By Jonathan H. Katz, Esq.

In an unpublished Appellate Court decision – The Glens at Pompton Plains Condo. Ass’n, Inc. v. Van Kleeff – the New Jersey Appellate Division made it abundantly clear that condominium associations must offer alternative dispute resolution (“ADR”) for any “housing-related dispute,” including the non-payment of assessments/maintenance fees, prior to filing any non-emergent legal action against a unit owner.

The New Jersey Condominium Act, N.J.S.A. 46:8B-14(k), requires condominium associations to “provide a fair and efficient procedure for the resolution of housing-related disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation.” Although, the Condominium Act does not specifically define the term “housing-related disputes,” that issue was squarely addressed in by the Appellate Division in Bell Tower Condo. Ass’n v. Haffert, which was decided in January 2012.

In Bell Tower, the trial court entered judgment for the association in a dispute with the unit owners over the payment of a special assessment. The trial court rejected the unit owners’ argument that they were entitled to ADR, which was refused by the association. The Appellate Division reversed the trial court’s decision and broadly construed the term “housing-related disputes” to include any dispute arising directly from the condominium relationship.

In The Glens at Pompton Plains, the issue centered on whether the decision in Bell Tower mandated that condominium associations offer ADR even when the issue was solely related to the unit owners’ non-payment of common expense assessments. The Association attempted to distinguish Bell Tower on the basis that it dealt with a special assessment rather than “unconditional” monthly common expense assessments/maintenance fees; however, the Appellate Division said loud and clear that so long as the dispute arises from the condominium relationship, the association must make ADR readily available as an alternative to litigation.

As we recommended when Bell Tower was decided and reiterate today, we strongly advise any condominium association without an ADR policy or procedure to adopt such a resolution as required by the Condominium Act. If there is any doubt whether ADR should be offered in a particular matter, consult with your attorney; however, offering ADR in advance of litigation when dealing with unit owner disputes clearly will avoid a later issue to be decided by the Court.

In addition, to proactively address the issues raised in Bell Tower and now The Glens at Pompton Plains, we recommend associations include as part of their own late notice/demand letter to delinquent unit owners that the association offers a form of ADR known as “conciliation.” Conciliation is a conference/meeting to review the unit owner’s account to determine whether or not the account balance is accurate and whether a payment arrangement may be agreed upon prior to taking legal action. We recommend that the conciliation take place between the community manager and the unit owner to review the unit owner’s account in person. By offering this form of ADR, we believe an association will have met its obligation to make ADR available, even if the unit owner fails or refuses to take advantage of the opportunity.

We suggest that the following language be included in your initial late notice/demand letter:

If you dispute the amount due you may request a meeting with the Association’s community manager in an attempt to resolve this matter without litigation. The request must be in writing and must be made within fourteen (14) days from the date of this letter. After receiving that request, the manager will contact you to schedule a mutually convenient time to meet. This process of meeting to attempt to resolve this dispute is called “conciliation,” which is a form of alternative dispute resolution (“ADR”) designed to avoid litigation. If a written request is not received by the Association within 14 days from the date of this letter, you will waive (give up) your right to attempt to resolve this matter through such ADR process.

We believe that implementing a conciliation process and including this language in an association’s initial late notice/demand letter to unit owners satisfies the Condominium Act’s requirement to offer ADR. It may also result in the resolution of some delinquencies without having to resort to counsel to initiate legal action.

Finally, please note that Bell Tower and The Glens at Pompton Plains applies ONLY to condominium associations and not to homeowner associations or cooperatives. An earlier Appellate Division case – Twin Rivers – determined that non-condominium community associations need not make ADR available for disputes over non-payment of common expense assessments. Nevertheless, homeowner associations and cooperatives may offer ADR to delinquent owners in an attempt to avoid litigation.

To read the Appellate Division’s full decision in The Glens at Pompton Plains Condo. Ass’n, Inc. v. Van Kleeff, click 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.