February 2025 CT

HIGH-RISE, HIGH-DELINQUENCIES? Collection Strategies for New Jersey High-Rise Condominiums

By Marian Miawad, Esq. and Glenford W. Warmington, Esq. Becker

“New Jersey law provides community

associations with several tools to collect overdue assessments.”

H igh-rise condominiums in New Jersey often offer the best of urban living: incredible views, con venient amenities, and a sense of community. But managing these communities can sometimes present unique challenges, particularly with the collection of past due assessments from unit owners. As has been said count less times, assessments (also referred to as maintenance fees) are the “lifeblood” of a community association, and timely payments are essential to maintaining an associa tion’s financial stability and ensuring proper upkeep of the building. Pursuant to the New Jersey Condominium Act, N.J.S.A. 46:8B-1 et seq. , and an association’s governing docu ments, the board of trustees or directors is responsible for ensuring all unit owners pay their proportionate share of common expenses. When unit owners fail to pay, it creates a financial strain on the entire community. New Jersey law provides community associations with several tools to collect overdue assessments. Associations can impose reasonable late fees and/or interest if autho rized by their governing documents. Associations are also authorized to record a claim of lien on a delinquent unit owner’s property, which would prevent any voluntary sale

of the unit and becomes important if a unit owner files for bankruptcy protection and/or the unit is subject to a mort gage foreclosure (in certain circumstances, the association’s lien would be entitled to limited priority over the unit’s mort gage). If necessary, associations can also initiate actions seeking a personal money judgment against a delinquent owner and/or initiate a lien foreclosure proceeding. To avoid delinquencies jeopardizing an association’s ability to maintain the common elements, association boards should implement a clear, consistent collection policy with the assistance of counsel. That policy should outline a pro cess that includes transparent communication with members, clear and comprehensive collection steps that apply to all unit owners so there are no surprises as to what will occur if a unit owner becomes delinquent, as well as a procedure of when and how delinquent accounts are referred to legal counsel. Collection policies should clearly specify payment obligations, due dates, and consequences of late fees for overdue payments, including the possible suspension of priv ileges, such as parking or use of the association’s amenities, if authorized by the governing documents. Management should work collaboratively with associa tion counsel to ensure all records are up-to-date and correct. CONTINUES ON PAGE 28

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