  New Jersey’s Law Against Discrimination similarly requires accommodation of the disabled.  Decisions of federal and state courts in interpreting these laws have held that in certain instances housing providers must accommodate those with a legitimate physical or emotional disability requiring the support or assistance of an animal regardless of any restrictions on pets in the governing documents.  That said, a “letter from their doctor” is not necessarily sufficient to establish that a resident suffers from a legitimate disability requiring the support or assistance of an animal.  

A governing board may require that residents requesting such an accommodation provide information and documentation sufficient enough to allow the board to reasonably establish that the resident: (1) suffers from a disability as defined by law; and, (2) requires the physical assistance or emotional support of an animal to accommodate their disability.  For example, amongst other things, the association may request a certification from a qualified treating professional certifying under the penalty of perjury that the resident’s disability meets the standards set forth by the FHAA and that no alternative accommodation exists.  

Ultimately, a request for an accommodation of a physical or emotional disability is not something a governing board should take lightly.  The failure to make a reasonable accommodation of a disability is considered discrimination.  Therefore, even if the governing board believes that the resident does not suffer from a disability or the resident making the request is unwilling to provide information or documentation, the advice of legal counsel should be sought before declining a request for an emotional support animal.

Wednesday, April 13, 2016

Developer’s Misrepresentations Relating to the Nature and Quality of Views from High-Rise Riverfront Condominium Results in Award of Treble Damages



Developer’s Misrepresentations Relating to the Nature and Quality of Views from High-Rise Riverfront Condominium Results in Award of Treble Damages


            Were you promised “breathtaking,” “unparalleled waterfront views” or an “unbelievable panoramic range” of views of the Hudson River and Manhattan skyline from your condominium unit, only to have your view obstructed by a neighboring building constructed after your purchase?  Depending on the circumstances surrounding the sale and marketing of your condominium, you may be entitled to damages for the diminution of the value of your unit resulting from the obstruction of your view, and possibly treble damages, attorneys’ fees and costs.  This was the outcome in Etelson v. South Shore Urban Renewal, LLC,[1]where the Appellate Division affirmed a jury’s finding that a developer deliberately misled purchasers in marketing materials when the developer had actual knowledge that views in the South Shore condominiums would not be unobstructed. 

            In Etelson, ten unit owners filed an action against the developer alleging violations of the New Jersey Consumer Fraud Act for, among other things, the loss of their view of the Manhattan skyline.  The developer actively marketed South Shore condominiums for its unparalleled waterfront views, which were depicted on the developer’s website, display boards, sales brochures, billboards, handouts and videos.  A painting of the condominium in the developer’s sales offices even depicted a smaller building being constructed in front of South Shore.  In contrast to the marketing materials, the developer was in fact actively seeking approval, and eventually constructed, a building obstructing the plaintiffs Manhattan skyline views.  As a result, the Court found that the developer could not hide behind generalized warnings and disclaimers in the Public Offering Statement, Master Deed and sales contracts.  The jury in Etelson awarded the unit owners $1,253,420.00 in damages for diminution in value of their units, and the Court entered a final judgement in Plaintiff’s favor for $4,817,638.12, which included a trebling of damages, attorneys’ fees and costs pursuant to the New Jersey Consumer Fraud Act. 

The knowing concealment, suppression, or omission of any material fact in connection with the sale or advertisement of real estate is strictly prohibited by the New Jersey Consumer Fraud Act.  If you are a condominium owner, and the developer failed to disclose certain material facts in connection with the sale or advertising thereof, you should consider consulting with an attorney.  In the same vein, developers should always consult with their attorney prior to making any representations in marketing materials. 


[1] Docket No. A-0570-11T4 (App. Div. March 10, 2014). 

Wednesday, March 9, 2016

Failure to Provide A Smoke Free Environment Entitles Co-op Owner to Reimbursement of Substantial Maintenance Fees


A recent decision of a New York trial court proved very costly for a cooperative.
An owner successfully sued the co-op for breach of the warranty of habitability, constructive eviction and breach of contract based on the infiltration of second hand smoke into the owner's apartment.

The New York Real Property Law § 235-b, applicable to cooperatives, provides a lessor's warranty that a unit will be free from any conditions that are dangerous or hazardous to the occupant's life, health or safety.

The co-op was found, inter alia,  to have breached the warranty of habitability by permitting the apartment to be infiltrated by second hand smoke. 

According to the decision, the plaintiff's complaints about the smell of smoke were ignored by the co-op and the plaintiff was forced to vacate.

The court noted that "as a matter of fact, the value of a smoke polluted residential apartment is zero    .  . .    and that the plaintiff is entitled to a 100 percent abatement . . . "  Reinhard v. Connaught Tower Corp., 602503/2008, NYLJ 120275100993 (Sup. NY Decided January 25, 2016)  As such, the plaintiff was entitled to reimbursement of maintenance fees in excess of $100,000.00!

In addition to the abatement of fees, pursuant to the terms of the proprietary lease, as the prevailing party, the plaintiff was entitled to reasonable attorney's fees incurred in connection with the lawsuit.

The decision leaves open questions concerning a co-op's options. Should it to exclude smokers from the building or  "smoke proof" units.

Wednesday, March 2, 2016

In Re Rones Revisited: Court Rules Condo Lien Cannot be Strippped Off



Don't leave money on the table by  assuming  that a Chapter 13 bankruptcy filing by an owner wipes out or limits payment of a  condominium  association's pre-petition claim for unpaid  fees and assessments.

A recent decision of the United States District Court, on appeal from an order of the U.S. Bankruptcy Court, is a solid victory for condominium associations in this regard. The decision impacts the amount of money a condominium association, with a recorded priority lien, will be entitled to receive
when an owner files a Chapter 13 bankruptcy.

Based on the decision, the limited super priority afforded to a condominium claim of lien pursuant to the New Jersey Condominium Act, specifically, N.J.S.A. 46:8B-21 (b)(1), prevents the lien from being stripped off or crammed down under a debtor's chapter 13 plan. Since the lien was entitled to a limited priority over the first mortgage, and was secured by the debtor's principal residence, the lien could not be modified or stripped off.

Therefore, under a Chapter 13 plan, the entire lien will secured and not just the limited super priority portion.