New Jersey Appellate Division Closes the Door on Mortgagee in Possession Actions: Woodlands Community Association, Inc. v. Mitchell

Posted by on Jun 12, 2017 in Assessments, Collections, Legal Decisions

By Jonathan H. Katz, Esq.

Over the past ten or so years, community associations in New Jersey have struggled with delinquent owners who, for numerous reasons, have ignored their responsibility to pay their common expense assessments and, in some cases, abandoned their homes. Many of these homes sat (or still sit) vacant for years due to the fact that mortgage lenders did not – or for a few years were prohibited by the courts from – prosecuting mortgage foreclosure actions. Since we are only now starting to see some increasing movement with mortgage foreclosures and Sheriff’s sales, associations were required to find creative ways to collect these past due assessments.

When traditional collection methods failed, some associations opted to foreclose the assessment lien(s) on the delinquent homes. Some obtained authority to rent vacant homes with the assistance of a court-appointed receiver (rent receivers), when and if the courts were amenable to such remedy, which is not always the case. In other circumstances, where the mortgage lender changed the locks or winterized a home, associations sought to hold the mortgage lender responsible for the assessments, claiming that the lender was a “mortgagee in possession”; however, due to a recent published decision, that avenue to collect delinquent assessments has been prohibited in most cases.

On June 6, 2017, the Appellate Division issued a decision in Woodlands Community Association, Inc. v. Mitchell. That decision, which was approved for publication, held that a mortgage lender’s act of securing its interest in the unit (changing the locks and “winterizing” the unit) did not amount to possession and did not create a duty for the lender to pay the ongoing assessments due to the association.

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Poetic Justice: Medford Lakes Colony Club v. Maida

Posted by on Mar 6, 2017 in Architectural Controls, Assessments, Legal Decisions

On March 2, 2017, the New Jersey Appellate Division decided the case of Medford Lakes Colony Club v. Maida, which dealt with unpaid assessments and the authority to remove a dock on association property. While the decision is unpublished (and does not constitute precedent), it made enough of an impression for Jonathan H. Katz to pen this brief write up:

In Medford a Club owned a lake,

Fees for its upkeep members make.

 

Docks on the lake were permitted,

As long as such fees were remitted.

 

Ms. Maida refused to pay fees,

Despite the Club’s numerous pleas.

 

So after the passage of time,

The Club removed the dock on Maida’s dime.

 

Maida objected but the Judge she directed,

The Club could remove the dock Maida erected.

 

So the moral of the story is not lost,

If you don’t pay your case will get tossed,

You’ll get dragged into Court,

For breach of contract or tort,

And you may have to pay all the cost.

You can read the Appellate Division’s much less poetic decision in Medford Lakes Colony Club v. Maida by clicking here.

For more information on this case or any other issue concerning your community association, please contact one of our Community Associations attorneys. For breaking news or updates on new blog posts, follow us on Twitter at: @njcondolaw.

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Join Us at the 2015 New Jersey Cooperator’s Condo, HOA and Co-op Expo on Saturday, May 9, 2015!

Posted by on Apr 26, 2015 in Alternative Dispute Resolution, Architectural Controls, Assessments, Board Meetings, Books and Records, Collections, Contracts, DCA, Disability Accommodations, Fair Housing, FDCPA, FHA, First Amendment Rights, Foreclosure, Municipal Services Act, New Jersey Cooperator

Hill Wallack LLP‘s Community Association Practice Group will be exhibiting at the 2015 New Jersey Cooperator’s Condo, HOA and Co-op Expo on Saturday, May 9, 2015, 10:00 a.m. to 4:30 p.m., at the Meadowlands Exposition Center in Secaucus, New Jersey.

Join board members, property managers, building owners and real estate professionals and meet building service companies, attend educational seminars and get your questions answered by a member of our team at Booth 600.

For more information or to register to attend, click here!

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DOs & DON’Ts: Community Association Assessment Collection

Posted by on Feb 4, 2014 in Alternative Dispute Resolution, Assessments, Collections, FDCPA

In the current economy, the prompt collection of common expense assessments is essential to the functioning of any community association. Accordingly, it is crucial that the board have a policy and use it to consistently collect the fees that it assesses to its members.

For some timely tips to enable you to collect assessments in a timely manner when a member’s account becomes delinquent, click here.

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Karpoff and Sauter to Speak at the 2013 Community Association Law Summit

Posted by on Oct 31, 2013 in Alternative Dispute Resolution, Assessments, Board Meetings, Books and Records, CAI, Collections, Contracts, DCA, Legal Decisions, Legislation, Speaking Engagements

Hill Wallack LLP Partners Michael S. Karpoff, Esq. and Kenneth R. Sauter, Esq. will be speaking at the 2013 Community Association Law Summit. This seminar is presented in cooperation with the New Jersey Chapter of the Community Associations Institute and the New Jersey State Bar Association’s Real Property, Trust and Estate Law Section.

Mr. Karpoff will be speaking on “Negotiating and Drafting Community Association Contracts – Getting the Terms Right,” and Mr. Sauter will be speaking on “Have We Weathered the Financial Storm? Dealing with the Fair Debt Collection Practices Act, Foreclosures, Bankruptcies, Vacancies, and the Bell Tower Case.”

The Summit will be held at the New Jersey Law Center in New Brunswick, New Jersey, on Wednesday, November 6, 2013, from 9:00 a.m. to 4:30 p.m., and it has been approved by the Board on Continuing Legal Education of the Supreme Court of New Jersey for 8.0 hours of CLE credit, of which 1.0 qualify for ethics/professionalism credit. CLE credit is also available for PA and NY, and CPE credits are also available.

For more information on this seminar or to register to attend, please click here.

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Perl Quoted in Chicago Tribune Article on Illinois Collection Decision

Posted by on Aug 31, 2012 in Assessments, Collections, Legal Decisions

In the August 17, 2012 edition of the Chigaco Tribune, Ronald L. Perl, Esq., the partner-in-charge of Hill Wallack LLP’s Community Associations Group, was quoted in the article “Ruling Could Change Course of Collection Proceedings.”

The article discusses the Illinois Appellate Court’s recent decision in Spanish Court Two Condominium Association v. Lisa Carlson, which involved the association’s lawsuit against an owner for nonpayment of assessments under Illinois’ Forcible Entry and Detainer Act. That Act allows associations to take temporary possession of a unit and rent it out in order to pay the delinquency. The owner countersued the association, alleging a failure to maintain and repair the common elements as required by its governing documents.

The Trial Court ruled in favor of the association, but the Illinois Second District Appellate Court disagreed. The three-judge panel determined that associations are duty-bound to repair and maintain the common elements and that neglect can be viable defense, at least in eviction cases like this one. Comparing the relationships between landlords and tenants to associations and owners, they wrote: “[j]ust as the contract principle of mutually exchanged promises can justify a tenant’s refusal to pay rent, so that principle can justify a condominium unit owner’s refusal to pay assessments.”

Disagreeing with the Court’s ruling, Mr. Perl stated: “This makes it exceedingly easy for any owner to say, ‘I’m dissatisfied with services; therefore, I’m not going to pay my assessments.’ If a significant number of owners decide to do that, it chokes off the supply of income to associations, so associations are even less able to provide services. Associations have no other source of income but from co-owners.”

“This is not a landlord-tenant situation,” said Mr. Perl. “This is a situation where there are multiple co-owners, and each one is responsible not only to the association but more importantly to each other.”

You can read the full Chicago Tribune article here. And you can read the Illinois Appellate Court’s decision in Spanish Court Two Condominium Association v. Lisa Carlson here.

For more information on this case or any other issue concerning your community association, please contact one of our Community Associations attorneys. For breaking news or updates on new blog posts, follow us on Twitter at: @njcondolaw.

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