Jan 2018

YEAR IN REVIEW... from page 11.

Lender Responsibility for Delinquent Maintenance Fees Until legislation is passed, unless a lender is an actual “mortgagee in pos- session”, it cannot be compelled to pay maintenance fees. Two recent cases have held that incidental activity under- taken by a lender to protect its security interest does not suffice to obligate the lender to pay maintenance fees. Hence, the acts of winterizing a unit, changing locks, remediating stink bugs, landscaping and making repairs do not constitute sufficient activity to deem the lender to be in possession. See, Woodlands Community Association, Inc. v. Mitchell, 450 N.J. Super. 310 (App. Div. June 6, 2017); Union Hill Condominium Association, Inc. v. Wells Fargo Bank, N.A., 2017 WL 5478310 (App. Div. November 15, 2017). This applies notwithstanding

"Examine your governing documents, if your ADR procedure refers to arbitration as the form of alternative dispute resolution, it may be time for an amendment."

and counsel. In the Highlands case, the facts exposed that although the association and its counsel thought they were participating in non-binding mediation, the record reflected that the proceeding was referred to and treated as an arbitration. Arbitration contemplates a binding proceeding. Opportunity to overturn an arbitrator’s award is extremely narrow and limit- ed. Examine your governing docu- ments, if your ADR procedure refers to arbitration as the form of alternative dispute resolution, it may be time for an amendment. Also, if your asso- ciation becomes involved with ADR, to avoid unintended results, confirm that all submission documents refer to the proceeding as mediation and not arbitration.

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the pendency of a mortgage foreclo- sure action. Based on these decisions, it would not be prudent to join the lender as a defendant in a suit to collect a money judgment for delinquent maintenance fees. Bankruptcy Updates This year, there were at least four decisions from the Bankruptcy Courts attempting to confirm the status of a priority condominium claim of lien in a Chapter 13 bankruptcy. The man- ner in which the lien will be treated and paid out under a Chapter 13 plan, depends on whether the lien is classified as a statutory lien or a consensual lien. All four decision acknowledge that a condominium lien is a created by statute and by the association’s governing documents. The courts acknowledge that the New Jersey Condominium Act, N.J.S.A. § 46:8B-21 (b) (1) affords a claim of lien a limited six-month priority over a prior recorded mortgage. The anti-modification provisions of the Bankruptcy Code, prohibit a debt- or from modifying the rights of claims

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