Condominium Associations operate similarly to small communities. The Boards elected to govern Condominium Associations experience similar governing problems and potential litigation over these problems, just like town officers. The Board may be on either side of a dispute or litigation, either acting as a plaintiff trying to achieve 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 the Bylaws, which is a very wide range. Many disputes concern the Board’s actions in overseeing the relationship between the association and individual members on subjects such 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 such as falls on stairs and walkways, dog bites, and 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

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. Common claims of this nature include:

• 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 (ADR)

Not all disputes need to be litigated. Both the New Jersey Condominium Act 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 of ADR availability as a precondition to issuing a fine. Enforcing the statutory provisions requiring adoption and administration of ADR procedures is within the authority of the Department of Community Affairs.

Legal Counsel for Your Condominium Board

Condominium law is very specialized and often technical. Many Condominium Board members have minimal familiarity with the legal aspects of the multi-faceted job they have been elected to perform. Seeking the advice of an experienced New Jersey Condominium Lawyer will make the difference between success and failure at every step in the Board’s journey. KingBarnes will help you (i) ensure your association documents are in order (ii) interpret your documents reasonably (iii) perform the detailed work in ensuring that third parties are held to account, and more.