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    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.


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    By: Martin C. Cabalar

    Q:     Can board members adopt a policy requiring all members of the Board to execute a confidentiality agreement?  


    A:       While there is no New Jersey case law directly on point, the likely answer is that with respect to material that is confidential, the governing board of a common interest community may adopt a policy requiring that the right of a director or trustee to access confidential material will be conditioned upon the board member's execution of a confidentiality agreement.


    The New Jersey Condominium Act and New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA), despite having vigorous open meeting requirements, recognize that certain discussions should be held in confidence. Specifically, the governing board, in the exercise of its powers and duties, may exclude or restrict attendance at those meetings, or those portion(s) of meetings, dealing with: (1) any matter, the disclosure of which, would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer; or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. SeeN.J.SA. 46:8B-13 and N.J.S.A45:22A-46(a). It is very likely that the reason for such provisions in the Condominium Act and PREDFDA are in recognition of the fact that to act within the best interest of the association (i.e. maintain a duty of loyalty) requires members of the governing board to exclude and restrict attendance at certain meetings in order to maintain the required fiduciary level of confidentiality. Thus, a governing board would be justified in denying a board member access to such confidential information or materials where that board member refused to sign a confidentiality agreement with respect thereto.


    In fact, the Appellate Division in one New Jersey case did not appear to take issue with the association requiring its members to sign confidentiality agreements in order to obtain a list of all members of the association.  Instead, the court held that a one thousand dollar liquidated damages clause in the confidentiality agreement was unreasonable and invalid, but did not otherwise appear to take issue with the confidentiality agreement or the board’s requirement that members sign same. SeeComm. for a Better Twin Rivers v. Twin Rivers Homeowners' Ass'n, 383 N.J. Super.22, 60 (App. Div. 2006) rev'd on other grounds, 192 N.J. 344 (2007). Likewise, in a corporations cases from Delaware, the court there has held that the access to materials as a director may be conditioned on the execution of a confidentiality agreement. Seee.g.Hollinger Int'l, Inc. v. Black, 844 A.2d 1022, 1092 (Del. Ch. 2004); Stroud v. Grace, 606 A.2d 75, 89-90 (Del. 1992).



    In light of the aforementioned legal precedent, where a member refuses to sign a reasonable confidentiality agreement but continues to demand access to confidential information, the board of a common interest community would likely be justified in seeking a judgment declaring that the member’s access to materials be conditioned on his or her execution of a confidentiality agreement.  In addition, while the board likely cannot remove the member from the board, as most governing documents require a vote of the unit owners, the board may also be justified in calling upon the unit owners for a vote to remove the obstinate board member.


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    BY: MARTIN C. CABALAR


    Q:        A resident is demanding copies of attorney invoices, but aren’t these subject to the attorney-client privilege? 


    A:        The simple answer is: it depends. While “it depends” is not the most satisfyingly complete answer, owners generally have a right to see our invoices. However, when an invoice pertains to or contains attorney-client privileged information, your counsel should review them and redact any part of the privileged narrative.  Examples of attorney-client privileged information that would have to be redacted include entries related to individual privacy, pending or anticipated litigation, contract negotiations, the employment, promotion, discipline or dismissal of a specific officer or employee of the association, or any other matters falling within the attorney-client privilege, to the extent that confidentiality is require in order for the attorney to exercise his ethical duties as a lawyer.


    Generally, we would advise our community associations to inform an owner requesting access to the association’s counsel’s invoices that if they wish to review the content of legal invoices, rather than just the amounts billed, they must first be reviewed by counsel, so that any entries which are protected by the attorney-client privilege can be redacted. While that work is not a significant undertaking, the association should not make the determination as to what is or what is not subject to the attorney client privilege or attempt to undertake the redaction on their own without the advice of counsel. An entry as innocent as “discussed contract negotiations with the Board and landscaping contractor” may be an attorney-client protected communication.


    The cost to review and redact the invoices should be charged to the requesting unit owner and not as a common expense to all unit owners. While owners may argue that you are attempting to prevent them from seeing the invoices, this is not the case at all. Owners are permitted to see the amount of each invoice, but they are not permitted to review narrative entries which contain attorney-client privileged communications.


    Finally, while an owner may argue that they “pay our bill” or that they are our client and therefore have the right to see the narrative entries on our invoices, the individual unit owners are not our clients. Yes, the unit owners pay the common expenses fees, which fund the association’s legal expense, but our client is the corporate entity which acts through its governing board.  


    If your governing board receives a request to review the association’s attorney’s invoices, we recommend that you first consult with and seek the advice of your counsel before providing copies to a unit owner.



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     BY: MARTIN C. CABALAR

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    To more fully convey this message, we are thrilled to announce the creation of our new brand. We invite you to visits our new website and share your thoughts.


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    BY: MARTIN C. CABALAR



    Q:       Our association is considering eliminating the lifeguard at our pool. Do we need to do anything other than post “swim at your own risk” signs?

    A:       Many communities throughout the State of New Jersey are giving serious consideration to eliminating the lifeguard at their pool in light of the amendments to the Public Recreational Bathing Code, N.J.A.C.8:26-1 (the “Code”), particularly those portions addressing the duties of lifeguards as they may result in increased costs.


    As you may be aware, the amended regulations require communities with pools larger than 2,000 square feet of surface area to have at least two lifeguards on duty. In addition to other changes, which are discussed in more detail below, lifeguards are not permitted to perform any activities that would distract them or intrude upon their attention from proper observation of, or prevent immediate assistance to, persons in the water. This means that lifeguards should not be texting or looking at their cellphones, checking pool passes or performing any services with respect to testing or cleaning of the pool while on duty. While this has always been the case, the language of the amendment suggest that local municipalities may enforce these requirements more strictly. While a qualified community interest community may exempt itself from these requirements, the exemption must be a complete exemption or none at all. Meaning, if you decide to have a lifeguard, then you must comply with all requirements of the Code.


    We do not recommend that you eliminate the lifeguard at your pool, despite any increased cost that may result to your community. The safety benefits of having a lifeguard are obvious, but there are other financial and liability considerations as well. The elimination of your lifeguard will certainly increase your insurance premium and may expose your community to greater risk. For example, if you currently have a vendor providing lifeguard services, you will lose the benefit of insurance coverage and other protections afforded by this vendor. In the event that a lawsuit was filed in connection with an incident at or near the pool, your vendor and its insurance carrier would likely be required to defend and indemnify your community. Whereas, if you eliminate the lifeguard provided by the vendor, the association or its insurance carrier must absorb these costs.


    If you are a qualified common interest community and decide to eliminate the lifeguard at your pool, the Public Recreational Bathing Code requires that you post a sign at least three feet by four feet in size, prominently displayed at every entrance to each swimming area, stating: (a) “No lifeguard on duty,” (b) “Persons under the age of 16 must be accompanied by an adult,” and (c) “No swimming alone.” This sign must include the hours the pool is open and all information on the sign must be easily readable with contrasting colors. At mobile home parks or retirement communities, the sign must also state: “This pool is closed when the owner or operator is not on the premises.” There are also additional signage requirements for a “Health Club” registered with the Director of the Division of Consumer Affairs pursuant to N.J.S.A. 56:8-39.


    Given the insurance and legal implications, we highly recommend that your consult with your attorney and insurance agent prior to making any decision to eliminate your lifeguard. 


    Here are some other important amendments to the Code that will affect everything from preseason pool opening procedures to pool inspections and maintenance:


    • Twenty-one (21) days before the pool is set to open, the owner/operator must submit the Checklist for Public Recreational Bathing Facilities to the local health authority for approval to open. An initial water sample must be obtained prior to opening the pool and sampling must be done at least once every week thereafter;

    • 5-year bonding and grounding certificates must be provided annually before the pool opens; 

    • full spine board must be kept poolside;

    • Pools must have at least one throw line which reaches the other side of the pool;

    • All life-guarded pools must have an automated external defibrillator (AED)

    • All pools with a depth great than five (5) feet, a diving area, or greater than 2,000 square feet in surface area must have elevated lifeguard platforms located at the water's edge; 

    • Emergency telephone numbers of the nearest rescue squad, police department, and other appropriate entities, along with the address of the pool, shall be posted in a weather-resistant display adjacent to the lifeguard station;

    • While a written standard operating procedure aquatics facility plan is not a new requirement, there is some new information that must be included in the plan, including: the location of the emergency shut off switch for the suction outlets, the hours of operation of the pool, the schedule of operational activities (such as water testing), the zone of protection plan for lifeguards and a safety policy on water toys and floats. 

    • Dressing rooms and bathrooms shall be provided. 

      • For facilities constructed prior to November 4, 1986, dressing rooms shall not be required and bathrooms may be portable. 

      • For facilities constructed prior to September 7, 2010, dressing rooms and bathrooms shall be provided within 50 feet and at least one bathroom shall be provided and it may be portable.

      • For existing condominiums where all residences are within 100 feet of the swimming pool, a separate dressing room and bathroom near the pool are not required. 

    • The circulation system must meet the following requirements:

      • The pumps, piping, return inlets/suction outlets, filters, etc. shall be maintained to ensure the complete circulation of water throughout all parts of the swimming pool.

      • The circulation system shall be operated so as to turn over the entire swimming pool water capacity at least once every six hours; and the wading pool water capacity at least once every hour. Pumps shall be operated 24 hours a day and seven days a week.  

      • The facility owner may install an energy efficient two-speed pump to save energy when the pool is closed at night. If such a pump is installed, the turnover rates do not have to be met during the night when the pool is closed.

      • Swimming pool water clarity shall be maintained so that the deepest portion of the pool is clearly visible from the pool’s edge.

      • The pump and component parts of the circulation system, shall be operated in a safe manner that is not hazardous to the operator and maintenance personnel.

      •  Mechanical seals shall be corrosion resistant and shall be maintained in good repair.

      •  Direction of water flow and pump rotation shall be clearly indicated on the pumps & all visible piping.

      • Strainers shall be provided on all filter systems, shall be removable, and shall be located upstream of the circulation pump(s) to remove solids, debris, hair, and lint. Water entering the pump shall first pass through the removable strainer.

      • Filters shall be cleaned and maintained pursuant to the manufacturer’s instructions, so that the circulation system can provide the required water clarity.
    These are only some of the changes to the Code. Thus, we highly recommend that you first consult with and seek the advice of your counsel and pool management vendor before the upcoming pool season to ensure that your community is in compliance. The New Jersey Department of Health - Public Health & Food Protection Program, has prepared a FAQ worksheet with respect to the Code amendments, which may also provide some guidance and assistance. 


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    BY: MARTIN C. CABALAR


    In our most recent blog post, we responded to a reader considering eliminating the lifeguard at their pool. This is something that many communities have considered doing this pool season as a result of the amendments to the Public Recreational Bathing Code, N.J.A.C. 8:26-1 (the “Code”), particularly the requirement that facilities with pools larger than 2,000 square feet of surface area have at least two lifeguards on duty. Recently, the New Jersey Department of Health issued a Frequently Asked Questions (“FAQ”) clarifying that a “private nonprofit common interest community” is a “specially exempt facility” and thus exempt from the lifeguard requirements of the Code. Accordingly, so long as your community is a specially exempt facility and complies with all other requirements of the Code, there is no requirement that you have at least two lifeguards on duty if your pool has a surface area greater than 2,000 square feet. One lifeguard will continue to suffice, provided you have appropriate signage. 


    If you nonetheless decide to eliminate the lifeguard at your pool, the Public Recreational Bathing Code requires that you post a sign at least three feet by four feet in size, prominently displayed at every entrance to each swimming area, stating: (a) “No lifeguard on duty,” (b) “Persons under the age of 16 must be accompanied by an adult,” and (c) “No swimming alone.” This sign must include the hours the pool is open and all information on the sign must be easily readable with contrasting colors. At mobile home parks or retirement communities, the sign must also state: “This pool is closed when the owner or operator is not on the premises.” There are also additional signage requirements for a “Health Club” registered with the Director of the Division of Consumer Affairs pursuant to N.J.S.A. 56:8-39.


    Given the insurance and other legal implications, we highly recommend that you consult with your attorney and insurance agent prior to opening your pool this season, especially if you are considering making any decision to eliminate your lifeguard. 



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    BY: MARTIN C. CABALAR
    Q: Our community has a resident who leaves their unattended, large service dog on the balcony. The dog barks once or twice every time it sees anyone walk by. This goes on all day and evening. The tenant is a renter and efforts to have them keep the dog inside have failed. Please help! 


    A: I assume from the question, which indicates that resident is complaining about a large "service dog," that perhaps the community does not allow pets. As the reader may be aware, decisions of federal and state courts interpreting the Federal Fair Housing Law and New Jersey’s Law Against Discrimination have held that in certain instances housing providers, such as a common interest community, must accommodate those with a legitimate physical or emotional disability requiring the support or assistance of an animal. Nonetheless, even where an accommodation is required by law, the resident is still required to maintain the animal in accordance with existing rules and regulations - which often include, among other requirements, that residents permit no activity that creates a nuisance or annoyance to other residents. Such rules require the resident to take all actions necessary to prevent the animal from making noise that may unreasonably annoy or disturb the peace of neighboring residents.


    Regardless of whether or not the animal is a "service dog," if the barking exceeds the average noise level a reasonable person would expect while living in a condominium, then the resident may be in violation of restrictions in the governing documents prohibiting any acts which may be or become an annoyance or nuisance to other residents in the community. If this is the case, the Association may determine to (a) issue a letter advising the owner to keep the barking of the dog at a reasonable level so as not to cause a nuisance to other residents (b) fine the  unit owner if permitted by the governing documents and/or (c) refer the complaining unit owner and owner of the dog to mediation.


    The issue of a “nuisance” is very fact sensitive. Thus, we recommend that you consult with your legal counsel prior to issuing a fine or taking any other action against a unit owner who fails to keep the barking of their dog to a reasonable level. 

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  • 05/11/18--07:18: Let No Man Put Us Under


  • The New Jersey Appellate Division Upholds the Sanctity of Property Held as Tenants by the Entirety 


    In a decision dated, May 8, 2018, approved for publication, the New Jersey Appellate Division held that N.J.S.A. 46:3-17.4, precludes an unsecured creditor from forcing the partition of real property owned by a debtor and a non-debtor spouse as tenants by the entirety not used a martial residence.   Raul Augustin Jimenez, et als. v. Raul Anibal Jimenez, (Superior Court, Middlesex County Docket No. L-0025-12 App. Div. May 8, 2018)


    The statute cited provides, in substance, that neither spouse may “sever, alienate, or otherwise affect their interest in the tenancy by the entirety during the marriage or upon separation without the written consent of both spouses”.


    The holding is important because it provides that the statute “supersedes and nullifies” existing case law that allowed such a creditor’s remedy in certain equitable circumstances.     The decision protects and preserves the interest of husband and wife in property held by the entirety over the interest of a creditor of a single spouse.


    The Court did note that an exception may exist in certain circumstances.  As with any other legal matter, executing judgment creditors should consult with qualified, experienced counsel to develop and implement an effective post-judgment execution plan that is consistent with current law. 




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    Condominium & HOA Collections & Compliance



    The Federal Fair Debt Collection Practices Act (“FDCPA”) 15 U.S.C.A. § 1692, et seq. applies to attorneys engaged in the collection of debt for community associations.  The language contained in demand letters is a frequent source of FDCPA litigation. Liability is often imposed based on certain words contained in or omitted from the letter.

    Damages recoverable under theFDCPA include actual damages, statutory damages, court costs, reasonable attorney’s fees and can result in class action liability. 

    Unlike credit card and other consumer retail debt which is generally charged off and then sent for collection, liability for homeowner association fees continues to accrue for so long as the owner has legal title to the property at issue. Hence, the collection process is ongoing. 


    Courts have held that a debt collector violates the FDCPA by stating the “current balance” of a consumer’s debt if the collector fails to disclose the balance is subject to increase due to the accrual of interest or other fees. This issue has been addressed by several very recent Court of Appeals cases.

               

    To avoid potential FDCPA pitfalls, attorneys engaged in community association collections are cautioned to ensure that the language contained in demand letters comports with existing, controlling caselaw.


    Do your demand letters comply with the requirements of the FDCPA?




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    Last August, New York City enacted Local Law 147 which requires owners of class A multiple dwellings to adopt and disclose a smoking policy.  Although touted as a disclosure policy, there are several requirements that owners need to be aware of since the law takes effect this August.   Under the law, the definition of owner includes the “owner of record” of rental apartment buildings, the board of directors of a cooperative and the board of managers of a condominium.  Although the law does not dictate the contents of the policy, it requires the policy to address all indoor locations, common areas and all outdoor areas including courtyards, rooftops, balconies and patios where smoking is permitted or proscribed. Similar rules are in effect in public housing nationwide.


    Once the policy is adopted, owners are required to provide all residents with a copy of the policy or to post it in a prominent location.  In cooperatives and condominiums, the policy must be incorporated into the by-laws. Failure to adopt and failure to disclose the policy, or to advise of material changes to the policy, will result in violations and the imposition of civil penalties.


    How far should your policy extend, i.e. should smoking be banned in individual units?

    What are the implications of such a ban?    How far could or should owners and boards go when implementing a smoking policy?



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    Vincenzo Mogavero, chair of our New Jersey and New York litigation groups, has just received his M.B.A. from Cornell University.
    Vincenzo joined the New York office as a litigator in August 2011, and has continually impressed all of us with his intelligence, work ethic and leadership abilities. He quickly emerged as the leader of the NY/NJ litigation group and, in 2015, added administration of the New Jersey Construction litigation practice to his responsibilities.


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    Very often boards of condominiums and other community associations hesitate to engage in litigation against unit owners who fail to pay common expense assessments due to fear of  the legal expense. In addressing this concern, I often advise boards that likely if you do nothing, you will receive nothing.



    In New Jersey legal fees are recoverable  against non-paying owners. Although many actions against delinquent owners  proceed as uncontested, some owners do appear and attempt to defeat the association’s claim to the money due and owing. Some matters may actually proceed to trial. This of course increases the expense to the association.



    Well established case law in New Jersey provides that the amount due to an association should not be reduced by the legal expense incurred to recoup the fees. The Appellate Division reaffirmed this principal in a case decided this week. Significantly, the court determined  that although the fee must be reasonable and must comport with the factors set forth in the Rules of Professional Conduct, the fact that the attorney fee award requested may be substantially disproportionate to the amount the association claims to be due for monthly common expense assessments, is not determinative of whether the fee is reasonable and should be awarded.



    Since unpaid common expense assessments will continue to accrue for so long as a non-paying unit owner has title, it is critical for the association to have a cost effective legal strategy in place to recover the fees.  


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