Updated Lien Priority Law Benefits Condominium and Homeowners Associations in New Jersey

Posted by on Mar 29, 2019 in Collections, Foreclosure, Legislation, Uncategorized

By Ronald L. Perl, Esq., CCAL

On March 25, 2019, the New Jersey Legislature passed a bill that will enhance the lien priority for condominium associations and, for the first time, give the same lien priority to homeowners associations.

If this legislation is signed by Governor Murphy, both condominium and homeowners associations will enjoy a limited priority over all other liens (except for municipal liens or liens for federal taxes). The legislation would amend the lien priority provisions already contained in the Condominium Act and add the lien priority provisions in the Planned Real Estate Development Full Disclosure Act (PREDFA).

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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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Pennsylvania Community Associations Benefit from Amendments to Uniform Planned Community Act and Uniform Condo Act

Posted by on Apr 25, 2016 in Collections, Legislation, UCA, UPCA

By: Jeffrey G. DiAmico, Esq.

On April 20, 2016, Governor Tom Wolf signed into law Act 21 – House Bill 1340, sponsored by Representative Martina White, which amended the Pennsylvania Uniform Planned Community Act (UPCA) and the Uniform Condominium Act (UCA) under Title 68 (Real and Personal Property). The amendments, specifically with regard to Section 3315(d) and Section 5315(e) of the Title 68 Acts – Lien for Assessments, expanded the provisions under the UPCA and the UCA and established that a lien for unpaid assessments may now be instituted within four (4) years (rather than the previous timeframe of three (3) years) after the assessments become payable. Additionally, the amendments now enable associations to resolve assessment delinquencies by allowing an association to obtain a personal judgment against the delinquent unit owner(s) rather than foreclosing on the lien, while still preserving the statutory lien. Previous to the amendment, in 2014, the United States Court of Appeals held that a personal judgment obtained by a community association in Pennsylvania did not preserve the statutory lien and that unless associations filed a lien foreclosure action within three (3) years of a delinquency, the lien for assessments was extinguished. The amendment allows associations to resolve assessment delinquencies without putting ownership of homes at risk through foreclosure proceedings.

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Condo FAQs: “Limited Priority” Liens Pursuant to the New Jersey Condominium Act

Posted by on Mar 8, 2016 in Collections, Condo FAQs

By Jonathan H. Katz, Esq.

Hill Wallack LLP’s Condo FAQs is a continuing series in which we answer frequently asked questions (FAQs) pertaining to condominiums, cooperatives and homeowners associations. These FAQs relate to various issues that include interpretation of governing documents, board meetings, suspension of privileges, collections, or bankruptcy and foreclosure.

Question: I’ve heard that when a mortgage lender forecloses on a condominium unit, the association is entitled to six (6) months of assessments. I’ve also heard that the association has “limited priority” over the mortgage. Is that true? What does that really mean?

Answer: Pursuant to N.J.S.A. 46:8B-21(b) of the New Jersey Condominium Act, a condominium association’s recorded lien for delinquent common expense assessments may have limited priority over an existing mortgage under certain circumstances. If those specific requirements are met, the association to would be entitled to six (6) months of “customary condominium assessments” from the mortgage lender if the unit is sold as part of a mortgage lender’s foreclosure action.

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In re Rones: A Debtor Cannot “Strip Off” or “Cram-Down” a Condominium Lien as Part of a Chapter 13 Bankruptcy Action

Posted by on Feb 22, 2016 in Bankruptcy, Collections, Legal Decisions

By: Jonathan H. Katz, Esq.

The District Court recently delivered a rare win for condominium associations throughout New Jersey dealing with bankruptcy actions filed by their residents. The Court reversed a 2015 decision that allowed debtors filing Chapter 13 bankruptcy petitions to “strip off” or “cram down” an association’s lien, which in most cases resulted in that the association only receiving six (6) months of assessments and having to write off as bad debt all of the remaining unpaid amounts.

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Perl Quoted in New Jersey Cooperator regarding Foreclosure Issues

Posted by on Jul 7, 2015 in Collections, Legislation, New Jersey Cooperator

In the June 2015 edition of The New Jersey Cooperator, Ronald L. Perl, Esq., the partner-in-charge of Hill Wallack LLP’s Community Associations Group, was quoted in the article “New Jersey 2015 Legislative Update.”

The article discusses pending legislation relating to or touching upon community associations in New Jersey, and Mr. Perl’s comments focus specifically on the continued issues experienced by community associations in New Jersey (and in other states) with respect to mortgage foreclosures.

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