CAI-NJ November 2020

“So what to do? Amending provisions of master deeds and bylaws is not always possible. The Act itself has the answer.”

218. The Court noted that because unit owners have an undivided interest in their community’s common elements, any governance scheme that conflicts with the recognition of that interest is inconsistent with and in violation of the Act. The Court held, therefore, that because “the Legislature included specific language in the [Act] to prevent a devel- oper’s lingering control over a condominium association,” the Kings Grant governance scheme “that granted irrevo- cable control over all common elements to the umbrella organization ‘plainly violate[d] both the letter and spirit of the [Act].’” Id. at 224 to 225 (citation omitted). Lastly, the New Jersey Appellate Division in Ellenheath Condominium Ass’n, Inc. v. Pearlman, 294 N.J. Super. 381(App Div 1996), is instructive. That Court heard an appeal of a dispute over whether a leaking underground oil tank providing heating oil to a single unit was a com- mon element or part of the unit. Id. at 382 to 383. The master deed’s definitions of a “unit” and “common ele- ments” made no mention of underground storage tanks for heating fuel. Id. at 383. In holding that the tank was unit owner property, the Court stated that “the master deed must yield to the statutory definition of ‘common elements’ as set forth in N.J.S.A. 46:8B-3d(ii), which definition excludes from ‘[c]ommon elements,’ ‘any improvement...specifically reserved or limited to a particular unit...’” Id. at 384 (citing N.J.S.A. 46:8B-7). See also Royal Tax Lien Servs., L.L.C. v. Marina Bay Towers Urban Renewal II, L.P., 2015 N.J. Super. Unpub. LEXIS 1957 (App Div 2015) (As such, the . . . provision permitting taxation of the land separately from the senior housing unit, and the definition of “Residential Unit” as excluding that land, are void as contrary to the Act. N.J.S.A. 46:8B-7.”). The lesson from these cases is that provisions drafted into governing documents that contradict rights and powers afforded to a condominium association by the Act, such as those examples cited above, will likely be struck down under N.J.S.A. 46:8B-7 if challenged. Condominium owners must take the time to scrutinize the governing docu- ments that they receive within the Public Offering Statement to identify provisions drafted by developers to curtail their rights or the rights of the association. n

owed by its individual unit owner members to an “umbrel- la” organization. Id. at 362. Section 7.21 of the Brandon Farms Master Association Declaration stated: “Despite anything to the contrary herein, the primary responsibility for the payment to [the Property Owners Association] of all Assessments, other than Miscellaneous Assessments, assessed against Class C Members, shall be that of the Condominium Association rather than that of the individual Class C Members.” Id. at 365. In finding that Section 7.21 violated the Act the Court noted that “Section 7:21 neglects to account for the Legislature’s intent in the Act ‘to ensure that the unit own- ers—not the developer—exercise control over their condo- minium boards’ and for the condominium board to make decisions on behalf of its members.” Id. at 373 (citation omitted). In striking the provision, the Court held as follows: Section 7.21 puts the developer’s interests ahead of unit owners’ interests. By insulating single family home- owners in Class A and Class B from the perceived risk of default by affordable housing unit owners and other Class C members, the developer made the single family dwellings in Class A and Class B more attractive. Thus, section 7.21 violates the public policy set forth in the Act by putting the developer’s interest in selling Class A and Class B homes ahead of the Condominium Association’s interests. [Id. at 375.] The Supreme Court relied on 46:8B-7 again in Fox v. Kings Grant Maint. Ass’n, 167 N.J. 208 (2001), to strike down a governing document provision that provided “that every sub association within Kings Grant …’irrevo- cably delegated’ … all of its powers and duties for the maintenance, preservation, administration and operation of common property” to the umbrella organization. Id. at

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