A condominium association is in every way a community. In many ways it’s a small town, and the boards elected to govern the condominium association’s business run into the same types of problems, and potential litigation over them, as the officers of a town. The board may be on either side of the dispute or litigation, either acting as a plaintiff trying to obtain a remedy, or as a defendant from whom someone else is trying to obtain a remedy.
Common Claims against Boards
A claim against a condominium board may be based on failure to adequately perform any duty imposed by law, the master deed, or bylaws, which is a very wide range, indeed. Many disputes concern the board’s actions in overseeing the relationship between the association and individual members on such subjects as:
- Setting and collecting fees
- Assessing and collecting fines
- Enforcing the association’s rules and regulation, such as the right of unit owners to have pets
The board can also face potential litigation over:
- Hiring and supervision practices, such as claimed discrimination
- Breach of numerous types of contracts, from painting and lawn care to major construction projects
- Its obligation to purchase adequate insurance for the association
- Self-dealing or similar wrongdoing by board members
- Managing the association finances
- Claims of negligence that injured someone on association property (falls on stairs and walkways, dog bites, vehicle accidents on defective or uncleared roads)
Protection from Personal Liability
Given the many possible reasons for finding a board legally liable, board members need to do what they can to protect themselves against personal liability. The two best protections are:
- Directors & officers (D&O) liability insurance paid by the association
- An enforceable agreement, preferably in the bylaws, that the association will indemnify the board members for costs of defending themselves
Not all D&O insurance is the same, of course. It’s crucial that the insurance cover liability of all the types commonly faced by a condominium board, and for a reasonable limit of liability.
Common Claims by Boards
As with claims against boards, there is no limit to the types of claims that a board may press against individual unit owners or third parties. Some of the more common ones are:
- Faulty construction claims based on defects in the association property
- Pursuit of insurance recovery for damage to common areas
- Collection of past due assessments, fees, penalties, etc.
- Challenges to tax assessments
Alternative Dispute Resolution
Not all disputes need to be litigated, of course. Both the New Jersey Condominium and the Planned Real Estate Development Full Disclosure Act require associations to provide a “fair and efficient” alternative to litigation for unit owners to resolve disputes between one another or with the association. In fact, the Condominium Act requires that the association provide written notice ADR availability as a precondition to issuing a fine. Enforcing the statutory provisions requiring adoption and administration of alternate dispute resolution procedures is within the authority of the state Department of Community Affairs.
Legal Counsel for Your Condo Board
Condominium law is very specialized and often technical, while many condominium board members have minimal familiarity with the legal aspects of the multi-faceted job they have been elected to perform. Having the advice of an experienced New Jersey condominium lawyer can be the difference between success and failure at every step in the board’s journey, from ensuring that the association documents are in order to interpreting the documents reasonably, to performing the detailed work in ensuring that third parties are held to account. At Barnes Law Group, LLC, we have the broad experience needed to work with the board in the many areas where problems can arise. Much of our business in Cape May and Atlantic Counties comes to us by word of mouth, because with more than fifty years of experience, we are the best at what we do. We keep in regular communication with our clients and pride ourselves on our positive relations with those we serve. Call today to schedule a meeting at one of our conveniently offices located in North Wildwood and Egg Harbor Township to learn how we can assist you with the smooth operation of your association.