CAI-NJ June 2021

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much the sponsor/developer was sup- posed to be paying in dues for its unsold units, self-funding pre-transition repairs, and satisfying other financial obligations. It will also determine wheth- er the capital reserve schedule the sponsor/developer established and has been funding is thorough, accurate, and realistic enough to ensure the association will have saved enough money to make future repairs and/or replacements to infrastructure when their respective useful lives end. When the unit owner-controlled asso- ciation board obtains the transition Engineering Study and the Financial Study, the board, typically with the assis- tance of legal counsel, will present these reports to the sponsor/developer and negotiate a settlement that includes finan- cial payment(s), construction repairs, or a combination of both. Armed with the Transition Engineering Study, Financial Study, and the fortuity of outstanding municipal bonds and a six-year statute of limitations for construction defect claims, associations typically have considerable leverage to compel the sponsor/devel- oper to come to the negotiating table and offer a reasonable, if not generous, settlement. Even if the parties cannot settle and the association decides to litigate, its investment in the transition studies is not lost as the association will be able to use its transition engineers and accountants as lit- igation experts (or have separate litigation experts rely on the transition profession- als’ groundwork and analysis). Transition Considerations for Smaller Communities A thorough and effective Transition Engineering Study and Financial Study can cost tens of thousands of dollars, CONT I NU E S ON PAGE 44

Who canYOUR Association count on today for guidance in Transition and Construction Defect Litigation?

A Professional Corporation

Hueston McNulty, P.C. Defense and General Counsel Serving New Jersey, New York & Pennsylvania N Value–Experience–Quality We provide our Association clients with qual- ity and value.We strive to solve the problem– resolve the issue–and make life easier for our Associations and their property managers. Samuel J. McNulty, Esq. smcnulty@huestonmcnulty.com /www.huestonmcnulty.com Tel: 973-377-0200 / Fax: 973-377-6328 Florham Park - Sparta - Toms River - Philadelphia - Manhattan

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