Tuesday, December 19, 2017

Q&A: Charging for Copies of Financial Documents


BY: MARTIN C. CABALAR


Question:       

Is there a limit how much we can charge to pull, provide and copy requested paperwork? Can we make a profit?

Answer:

Yes, there is a limit to the amount a condominium association can charge its residents to provide copies of records the association is required to keep open to inspection by its owners. In New Jersey, the charge cannot exceed an amount reasonably related to the association’s copying cost, which may include any additional administrative expense incurred. Therefore, unless your governing documents provide otherwise, the association may charge the cost for copying.

It is important to keep in mind that the New Jersey Condominium Act provides that associations shall be responsible for “the maintenance of accounting records in accordance with generally accepted accounting principles open to inspection by unit owners at reasonable times.” N.J.S.A. 46:8B-14(g) (emphasis added). The accounting records required to be open to inspection by unit owners include (1) a record of all receipts and expenditures and (2) an account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due and any interest in common surplus. Thus, while the association may charge a fee reasonably related to the association’s copying cost to provide copies, the association must grant access to inspect the financial records required to be kept open to inspection without charge to the unit owners. Even if another party, such as the Association’s managing agent or accountant, charges the association a production fee, the association cannot charge the owner a fee to merely inspect these records.

Finally, while the Condominium Act is silent as to whether owners have a right to make copies, and New Jersey case law has not resolved this precise issue, the New Jersey Department of Community Affairs takes the position that the right of inspection includes the right to copies of those documents. Thus, we recommend that you allow members to make copies of financial records that are required to be open to inspection.

Tuesday, December 12, 2017

Hudson County Court Distinguishes Controversial Palisades Decision


On December 7, 2017, a Hudson County Superior Court Judge, in the matter of Grandview II at Riverwalk Port Imperial Condominium Association, Inc. v. K. Hovnanian at Port Imperial Urban Renewal III, LLC, et al, Docket No. HUD-L-2839-14 ("Grandview II"), denied summary judgment to an architect retained by the developer who argued that the statute of limitations barred the association's claims pursuant to the Supreme Court's controversial decision in the matter of The Palisades at Fort Lee Condominium Association, Inc., v. 100 Old Palisade, LLC (“Palisades”)[1] because the developer knew of the defects more than six-years prior to the lawsuit being filed. In denying summary judgment, the Court specifically held that Palisades (1) was factually distinguishable from a project such as Grandview II that was originally developed as a condominium with the intent to transition the operational control to an association in the future and (2) did not modify the long-standing rule that claims by a condominium association against the developer, its design professionals and subcontractors do not accrue until transition. Citing Terrace Condominium Association, Inc. v. Midlantic National Bank, 268 N.J. Super. 488, 503 (Law Div. 1993). 

Becker & Poliakoff represents the plaintiff condominium association in Grandview II and argued in opposition to the motion for summary judgment, among other things, that Palisades was not only factually distinguishable, but that it did not change long-standing New Jersey case law holding that such claims do not accrue, at the earliest, until transition of control by the developer. Fortunately for common interest communities throughout New Jersey the Court agreed that "no claim could be brought by the association until the transition occurred. That is until at least seventy-five percent of the units were sold to require the transition from owner to association control." 

As recognized by the Court, the statute of limitations is a rule of equity and as such equitable considerations must control the Court. There is an inherent conflict of interest in the argument put forth by the architect in Grandview II that a cause of action for construction defects by a condominium association accrues when anyone in the chain of ownership, including the developer, first knows or reasonably should know of a defect, even if transition to unit owner control had not yet occurred. While such may be equitable in the unique circumstances presented by Palisades, where the building was constructed as an apartment complex and subsequently transitioned to a condominium, it is not realistic to suggest that a developer would initiate an action against itself, or its contractors and design professionals, prior to transitioning control to the unit owners in the normal condominium context. 

While we believe the decision by the Hudson County Superior Court is correct and well-reasoned, it certainly will not bring an end to design professionals and subcontractors attempting to dismiss a condominium association's construction defect claims as being barred by the applicable statute of limitations based on the decision in Palisades and the developer alleged knowledge of defects. The Palisades decision, while innately fact driven, is nonetheless a decision by the Supreme Court. Thus, defendants may still attempt to argue that Palisades is not distinguishable and as a decision of the Supreme Court is the applicable controlling law. While we believe that argument to be incorrect for the very reasons argued to and set forth by the Court in Grandview II, if your association is currently experiencing problems due to potential construction or design defects it is suggested that you seek the advice of counsel immediately to best protect your interests.



[1] The full opinion in Palisades can be downloaded at: http://njlaw.rutgers.edu/collections/courts/supreme/a-101-15.opn.html

Fear Not the Dreaded Legal Fees: Part Two

BY:  ANGELA M. MORISCO, ESQ. Very often boards of condominiums and other community associations hesitate to engage in litigation ag...