August 2024 CT

August 2024 Community Trends

®

TRANSITIONS

In This Issue

tumdee/ iStock / Getty Images Plus

• Agreed Upon Procedure Reports for Sponsor Transition • Community Associations + Civil Litigation: A Primer • HOA and Condo Transition • There is More to S2760 ... and more!

TO DOWNLOAD AND PRINT THIS ISSUE, PLEASE CLICK THE ICON BELOW.

The Community Associations Institute New Jersey chapter would like to thank its 2024 Ultimate Partners below. For more information on our sponsorships, please contact CAI-NJ at 609-588-0030 or info@cainj.org.

THANK YOU FOR YOUR SUPPORT!

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MARCH 2024

THE CAI-NJ COMMUNITY TRENDS ® MAGAZINE CONTENTS 14 Agreed Upon Procedure Reports for Sponsor Transition By Mohammed Salyani, CPA, FCCA (UK), WilkinGuttenplan 27 Community Associations + Civil LItigation: A Primer By John S. Prisco, Esq., EBP, Becker 38 HOA and Condo Transition By Damon Kress, Esq., McGovern Legal Services, LLC, and Andrew Newman, CMCA, AMS, PCAM, INTEGRA Management Corp., AAMC 46 There is More to S2760 By Steven J. Morris, P.E., NAFE, R.S., Morris Engineering, LLC and Arnold J. Calabrese, Esq., Becker 50 Management Trends — Navigating HOA Management: Addressing Disagreements Between Management Companies and Associations By Toine Hutchinson, CMCA 27 14

EXTRAS President’s Corner Looking Ahead

5 6 7

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CAI-NJ Upcoming Events

Legislative Update

11 12 12 19 20 21 31

Chapter Trends

Conference Kick--Off — Save the Date Annual Beach Party Sponsor Announcement Annual Beach Party — Register Now!

Dennis R. Casale Memorial Golf Outing Recap & Photos F.A.S.T. Kickball Tournament — Save the Date 2024 CAI-NJ Conference & Expo — Register Now! 33 Schedule....................................................................34 Manager’s All Access Pass...........................................35 Why Board Members Should Attend.............................36 2025 CAI-NJ Board Member Nomination Form 37 Learn with LAC — Register Now! 39 F.A.S.T. School Supply Drive 41 F.A.S.T. Olympics Recap & Photos 42 Wednesday Webinar — Complying with Radburn Practically & Realistically 45 Join a 2025 CAI-NJ Committee 51 9 and Nosh Registration & Sponsorships 53 New Member Open House Recap & Photos 55 Summer Pints with PAC Registration 57 Board Leadership Development Workshop Registration 59 New Members 54 2024 Ultimate Partner Listings 64

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AUGUST 2024

CAI-NJ BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

VICE PRESIDENT RYAN FLEMING, CIRMS, EBP JGS INSURANCE, A BALDWIN RISK PARTNER

PRESIDENT ELECT STEVEN MLENAK, ESQ. GREENBAUM, ROWE, SMITH & DAVIS, LLP

PRESIDENT CHRISTOPHER NICOSIA, CMCA, AMS, PCAM RCP MANAGEMENT COMPANY, AAMC, AMO

SECRETARY MARY BARRETT, ESQ. STARK & STARK, ATTORNEYS AT LAW

TREASURER JOSEPH CHORBA, CPA WilkinGuttenplan

BOARD MEMBERS

Michael Flippin, CMCA, AMS, PCAM INTEGRA Management Corp., AAMC Community Association Manager Charles Lavine Traditions at Federal Point Condominium Association Homeowner Leader Tony Nardone, MBA, PCAM Corner Property Management, LLC, AAMC Community Association Manager

Cheryl Rhine, CIC, CIRMS, EBP USI Insurance Services Business Partner Robert Travis, CIRMS Long Beach Commons Condominium Association Homeowner Leader

GENERAL COUNSEL Jason Orlando, Esq. Orlando Murphy LLP

GENERAL COUNSEL EMERITUS Wendell A. Smith, Esq., CCAL Greenbaum, Rowe, Smith & Davis, LLP

IMMEDIATE PAST PRESIDENT Tony Nardone, MBA, PCAM Corner Property Management, LLC, AAMC

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AUGUST 2024

PRESIDENT’S CORNER Christopher Nicosia, MM, CMCA, AMS, PCAM 2024 CAI-NJ PRESIDENT RCP MANAGEMENT COMPANY, AAMC, AMO

CAI-NJ TEAM

Happy August, fellow CAI-NJ Members! Welcome to another edition of Community Trends ® !

ANGELA KAVANAUGH CHAPTER EXECUTIVE DIRECTOR ANGELA@CAINJ.ORG JACLYN OSKIERKO DIRECTOR, CONFERENCE & EVENTS JACLYN@CAINJ.ORG ROBIN SURGENT DIRECTOR, MEMBERSHIP DEVELOPMENT ROBIN@CAINJ.ORG BROOKE STOPPIELLO-NEVINS EDITORIAL & WEBSITE MANAGER BROOKE@CAINJ.ORG JOCELYN GARLOCK PROGRAMS & EVENTS COORDINATOR JOCELYN@CAINJ.ORG HELEN KIECHLIN MARKETING & MEMBER RELATIONS COORDINATOR HELEN@CAINJ.ORG

I n this month’s issue of Community Trends ® , our experts discuss transitions. Transitions take many forms in the community association industry, including the process new construction communities undertake when they enter transition — the time when control of the association transfers from the developer/sponsor entity to the owners. At this point in a community’s life cycle, the board begins evaluating the physical and financial assets of the association to ensure the

community received everything it was entitled to from the developer/spon sor. It can also reflect a period when communities enter different phases of their life cycle, or the transition of leader ship through the board election process. Please take some time to read the infor mative articles included in this month’s issue and I hope you gain some insight along the way. On July 10th, CAI-NJ held its annual F.A.S.T. Olympics — an afternoon of

“...our most recent donations from last year allowed Make A-Wish ® New Jersey to grant two wishes... for two brave children fighting childhood illness.”

Contact CAI-NJ

ADDRESS CAI-NJ

500 HARDING ROAD FREEHOLD, NJ 07728 PHONE 609-588-0030 FAX 609-588-0040 WEB WWW.CAINJ.ORG EMAIL INFO@CAINJ.ORG

friendly competition, networking, and fundraising to support Make-A-Wish ® New Jersey! This year was another hot day at Thompson Park in Monroe, but the sun was shining, the breeze was blowing (almost too much…frisbee was a challenge!) and the BBQ was plentiful as our members enjoyed a fun-filled day organized by our fantastic F.A.S.T. Committee and Chapter Team! We were also joined by Dominique Gleason, Director of Events for Make-A-Wish ® New Jersey, who shared that our most recent donations from last year allowed Make-A-Wish ® New Jersey to grant two wishes — a shopping spree and an all-expenses paid trip to Disney World for two brave children fighting childhood illness. It is so rewarding to hear that our collective efforts on behalf of Make A-Wish ® New Jersey are truly making a difference! I personally want to thank everyone that attended, our wonderful sponsors for your support, my fellow board members that participated in the Board Slime Challenge, and to our fan tastic F.A.S.T. Committee and Chapter Team for another wonderful event! I am excited to announce that the Board Slime Challenge raised over $5,700.00 in addition to the day’s sponsorship and registration revenue for Make-A-Wish ® New Jersey! Final totals for the day will be revealed soon as

CAI-NJ on Social Media

www.facebook.com/ CAINJCHAPTER Community Associations Institute - New Jersey Chapter

@cainewjersey

CONTINUES ON PAGE 66

CAI-NJ

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AUGUST 2024

LOOKING AHEAD ANGELA KAVANAUGH | CAI-NJ CHAPTER EXECUTIVE DIRECTOR

I hope you are enjoying your summer and staying cool. At the chapter we are already planning for 2025 and that includes accepting applications for nominations to the CAI-NJ Board of Directors and forming our chapter committees. The CAI-NJ Board of Directors currently has three (3) board seat openings beginning January 1, 2025. Homeowner Leader and/or Community Association Manager Members are invited to submit their names to the Nominating Committee for consideration for nomination to the Board of Directors. If you are interested in applying, further information can be found at, https://cainj.org/2025-nomination-bod-form/. 2025 Committee Sign-Ups are currently available. Volunteering your time and getting involved as a committee member is one of the best ways to optimize your chap ter membership. As a committee member you will have the opportunity to meet our industry leaders, opening up opportunities to build new relationships with your peers, while creating programs and enhancing the benefits for our chapter members. Committee Sign-Ups are now available and we encourage all member companies to utilize their three (3) seats to serve! Choose the one that best fits you. For further information click here. • North Jersey Regional Committee – New this year! The North Jersey Regional Committee will be the NJ regional task force collaborating with the Events Committee to assist in the execution of networking, educational and happy-hour events in the northern region of the state where we are hoping to grow and gain more member involvement in those areas. You must live or work in that area in order to serve on the committee to best assist the committee with venue locations. • Awards Committee – Our first event for the year, the Annual Awards Celebration, attended by over 350 members annually, honors the past year’s president and celebrates our members that have demonstrated excel

lence in our industry over the past year. Committee mem bers assist in making the Annual Awards Celebration a must-attend event. • Business Partner Committee – This committee, com prised of Business Partner Members, strives to enhance the chapter benefits offered to not only business partners but community association managers and homeowner leaders as well, by creating educational opportunities and providing networking opportunities to foster relation ships within the industry. “As a committee member you will have the opportunity to meet • Conference & Expo Committee – This two-day event begins with the Conference Kick Off followed by the Conference & Expo, with over 1,100 attendees. Assist in the planning and execution of the chapter’s signature event and ensure that community association board members and managers are offered timely education while learning what’s trending in the industry. • Editorial Committee – The chapter’s monthly magazine, Community Trends ® , the official median of communica tion for the chapter, is an important resource for all three Membership Representation Groups (MRGs) of CAI. The Editorial Committee is responsible for soliciting, reviewing, and editing all articles for publication in the magazine. • Events Committee – This is your opportunity to be a part of the two biggest parties of the year. Committee mem bers assist with the planning and execution of both the Beach Party, attended by over 700 members, and the our industry leaders, opening up opportunities to build new relationships...”

CONTINUES ON PAGE 8

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AUGUST 2024

CALENDAR 2024 Events & Education

AUGUST

OCTOBER

7 15 22 27 28

1 8

Community Conversations Live Virtual

CA-PAC - 9 & Nosh Concordia Golf Club, Monroe Twp.

Ultimate Event - Jersey Shore BlueClaws ShoreTown Ballpark, Lakewood

Joint Roundtable Discussion Regency at Monroe, Monroe Twp.

16 17

Summer Pints with PAC Homestead Bar + Kitchen, Morristown

Conference Kick-Off Sheraton, Edison

Board Leadership Development Workshop CAI-NJ Headquarters, Freehold

Annual Conference & Expo New Jersey Convention & Exposition Center, Edison

SEPTEMBER Beach Party

NOVEMBER

12 17 25

6 21

Community Conversations Live Virtual

Martell’s Tiki Bar, Pt. Pleasant

Learn with LAC Virtual

Make-A-Wish Check Presentation Breakfast & Castle Tour Make-A-Wish New Jersey Castle, Monroe Twp.

Wednesday Webinar - Complying with Radburn Practically & Realistically Virtual

DECEMBER

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F.A.S.T. Kickball Tournament Mercer County Park, Princeton Junction

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Annual Meeting & Chapter Retreat Grand Marquis, Old Bridge

Winter Break Party Grand Marquis, Old Bridge

Register for these and other events at www.cainj.org All events are subject to change .

LOOKING AHEAD... from page 6.

Don’t miss these upcoming Summer events! CAI-NJ Ultimate Night Out, August 15th, at Jersey Shore BlueClaws Stadium in Lakewood. Community asso ciation board members and managers are invited to join our Ultimate Partners on the Party Deck, as they host an evening of baseball, buffet, and cocktails while networking with out Ultimate Partners. Summer Pints with PAC, August 22nd. The New Jersey Community Associations Political Action Committee (CA-PAC) invites you to a happy hour that helps support our PAC while enjoying pints and networking with colleagues. This is an excellent opportunity to support those who advo cate for our communities as well as meeting influential members of the organization! CAI-NJ Annual Beach Party, September 12th. Reconnect with old friends and start new friendships by joining over 700 New Jersey chapter members for the chapter’s largest networking event of the year at Martell’s Tiki Bar in Point Pleasant Beach. Learn with LAC, September 17th. Join us for this two hour webinar update on legislation that could affect you. CAI-NJ F.A.S.T. Kickball Tournament, September 26th. Come out to help us reach our $100,000 donation mile stone for the Make-A-Wish New Jersey, while making new connections for your network. CAI-NJ Conference & Exp, October 17th. We will be hosting the New Jersey chapter’s Annual Conference and Expo at a new venue this year to allow for additional exhib itors and education. This will be the largest tradeshow in our industry where attendees will have the opportunity to network and connect with industry leaders, discover what is trending and become more informed on issues affecting those living and working in common interest communities (CICs). Please mark your calendar for Thursday, October 17th at the New Jersey Convention & Exposition Center, in Edison. For further information and to register for all our upcoming programs, please visit, https://cainj.org/network-events/ for networking events and, for education programs visit https://cainj.org/education-events/. Feel free to reach out to me or anyone on the CAI-NJ Team to discover how to get involved and optimize your chapter membership! n

elegant Winter Break Party attended by over 300, the final networking event of the year. The committee estab lishes the event themes, secures sponsorships, solicits attendance, and assists with registration for both events. • Future All Star Team (F.A.S.T.) Committee – The dedica tion and energy of involved young professionals is what allows this committee to accomplish their goals. Their focus is on civic outreach and charitable fundraising. Through networking activities, they make a significant difference in our communities. The committee plans and executes the Annual Olympics and Kickball Tournament, raising donations for the Make-A-Wish New Jersey in addition to clothing and school supply drives throughout the year. • Golf Committee – Our Annual Dennis R. Casale Memorial Golf Outing, attended by more than 250 golfers, is one of our premier events. The Golf Committee plans the event, assists with registration, secures event sponsorships, and door prizes. • Homeowner Leader Committee – This committee, com prised of common interest community (CIC) board mem bers, creates benefits, networking opportunities and edu cational programs on issues directly affecting homeowner leaders. • Manager Committee – The focus of this committee, comprised of community association manager members, is to promote professionalism of community association managers within the industry through timely education, sharing of best practices and certifications. • Membership Committee – The Membership Committee assists with member retention and recruitment by directly reaching out to our members. Through this outreach they ensure that the chapter benefits are meeting the needs of our members. • Women’s Leadership Committee – It is the mission of this committee to provide education and resources that support and empower women aspiring to grow within or enter the industry. Committee members plan and exe cute the Annual Conquer + Connect Retreat, a full day of education and networking with industry leaders.

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AUGUST 2024

2024 CAI-NJ COMMITTEES

AWARDS Lila Khiry Cirillo — Chair Kim Dempsey — Vice Chair Liz Bonafide Jeanine Clark, Esq. Drew Cowley Lindsay Cupples, EBP Michelle Gadaleta Kristin Guinan Nick Haralambopoulous, CPA Christine Maldonado Matthew Manley Newlin Peng Kari Prout, CMCA Eileen Szelewicki, CMCA Mary Visco Board Liaisons: Steve Mlenak, Esq. Chris Nicosia, CMCA, AMS, PCAM Staff Liaisons: Jocelyn Garlock Jaclyn Oskierko BUSINESS PARTNER Mike Luzzi, CPIA, EBP — Chair Theresa Beckett, EBP — Vice Chair Jack Benson

EDITORIAL Drew Podolski, Esq. — Chair Casey Noon — Vice Chair Robert Arnone, MSRE, CMCA, AMS David Cerqueira, Esq. David Dockery, Esq. Damon Kress, Esq. Nicole Martone, CMCA, AMS, PCAM Michael Mezzo, CPA Steven Morris, RS Andrew Newman, CMCA, AMS, PCAM Board Liaisons: Mary Barrett, Esq. Staff Liaison: Brooke Stoppiello-Nevins EVENTS Diane Cody, CMCA, PCAM — Chair Randy Vogel — Vice Chair Anthony Gjergji Maria Mikowski Debbie Pasquariello, CIC, CIRMS, EBP Alexandra Pollera Lyly Ton Melissa Volet, Esq. Jill Zulin Board Liaisons: Charles Lavine Tony Nardone, MBA, PCAM Staff Liaisons: Jocelyn Garlock Jaclyn Oskierko F.A.S.T. Jessica Long — Chair Eric Eggert, CIC, CIRMS, EBP — Vice Chair Adara Azeez Chelsea Brodmerkel Rebecca Gavin Steven Kuhnert Mary Ellen Liberatore, Esq. Will Meola, RS Marian Miawad, Esq. Nicole Miller, Esq. Kristina Munson, CMCA, AMS, PCAM, CPM Jen O’Brien Jose Romero, EBP Dharmi Shah Peter Shine, EBP Jimmy Stovall Lauren Vadenais, EBP Michael Vargetto Kristy Winchock, EBP Board Liaisons: Michael Flippin, CMCA, AMS, PCAM Cheryl Rhine, CIC, CIRMS, EBP Staff Liaisons: Brooke Stoppiello-Nevins Robin Surgent Jonathan Cairone Melanie Donnoli Kristi Evans Shelby Evans, CPA, EBP Nicole Ancona Michael Blaney Tim Bruchez Dean Catanzarite Justine DelVecchio Mary DeNone Frank Fasolo

GOLF OUTING Lisa Komitor — Chair Jasmin Shelton — Vice Chair Chris Belkot Harold Berlowe, CMCA Lorenzo Cullari, AICP Marty Ehrlich Donna Fiore, CMCA Keith Giliberti, PE, RS, EBP Fred Hodge, EBP Sal Iozzia Hank Johns, EBP Cathy Mango, EBP Karl Meth, Esq. Paul Migliore Mike Polulak, Esq. David Shahrabani, EBP Jodi Smallwood Michael Sturchio Ryan Weiner Paul Wojciechowski Board Liaisons: Michael Flippin, CMCA, AMS, PCAM Tony Nardone, MBA, PCAM Staff Liaisons: Jocelyn Garlock Jaclyn Oskierko HOMEOWNER LEADER Lois Gerber — Chair Bruce Blum — Vice Chair Joseph Branciforte Roslyn Brodsky Barbara Finn, CMCA Charles Fredericks Carl Kentzel Thomas Krieger

MANAGER Chuck Graziano, PCAM — Chair Mariaellen Varelis — Vice Chair Antoinette Hutchinson Richard Mattalian, CMCA, AMS, PCAM Erin O'Reilly, CMCA, AMS, PCAM Dan Penix, CMCA Vince Rapolla, AMS, PCAM Christopher Spagnuolo Erin Spiliotopoulos, CMCA, AMS Barbara Strubel, CMCA Elaine Warga-Murray, CMCA, AMS, PCAM Board Liaisons: Michael Flippin, CMCA, AMS, PCAM

Staff Liaisons: Jaclyn Oskierko Robin Surgent MEMBERSHIP Tara Baldwin, CPA — Chair Ken Shah — Vice Chair Lysa Bergenfeld, Esq. Jeffrey Cuevas Megan Brazil, EBP Nichole Gist Melissa Lloyd, CMCA, AMS

Kim Manicone, EBP Francisco Marcucci Kathleen Radler

Joe Cunningham Glenn Fedale, Sr. Carrie Fusella Dave Kiessling, RS, EBP Richard Lang, EBP Christopher Lugara Fran McGovern, Esq. David McNamara Chris Merkler Donna Meyer, EBP Jonathan Moscou John Prisco, Esq., EBP

Brent Rivenburgh, AAI Steve Roderick, EBP Michael Ryan Larry Sauer, CPM, CMCA, PCAM

Denise Schiera Ryan Trembley Board Liaisons: Joe Chorba, CPA

Richard Lans Cheryl Palent Board Liaisons: Charles Lavine Bob Travis, CIRMS

Charles Lavine Staff Liaisons: Robin Surgent WOMENS LEADERSHIP

Ross Rutman, EBP Herman Shaugger David Velasco, EBP Gregory Vinogradsky, Esq., EBP Board Liaisons: Joe Chorba, CPA Ryan Fleming, CIRMS, EBP Staff Liaisons: Jaclyn Oskierko Robin Surgent CONFERENCE & EXPO Shelia Adams, CMCA, AMS — Chair John Echelmeier — Vice Chair Tom Anzalone Brian Aubrey, PCAM

Staff Liaisons: Jaclyn Oskierko Robin Surgent LEGISLATIVE ACTION COMMITTEE (LAC)/PAC Matthew Z. Earle, Esq. — Chair Edward San George, PCAM — Vice Chair Jackie Thermidor, CMCA, AMS, PCAM — Secretary Mohammed Salyani, CPA — Treasurer Elizabeth Comando, CMCA, PCAM — PAC President Andrew Podolski, Esq. — PAC Vice President James Rademacher, EBP — PAC Committee Jennifer Alexander, Esq. Roslyn Brodsky Barbara Drummond, CMCA, PCAM

Jamie Cullen-DeVries, CMCA, AMS — Chair Linda Courain, CMCA, AMS — Vice Chair Jennifer Carr Alexis Dairman, Esq. Beth Duffy, CMCA Kimberly Finno Patricia Foltanski Jessica Kizmann, CPA Lirelle Klein Elizabeth Maltais Jessica Marvel, EBP Kristin Marzarella-Amato Shannon McCormick

Rachel Neves Anita Rothery Nikki Schillaci, EBP Board Liaisons: Mary Barrett, Esq. Cheryl Rhine, CIC, CIRMS, EBP

Martin Bahner Michael Blaney Joe Bonafede Jay Burak Jordan Burkhalter, CPA John Desien Ellen Comiski, CMCA Marty Conway

Mitchell Frumkin, RS Vincent Hager, CIRMS Karyn Kennedy-Branco, Esq. Terry Kessler, Esq. J. David Ramsey, Esq. Lisa Rayca, CMCA, AMS John Reichart Alexander Scheffer, CMCA Board Liaisons: Richard Milder Cheryl Palent

Staff Liaisons: Jaclyn Oskierko Robin Surgent

Anthony Dellanno Saher Gouda, EBP James Kiernan George Caso Martinez Jerome Quagliozzi Holly Teufel, CMCA, AMS Board Liaisons: Ryan Fleming, CIRMS, EBP Chris Nicosia, CMCA, AMS, PCAM

Steven Mlenak, Esq. Robert Travis, CIRMS Staff Liaisons: Angela Kavanaugh Robin Surgent

Staff Liaisons: Jocelyn Garlock Jaclyn Oskierko

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AUGUST 2024

CAI-NJ 2024 PARTNERS

Alliance Association Bank Ansell Grimm & Aaron, PC Associa Community Management Corp., AAMC Becker BELFOR Property Restoration Brown & Brown Insurance of Lehigh Valley Clearview Washing, LLC Corner Property Management, LLC, AAMC Denali Property Management, Inc. The Falcon Group FWH Associates, P.A.

GAF Hill Wallack LLP Kipcon Inc. McGovern Legal Services, LLC PS&S, LLC Professional Restoration Services, LLC DBA PuroClean of Hoboken Rezkom Enterprises, Inc. Sweeping Corp. of America (SCA) Taylor Management Company, AAMC, AMO Technocality, Inc. USI Insurance Services WilkinGuttenplan

National Contractors, Inc. National Cooperative Bank O & S Associates, Inc. Parallel Architectural Group Pardini R. Construction Corporation

Accent Group Access Property Management, AAMC, AMO Acrisure Adamas Building Services All County Exteriors Amco Pest Solutions, Inc. Anchor Pest Control Apex Air Duct Cleaning & Chimney Services Becht Engineering BT, Inc. Buckalew Frizzell & Crevina LLP Capital One CCA, Construction Consulting Associates, LLC CertaPro Painters of Central & Lower Bucks

FirstService Residential, AAMC Garden State Pavement Solutions Giordano, Halleran & Ciesla Homestead Management Services, Inc. Hueston McNulty, P.C. L.N. Rothberg & Son, Inc. Landscape Maintenance Services, Inc. Lemus Construction, Inc. MyPropertyBilling.com Cowleys Pest Services Cutolo Barros, LLC Environmental Designers Irrigation, Inc First Onsite FloodCo USA Greenbaum, Rowe, Smith & Davis LLP Griffin Alexander, P.C. Guardian Service Industries, Inc. Innovative Pressure Cleaning IronRock Security The Jesan Companies JGS Insurance, a Baldwin Risk Partner KPI2 Enterprises, Inc. Mackoul Risk Solutions, LLC Morris Engineering, LLC

Popular Association Banking Quality 1st Contracting, Inc. Rainbow G & J Painting, LLC Regal Restoration USA

Republic Services of New Jersey, LLC Servpro of Howell, Wall, Spring Lake, Asbury Park Stark & Stark Attorneys at Law Valley Bank Wilkin Management Group, Inc.

Accurate Reconstruction APC Hospitality, LLC AR Management Company Association Advisors NJ Association Reserves BlueSky Restoration Contractors LLC Core Maintenance Construction Down to Earth Landscaping, Inc. Felsen Insurance Services First Citizens Bank

SmartStreet Powered by BANC of California Preferred Community Management Services, Inc., AAMC

Radom & Wetter Renda Roads, Inc. Servpro Team Fox South Shore Construction, LLC STAR Building Services Towne & Country Management

LEGISLATIVE UPDATE

MATTHEW Z. EARLE, ESQ. KATES, NUSSMAN, ELLIS, FARHI & EARLE, LLP LEGISLATIVE ACTION COMMITTEE CHAIR

A s you get ready for the home stretch of Summer (already---ugh), I wanted to provide you with some bullet point updates of recent matters that are of interest to the New Jersey Legislative Action Committee (NJ-LAC). 1. CAI National has filed a lawsuit in federal court seeking to have community associations exempted from having to file under the Corporate Transparency Act. We are closely monitoring the situation and will provide you with any updates. 2. Governor Murphy signed S3192, the “Real Estate Consumer Protection Enhancement Act.” While this mainly applies to brokers and the buyers and sellers of real estate, be aware that a property condition disclo sure form must now be executed by the seller in every residential real estate transaction. 3. Governor Murphy signed A3772 into law, which per mits the owner or his or her heirs to request that a proper ty subject to a tax sale foreclosure be sold at sheriff’s sale for the purpose of preserving equity in the property. The NJ-LAC unsuccessfully attempted to get the sponsors to extend that right to all lienholders, including condomini um and Homeowners Association (HOA) lienholders.

4. Governor Murphy signed into law A4458 which will require newly constructed townhomes to be installed with automatic sprinkler systems.

“CAI National has filed a lawsuit in federal court seeking to have community associations exempted from having to file under the Corporate Transparency Act.” 5. On August 22, 2024, the Community Associations Political Action Committee (CA-PAC) will hold a “Pints with PAC” event at the Homestead Bar + Kitchen in Morristown, New Jersey. If you care about what we do, your support in these events is critical. Therefore, please consider sponsoring and attending. Enjoy the rest of your summer. We will be back with our September LAC issue of the magazine and a virtual Legislative Update on September 17th. n

Stay up-to-date on legislative issues at www.cainj.org.

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AUGUST 2024

CHAPTER TRENDS

Introducing the Newest Member of CAI New Jersey, the HOA Pros Podcast: A Voice for the Community Association Industry! Their show features industry experts Mike Perlof and Kara Foley, CMCA, AMS, PCAM as co-hosts. This dynamic duo brings a wealth of experience and passion to the table, offering listeners invaluable insights into the world of homeowners associations. Each episode will feature in-depth discussions on various aspects of HOA management, including legal issues, financial management, community engagement, and more. With a focus on education and empowerment, the HOA Pros Podcast is a valuable resource for anyone involved in community management. The HOA Pros Podcast is now available on all major podcast plat forms, including Apple Podcasts and Spotify. Listeners can subscribe to stay up-to-date with the latest episodes and join the conversation by following the podcast on Instagram. n

• All submissions must come from and be about: - A member of CAI-NJ (Manager, Management Company, Board Member, Business Partner or Business Partner Employee) in good standing. • Companies/Communities are permitted four (4) announcements per calendar year. • Submissions are limited to 150 words. - Members are responsible to condense the information appropriately, as CAI-NJ will not do so. Any submissions over 150 words will not be published. • Submissions may include (1) image. • Submissions should not be advertorial in nature. Please note, CAI-NJ reserves the right to edit any submissions. The chapter reserves the right to omit information as necessary. CAI-NJ has the exclusive right to refuse to publish any submissions for any reason. For questions regarding the Chapter Trends section of Community Trends ® , please contact brooke@cainj. org or 609-588-0030. Chapter Trends Editorial Guidelines

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AUGUST 2024

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Agreed Upon Procedure Reports for Sponsor Transition By Mohammed Salyani, CPA, FCCA(UK), WilkinGuttenplan

A ssociations are deemed to be going through tran sition when control of the board is transferred from the sponsor or developer to the unit owners. This usually occurs when 75% of the units have been conveyed. At such time elections are normally held and all but one seat on the board is filled by unit owners. In this article we will not be going through the legal aspects of transition, nor will we be discussing the physical aspects of the buildings. Those would be handled by the association’s attorney and engineer respectively. This article will cover the financial aspects of transition. However, input from both the associ ation’s attorney and engineer are critical for this report and we will cover why that is the case in the section to follow. During the course of transition, normally associations will hire an independent accountant to prepare what is known as an Agreed Upon Procedures Report to help in the

process. So, what is an Agreed Upon Procedures report or AUP report as we normally refer to? It is exactly what the name implies. The one crucial factor to understand is that an AUP report is quite different from an audit. A com mon misconception is that the accountant is performing a transition audit but that is not the case. For an audit, the accountant gives an opinion as to whether the financial information contained in the report is complete and free from any material omissions or misstatements. There are certain procedures that the auditor should follow to arrive at that opinion. In an AUP report the accountant offers no such opinion and must ensure that the report does not give the reader any such impression. The accountant is simply performing certain procedures as documented in the engagement letter, reporting their findings and providing a conclusion based on the same. CONTINUES ON PAGE 16

Wasan Tita/iStock/Getty Images Plus

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AUGUST 2024

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PROCEDURE REPORTS... from page 14.

So where do these procedures come from? It is the board of the association that provides the accountant with the list of procedures or calculations they would like to have performed and based on those procedures the accountant will calculate an amount that may be due from the developer. The report is then used as part of the transition negotiation process. As we all know, board members are volun teers that are not experts in this field.

“It is the attorney that guides the board as to what procedures they would have the accountant perform.”

This is where the association’s attorney is critical. It is the attorney that guides the board as to what procedures they would have the accountant perform. The accountant should be very careful to remain independent during this process and not give any opinions to the board as to what procedures should or should not be performed. The accountant can give a list of the most common procedures done but not make any decision on them. This is even more critical if the accoun tant is also the association’s auditor. Attestation standards that all CPA firms are required to abide by, do not allow it. One recommendation is to have the whole process done through the association’s attorney so as to

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developer gave up control of the board. 5) Calculate the replacement funding based on an updat ed capital reserve schedule using the cost index appli cable to the year the first unit was sold and subsequent updates and compare it to amounts funded to the replacement fund as per the audited financial statements and calculate the difference through the end of the year when the developer gave up control of the board. 6) Inspect material cash disbursements (over $XXX) and underlying invoices and/or documentation for the peri od from date of inception through the end of the year when the developer gave up control of the board and identify any disbursements not included in the budget for the operations of the association. To clarify #5, normally when a developer issues a Public Offering Statement, for a condominium association or a homeowner association with more than 100 units, it includes a budget and a schedule of reserve funding. The new regulations require that the schedule be prepared by a reserve specialist or an engineer. When associations

maintain attorney client privilege. Communication directly between the board and the accountant are not privy to the same. All that said, we can look into what are the most common procedures performed: 1) Obtain the association’s governing documents and detail the sections that reflect the developer’s financial responsibilities. 2) Obtain any prior audited financial statements and cal culate the developer’s responsibility regarding the deficit for each year of the association through the end of the year when the developer gave up control of the board. 3) Calculate the members’ initial working capital or other based on initial closing of all units through the end of the year when the developer gave up control of the board. 4) Calculate maintenance fees due from the developer, if any, on unsold units after end of the year when the

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Community Associations + Civil Litigation: A Primer By John S. Prisco, Esq., EBP, Becker

I f you are a community association board member or man ager, chances are that at some point you are going to be involved in a legal dispute. It’s simply an occupational hazard. From transition issues such as construction defects with the developer, to collections matters, rule enforcement, and even potentially employment disputes, community asso ciations are constantly facing legal challenges. Given that community associations can be hotbeds for legal disputes, it’s critical for board members and manag ers to be familiar with the litigation process. Understanding the key concepts and procedures of litigation will help board members and managers: • Make better, informed decisions. Understanding the legal landscape and procedures will greatly assist board members and managers in better understanding, evaluating, and acting upon counsel’s recommendations and legal advice. • Communicate effectively with homeowners. If a board member or manager understands the litigation process, they will be better suited to communicate effectively with homeowners about legal matters. This can help to pre vent misunderstandings and disputes. • Build trust with homeowners. When homeowners see that board members and managers are knowledgeable about the legal process, they are more likely to trust them to make sound decisions. This can help to build unit, even during conflict. From initiating suit to appeals, read on to learn more about the civil litigation in New Jersey:

Filing the Lawsuit – The Pleading Stage A lawsuit begins with the filing of a complaint by a plain tiff. This first stage is referred to as the “pleading” phase. The plaintiff is the person who thinks they have been wronged and wants the court to help them. The defendant is the person who is accused of doing something wrong and must defend themselves against the plaintiff’s claims. Here’s an example: Plaintiff: A homeowner who is suing their community association because they believe the association did not properly maintain the common roof that caused damage to the Plaintiff’s unit. Defendant: The community association, which is being accused of not properly maintaining the common roof. To have a viable claim, a plaintiff will need to file their complaint, depending on the specific type of claim or claims, within a specified time after the plaintiff’s claim “accrued” or in other words from the time the plaintiff had knowledge that a claim existed. Every state has what are called “statutes of limitation” that place time limits on different categories of claims. In New Jersey a personal injury claim has a two-year statute of limitations period. Contract and construction defect claims must generally be filed within six years However, New Jersey has what’s called the “discovery rule,” which essentially pauses the statute of limitations until the plaintiff obtains knowledge or with reasonable dili gence should have obtained knowledge that a claim exists. The discovery rule is a plaintiff-friendly equitable doctrine CONTINUES ON PAGE 28

sabelskaya/iStock/Getty Images Plus

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CIVIL LITIGATION... from page 27.

that was implemented to help offset the sometimes harsh results of being time-barred under an applicable stat ute of limitation. The discovery rule is particularly helpful for situations involv ing latent damages such as water infiltration within the cavity of a wall that does not present itself until after the limitations period has expired. Even with the discovery rule, in the past, community associations that were subjected to extended devel oper control beyond the statute of limitations often faced uphill battles to get their claims into court. Fortunately, New Jersey amended the applicable statute of limitation for property dam age claims to toll (pause) the statute of limitations for community associations until after the final transition vote when the unit owners control a majority of the board. Of course, with one hand the state giveth and with the other it taketh. New Jersey also has what’s called a statute of repose. That statute applies to certain types of claims, includ ing construction defect claims, and requires claims for property damage arising from construction to be filed within ten-years after “substantial com “The discovery rule is particularly helpful for situations involving latent damages such as water infiltration...”

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CIVIL LITIGATION... from page 28.

pletion.” This is a hard deadline for the benefit of developers, contractors, and designers of construction projects. Once the ten years is up, that’s it; no more claim. Making matters worse, the time of substantial completion can be different for one community depending on various factors. Once a plaintiff files a complaint, they must “serve” the defendant. That means, in an ideal setting, the defen dant is literally handed the legal doc uments by a person called a process server at their place of residence or business. Once the defendant is served, they will have thirty-five days to take one of two actions: (1) file an answer or (2) file a motion to dismiss the complaint for specific reasons per mitted under the court rules. An answer is the complaint’s coun terpart and as the name suggests, responds to the various allegations and claims in the complaint and sets forth defenses, which are reasons the defendant believes they’re not liable. A defendant can also allege their own claims against the plain tiff in the answer, which are called “counterclaims.” Counterclaims are those claims asserted by a defendant against a plaintiff. These types of claims are often confused with “cross-claims,” which are claims asserted between multiple defendants. For instance, a communi ty association files a complaint against a contractor for damage caused by negligent work. The association is the plaintiff, and the contractor is the defendant. In answering the associa

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CIVIL LITIGATION... from page 30.

plaintiff will have twenty-years to collect if the defendant ever turns up. Supporting/Defending Claims – Conducting Discovery Once a defendant files his answer the litigation moves into the next phase, which is the “discovery” phase. In this phase the parties “discover” the facts and evidence relevant to the claims and defenses. Because every claim requires a different approach, not every litigation’s discov ery phase will be identical. However, during this phase the parties generally: • Exchange paper document requests including, but not limited to, written interrogatories, which are questions that require certified answers and requests for docu ments in the possession of the parties and non-parties through the use of Notice to Produce Documents and subpoenas (a request to non-parties with the authority of the court behind it). • Conduct investigations into the claims to obtain evidence to support the claims and/or defenses. This step and how it proceeds will be dependent on the claims in the action. Some claims will require little to no investigation

tion’s complaint, the contractor may assert a counterclaim against the association for outstanding payments. If in that same action, there were multiple defendant contractors, each could assert against the other a crossclaim or cross claims. Sometimes though a defendant never files an answer and just ignores the plaintiff’s complaint. There are many reasons defendants do this, most notably that they believe they are judgment proof, meaning they have no collect able assets even if a judgment was entered against them. When a defendant fails to respond to a complaint in any fashion after being properly served, plaintiffs can rely on New Jersey’s procedures to obtain a judgment against an absent party, which is called a “default judgment.” This process typically involves proving to the court that all of the necessary steps to apprise the defendant of the action were taken (service) and ultimately proving to the court, even in the absence of the defendant, the damages caused by the absent defendant. Once obtained, like any judgment, a

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