Thursday, January 16, 2014

Neighboring Tree Threatens Your Community, What Can You Do?

(As originally published in the January 2013, “Restore the Shore” issue of Community Trends, CAI-NJ)

In the aftermath of a severe storm you may find that a neighboring property’s tree has fallen on to your community’s property.  Even leaning trees or overhanging branches may create a nuisance; or worse, a potentially hazardous condition.  In the unfortunate event that a neighboring property’s tree should fall, causing damage to community property, you should immediately contact your insurance company to alert them of the potential claim.  Under New Jersey law, absent proof of some negligence or unreasonable activity, liability is not likely to be imposed upon the neighboring property owner; even despite the fact that the tree was located on the neighbor’s property. 

In the case of leaning tress or overhanging branches, there is a long-standing principle in New Jersey law providing that this may constitute a nuisance for which an action for damages lies.   In such a circumstance a property owner is entitled to the right of self-help to lop off overhanging tree branches to the property line, but no further.   These legal remedies, however, should only be used as a last resort.

The absolute best solution is to put the neighboring property owner on notice of the nuisance or hazardous condition and coordinate a solution together.  More likely than not the neighboring property owner will recognize the potential liability of failing to take action and will be more than happy to trim back the portions of the tree overhanging onto your community’s property.  There may even be an applicable local ordinance related to the upkeep and removal of trees requiring the neighboring property owner to keep trees trimmed to prevent the creation of a nuisance or hazardous condition. 

Immediately resorting to a legal remedy, such as filing a lawsuit or acting upon self-help rights, is not preferred and has effects that cannot be undone.  For example, should the community elect to act upon self-help rights, they may be subjecting themselves to liability for trespassing or for damage caused to the neighboring property.  More often than not you will find that in order to properly trim back the tree branches you will need access to the neighbor’s property, which will require permission.  Furthermore, electing to trim the tree branches can result in damage to the neighbor’s property or create a condition which is harmful to the health of the tree and endangers the tree’s continued vitality; both of which may impose liability upon the community.   

It is important to remember that the owner of the tree is your neighbor.  The fact is, after the matter is resolved, you will continue to remain neighbors and, presumably, would prefer to maintain a cordial relationship.  If you find that a neighboring property owner is not willing to cooperate concerning a tree which has fallen onto or is leaning over your community’s property you should immediately contact your attorney.

Ackerman v. Ellis, 81 N.J.L. 1 (Sup. Ct. 1911). 
Wegener v. Sugarman, 104 N.J.L. 26 (Sup. Ct. 1927). 

Friday, January 10, 2014

Federal Disaster Assistance for Condominium Associations and Cooperatives May be on the Horizon

In the wake of Hurricane Sandy, many communities throughout the tri-state area suffered severe and catastrophic damage.  Community associations, much similar to single family homeowners, turned to the Federal Emergency Management Agency (FEMA) for financial assistance, only to be turned away.  Surprisingly, federal law does not currently permit FEMA to provide financial assistance directly to cooperatives, condominiums or homeowners associations to repair essential common elements.  Despite the fact that many common elements likely to be damaged in a natural disaster are necessary to the continued habitability of the structure, such as the exterior of the building or the mechanical room, these non-profit entities are only eligible to receive low interest loans from the Small Business Administration (SBA).

FEMA offers grants for recovery efforts to “individuals” and “households” through its Individuals and Households Program (IHP).   The Federal Government has interpreted the IHP to exclude condominium associations and cooperatives by considering them to be a business, despite the fact that they are simply non-profit entities set up by property owners.   However, on July 31, 2013, Rep. Steve Israel (D-NY), introduced a bill to amend the Act to provide assistance for condominiums and housing cooperatives damaged by a major disaster.   The bill will amend the definition of the terms “individual” and “household” in the Act to specifically include the “residential elements that are the legal responsibility of an association for a condominium or housing cooperative.”  

The introduction of this bill is good news for condominium associations and cooperatives, which have a fiduciary responsibility to its residents to maintain and repair common areas.  Becoming eligible for FEMA grants to assist in the recovery of natural and other disasters would alleviate additional financial burdens on residents and put these communities on equal footing with single family homeowners.  Interestingly, however, the bill does not include within the definition of “individual” and “household” a homeowners association.  This is probably because damage to the common elements of a typical homeowners association is not likely to affect the habitability of the homes in the community.  Fortunately, homeowners in an association can are already eligible for assistance for their individual homes. 

While the introduction of this bill to Congress is not likely to provide any assistance to those affected by Hurricane Sandy, as severe weather becomes more common in the Northeast region the passage of the bill will serve to ensure that condominium associations and cooperatives are not shortchanged in disaster aid in the future. 

See the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Act”).  Note, individual condo owners can receive assistance for their individual units, whereas individual owners of cooperatives cannot.  In a cooperative, the owners sign leases for the rights to their units, rather than owing them and, therefore, do not qualify for the IHP.  

See H.R. 2887, 113th Congress (2013-2014), http://beta.congress.gov/113/bills/hr2887/BILLS-113hr2887ih.pdf
See fn. 2. 

Friday, January 3, 2014

Fiduciary Duty and the Remediation of Construction and Design Defects

The existence of a construction or design defect in a community association gives way to a unique paradox in the nature and scope of the fiduciary duty board members owe to the association and its members.  On one hand the board has a fiduciary duty to maintain and provide for the necessary repairs to the common elements.  As a result, the board will likely feel pressure from unit owners to immediately address construction or design defects, especially where the defect presents a health or safety concern.  On the other hand the board also has an essential obligation to preserve evidence of the defects in the event litigation proves necessary.  As fate would have it, the immediate undertaking of invasive inspections or repairs may improperly destroy evidence needed to demonstrate liability and damages.  Fortunately, with proper advice and counsel these seemingly inconsistent fiduciary obligations can be satisfied.

The failure to preserve evidence (or the destruction thereof) for use by an adverse party where litigation is probable or pending is known as “spoliation.”  The defense of spoliation is premised upon the prejudice that may result where there is not an equal opportunity to inspect the alleged defects and observe any repairs.  For example, professionals hired by an association may “destroy” evidence of defects while undertaking invasive inspections, correcting a design or repairing the defect.  Even despite exigent circumstances and the fact that association’s retained professionals may document conditions they observe, the failure to give all responsible parties an opportunity to similarly inspect the defect and observe any repairs may severely limit the association’s ability to establish liability and damages.

Therefore, when undertaking remediation efforts, it is important that the association work with legal counsel and other professionals to: (1) develop an orderly procedure for identifying defects; (2) alert all potentially culpable parties; (3) provide an opportunity to inspect; and, (4) permit all parties to observe and document all investigations, testing and remediation efforts.   Understandably, the need for repair in some instances may be so time-sensitive that little if any opportunity may be afforded to provide notice of an inspection.  While an association is less likely to be penalized for seemingly unavoidable spoliation, if you are currently experiencing problems due to potential construction or design defects, please be sure to seek the advice of counsel immediately.  While the members of the board have fiduciary duty to maintain and repair the common elements and may feel pressure to do so sooner rather than later, it’s important to remember they likewise have a fiduciary duty to ensure the preservation of the evidence of construction defects in the event litigation proves necessary. 

1 See Robertet Flavors, Inc. v. Tri-Form Const., Inc., 203 N.J. 252 (2010) (Property owner was not allowed to present evidence of claims of mold infiltration and a defective curtain wall against contractor because the owner’s lack of notice of and an opportunity to inspect the remediation work undertaken deprived the contractor of the ability to defend those claims.  As a result, the property owner’s evidence was limited to the conditions that were observable prior to remediation).   
2 See Robertet, supra., 203 N.J. at 258.