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New Jersey Court Issues Ruling on Pivotal HOA Collections Case

January 12, 2016 Posted in Community Association Law

Assessing fees and penalties against condominium association residents can be a dicey issue for boards, particularly given the fact that board members are also residents of the community and may be involved socially with those residents whose accounts reflect a default.  Nonetheless, collection of dues and membership fees is an integral component to maintaining a healthy bottom line. Sometimes, unfortunately, it takes litigation to ensure that some residents are compliant with the dues requirements.

In one recent case, however, a condominium association based in Howell, New Jersey became abruptly aware of the specificity required by association bylaws with regard to attorneys’ fees accrued as a result of collection matters.

The details of the case are outlined below, and serve as a reminder for New Jersey condominium associations to double-check their governing documents for attorney fee provisions – as the court will not automatically award attorneys’ fees without express language permitting such an award.

Details of the Case

The New Jersey collections case began when a resident of the condominium became seriously delinquent on monthly dues, and the association obtained a default judgment against her for the total amount. Shortly thereafter, the Association sought to amend the judgment to include the attorneys’ fees accrued as a result of the action – a measure expressly permitted by the New Jersey Condominium Act.

In support of the amendment, the Association provided a copy of its governing documents, which allowed for “reasonable attorney fees,” but did not specify the nature of the action in which reasonably attorney’s fees could be assessed against a homeowner.

In the time period between the entry of the original judgment and the petition to amend for attorneys’ fees, the homeowner had taken out a loan and paid the entire outstanding balance of the unpaid dues.

In the end, however, the Court denied the Association’s motion for post-judgment attorneys’ fees, primarily because the governing documents did not specifically and expressly describe the types of fees assessable against a resident. Moreover, the court stated:

[The court is] not saying that a ... condo association, can't collect post-judgment fees, attorney fees….What [it is] saying is you need to spell it out in your condo association [documents,] the notice that people get when they join the association so that they know that they are potentially on the hook for that, if they don't make the payment….[The Court is] not satisfied that you've done that. The generic language in the condo association [documents] does not include or would not put somebody on notice ... of such post-judgment attorneys’ fees.

Contact an Experienced Condo Association Attorney Today!

It is important for the language of your association’s governing documents to be specific enough to withstand appellate scrutiny. Let us help you understand the intricacies of New Jersey and New York condominium association law. Contact Griffin Alexander, P.C. today for help.

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