CAI-NJ November 2020

is that the article essentially imposes binding arbitration on the association without the association ever having agreed to limit its rights in that fashion. Section 15.03 gives the sponsor the right to select binding arbitration for any issues raised by the pre-transi- tion committee. Then, Section 15.05 imposes the same process contained in Section 15.03, including the spon- sor’s right to choose binding arbitra- tion, on the board after transition once it is controlled by the unit owners. This means that the sponsor decided that the association will be bound by bind- ing arbitration for construction defect claims, taking away its right to go to court, even though the unit owners never had the chance to agree to, or reject, that approach. Any construction defect litigation

attorney will tell you that binding arbi- tration is not a favorable approach for an association plagued with construc- tion defect problems. The association’s claims will be decided by arbitrators who may or may not have legal or construction knowledge. Arbitration lacks most of the rights and protec- tions afforded to an association by the litigation process. There is no jury of peers to decide whether an associ- ation is entitled to compensation. And lastly, there is no right to appeal the arbitrators’ decisions to the courts.It is a flawed and expensive. An article like the one above imposing binding arbitration upon an association is in direct violation of N.J.S.A. § 46:8B- 15, which defines the powers of an association and provides in part that “the association shall be an entity

which shall act through its officers and may enter into contracts, bring suit and be sued.” Another common master deed pro- vision is one that attempts to define common elements such as roofs, sid- ing and foundations to be part of the definition of a unit, thereby preventing the association from having standing to pursue claims related to those components. A provision from an unnamed client follows, again with key language in bold: ••• (B) Units include all: appliances and fixtures; foundation, exte- rior walls and siding; interior walls and partitions; gypsum board or other facing material on walls and ceilings; the decorated or finished all wood, tile, carpeting and pad- CONT I NU E S ON PAGE 28

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