Petition — Siller v. Hartz Mountain Associates

Supreme Court brief1983

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8 8.439 : i LE I

In The

Supreme Court of the United intra

October Term, 1983

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE J. GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife; FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER,

single,

Petitioners,

-and-

HARMON COVE CONDOMINIUM II ASSOCIATION, INC.,

Intervenor,

vs.

HARTZ MOUNTAIN ASSOCIATES, a corporation; HARMON

COVE I CONDOMINIUM ASSOCIATION, INC., a

corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE SUPREME COURT OF NEW JERSEY

JOHN TOMASIN

Attorney for Petitioners

4800 Kennedy Boulevard

Union City, New Jersey 07087

(201) 863-1821

q19

*NJ (201) 257-6850°NY (212) 840-9494°PA (215) 563-5587

MA (617) 542-1114*DC (202) 783-7288°USA (800) 221-0008

QUESTIONS PRESENTED

Background

It is not disputed that petitioners are contract purchaser unit

owners of real estate condominium residential units, each with

a percentage ownership interest in the appurtenant common

elements, of a residential development, under the General New

Jersey Condominium Real Estate Law (R.S. 46:8B-1 ef seg.) which

provides that such ownership is in fee simple [R.S. 46:8B-3(q)]

and that each unit is a separate parcel of real property which

may be dealt with by the owner ‘‘. . . in the same manner as is

otherwise permitted by law for any other parcel of real property.”’

(R.S. 46:8B-4).

Questions Presented

Does a construction of such statute by the New Jersey

Supreme Court, whereby said unit owners are barred from suing

their developer-seller for (a) specific performance of the contract

of sale; (b) breach of contract; (c) breach of warranty; (d) negligent

planning and construction of the common elements and resultant

damages; (e) accounting, and reimbursement for monies expended

to correct developer’s deficiencies:

Question 1 — Impair the obligations of petitioner unit

owners’ contract rights, contrary to Article I, Section 10,

Clause 1, of the United States Constitution?

Question 2. — Deprive petitioner unit owners of equal

protection of the laws, contrary to the Fourteenth

Amendment to the United States Constitution?

Question 3. — Deprive said petitioner unit owners

of property and vested contract rights without due process

of law, contrary to the Fourteenth Amendment to the

United States Constitution?

Question 4. — Decide questions of federal rights

contrary to applicable decisions of the United States

Supreme Court [Rule 17.1(c)]?

Question 5. — Decide questions of federal rights

contrary to applicable decisions of courts of last resort

in several states on the same subject matter [Rule 17.1(b)]?

iti

ADDITIONAL PARTIES INVOLVED

1. Harmon Cove Condominium II Association, Inc. sought

to intervene as a party plaintiff-intervenor but dic) mot participate

or file briefs but will be served with a copy of petition for writ

of certiorari under Rule 19.6.

2. Pursuant to Rule 28.4(c) and 28 U.S.C. §2403(b) a copy

of the petition for writ of certiorari will be served upon the

Attorney General of the State of New Jersey.

TABLE OF CONTENTS

Page

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PN NEED PINON. bc a scia'cs ceescccvecvevanenpes iii

EE, bbb a> cacbeeras coc dechned teewraeeh iv

SE GE ay Oi ELE Le Ae ees

cue ksteseks kee dcewemeews saseeeee.s 2

PE sion ls clas coc uuiie cule sch ans sat wne haw 2

Constitutional and Statutory Provisions Involved........ 3

NE i on aly oad ke dan d wine 6 5 s.00 can Ras 3

How and When Federal Constitutional Questions Were

PIES I SON GE 6 oie bcos ccccrsrvvcesiaes 6

Reasons for Granting the Writ:

i) ME LEA ac tiN vaes vekiceseenpetsbbess tess 1]

es BOs ES SONNE cnc cenctenevnnssceuerve 12

ls RE Te IE ocndc i cece cccdccccessses 13

IV. Denial of Equal Protection of Laws............. 16

V. Deprivations of Property Without Due Process... 18

Contents

Page

VI. The Decision of the New Jersey Supreme Court Goes

Contrary to the Decisions of Courts of Last Resort

in Many States that Have Passed on Similar Questions,

and Requires Review Under Rule 17.1(b)......... 19

Nee en oe ccoebbstocowecs 22

TABLE OF CITATIONS

Cases Cited:

Adkins v. Children’s Hospital, 261 U.S. $25, 67 L. Ed. 78

Tenet cece cesecececnee 14, 17

Allied Stores, Ohio v. Bowers, 358 U.S. 522, 3 L. Ed. 2d

ee ae Do, J uleae encase 7. =

Avila South Condo Ass’n v. Kappa, 347 So. 2d $99 (1976)

ra ore S. o ee e a ta teluc e's ebeebes cence 20

Bandini v. Superior Ct., 284 U.S. 8, $2 S. Ct. 103, 73 L.

a Os 2 beech ees ceovecesée 1]

Bantam Books v. Sullivan, 372 U.S. $8, 83 S. Ct. 631, 9 L.

a nT ros we vadewes 13

Barbier v. Connolly, 113 U.S. 27, 28 L. Ed. 923, §S. Ct. 387

sk pec epeemndecben 19

Bayside Fish Flour Co. v. Gentry, 299 U.S. 422, 80 L. Ed.

i es 14, 18

Contents

Page

Bd. Managers of Woodgate Village v. Kaufman, ___ N.Y.

i Oe a, CO ROPE... 2

Borden’s Farm Products v. Baldwin, 293 U.S. 194, 79 L. Ed.

rr nos ld caued tee ene beee 17

Bowman v. Lewis, 101 U.S. 22, 25 L. Ed. 989 (1880) ..iS, 19

Bricker v. Crane, 468 F. 2d 1228, cert. denied, 410 U.S. 930

RES | een See 12

Cincinnati Street Railway v. Snell, 193 U.S. 30, 48 L. Ed.

eo ee eer, a vebectwebeet és 16

Columbia Railway v. South Carolina, 261 U.S. 236, 67 L.

NE sac core UE. inde sce eeeswe see 11, 12, 14

Connolly v. Union Sewer Pipe Co., 184 U.S. $39, 46 L. Ed.

ee ei ae ne. odigeneé'blesteees « 16, 18, 19

Coombes v. Getz, 2850 S. 434, §2 S. Ct. 435, 76 L. Ed. 866

ee ee see veoaccetenees 11, 15

Cotting v. Godard, 103 U.S. 78, 46 L. Ed. 92 (1900).... 15

Demorest v. City Bank, 321 U.S. 36, 64S. Ct. 384, 88 L.

Re ia Ba tele) e's ta clieh nes 12

Dept. of Revenue (Ky.) v. Beam Distilling, 377 U.S. 341, 84

ms Gh Ebe7, 82 L. BA. Be SES CI9GO) 20. ciceccness 13

Douglas v. Alabama, 380 U.S. 415, 85 S. Ct. 1074, 13 L.

IE cn. 's od ag eeccubsevecissVacedandrs 13

vii

Contents

Page

Doyle v. A.P. Realty, 36 Conn. Rep. 126, 414 A. 2d 204 (1980)

Vedas ceccnedceenancdconserogeseesontoonesntaen 14, 15

Friendly Village v. Silva & Hill Const. Co., 31 Cal. App. 3d

Sa, BOT Ge. PARES .. LAE ISTEP o isiccccvesivcancas 19, 21

General Motors v. Washington, 377 U.S. 436, 84S. Ct. 1564,

Be Sec: ey Oe EE 5 wre cccunadnees ietebatonwes 12

Giffes v. Zimmerman, 290 U.S. 326, 78 L. Ed. 342 (1933)

dei Gan kULSE OWA LO aa ek eamioe cba Cam tena ias ohaae 15

Goldenfarb v. Land Design, 409 A. 2d 662 (Maine 1979). 21

Governor's Grove v. Hill Development, 35 Conn. Supp. 199,

— oe Bi oR) SP ere reer ee 20

Greentree v. RSP Corp., 36 Conn. Sup. 160, 415 A. 2d 2481

SEER hi ds Pica kde hibs caMaden cs buanene ie eh elenens 21

Gulf, Colorado & Santa Fe Railroad v. Ellis, 165 U.S. $0,

OE Te Be, Be GR i vai vnc s cekocccecBbne sae oanas 18

Hanover Ins. Co. v. Harding, 272 U.S. 494, 47 S. Ct. 179,

FR hes Ts Oe Lh WiWad 0.00 05048 d0e Kee beeeeen 12

Hartford Steamboiler Co. v. Harrison, 301 U.S. 459, 81 L.

ek Se OE, as cls Sdnicie' saw cade da eeeeebe.s 16

vill

Contents

Page

Huffman v. Pursue, 420 U.S. $92, 95 S. Ct. 1200, 43 L. Ed.

Ae Ge CINE ac va bd neh c\duevescauehenceusbagees es 12

Imperial Towers Condo v. Brown, 338 So. 2d 1081 (Fla. 4th

Da WO hans ccdccvdducabaticacekoemcsesente 20

Ireland v. Wynkoop, 539 P. 2d 1349 (Colo. App. 1975)

Sdn qb S ca dodsudunteaese vue cudmace Pease eeaeeeual 14, 19

Lindsley v. Natural Carbonic Gas, 220 U.S. 61 ......... ll

Louisiana v. Police Jury, 111 U.S. 716, 28 L. Ed. $74 (1884)

Murray v. City Council, Charleston, 24 L. Ed. 760, 96 U.S.

GED GTN, oc Kn ck bn viccceccuacetndas Uieeat cube 14

Nevada I.C. Deal v. 999 Lake Shore Ass'n, 94 Nev. Adv.

Ve a, te Se fF teND ea 20

Ohio State Life Ins. Co. v. Clark, 274 F. 2d 771, cert. denied,

80 S. Ctr. 1599, 363 U.S. 828, 42 L. Ed. 2d $23 .... 15

Pierre v. Louisiana, 306 U.S. 354, 83 L. Ed. 757, $9 Sup.

Cd, SEB ARSED oc cvcicdcavecuecsccksheteteceheus duet 17

Pritchard v. Norton, 106 U.S. 124, 27 L. Ed. 104, 1S. Ct. 102

Rooker v. Fidelity Trust, 263 U.S. 413, 44S. Ct. 149, 68 L.

, FE Gs cc cccenecsesscccncctescceaevesaent 12

Contents

Page

Rubenstein v. Burleigh, 305 So. 2d 311 (Fla. 3d D.C.A. 1975)

CET CEte sce seeb ede ccecvivesosveceseceds 20

Shelley v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161 (1947)

eee cs Cis as onees eoeeeseechone's 12

Standard Oil v. Johnson, 316 U.S. 481, 52 S. Ct. 1168, 86

Cee ag Gd se sinc aS enc0deevinccved's 12

State Bd. Insurance v. Todd Shipyards, 370 U.S. 451, 82S.

i a a a CEOOED ccciccccceccecsces 13

Street v. New York, 394 U.S. 576, 89S. Ct. 1354, 22 L. Ed.

I coe aUs nuda s Gacvccee ceases sicess 12, 13

The Florida Bar, 353 So. 2d 45 (1977) ......ccccceeeees 20

Tigner v. Texas, 310 U.S. 144, 84 L. Ed. 1126, 60 Sup. Ct.

RR oe ode hbedl teas sie eme sect eves 16

Truax v. Corrigan, 287 U.S. 312, 42 S. Ct. 124, 66 L. Ed.

ES Sete aaned dabciewacecvesncscien 13, 18

Twin City Pipeline Co. v. Harding Glass, 283 U.S. 353, 75

ES, faa So be ond 6.0.0.0 6.0 00% 9s 000 bs 14

West Coast Hotel v. Parrish, 300 U.S. 400, 81 L. Ed. 713,

EDD cabin OWe ces cc deaberecsvvess 14

Wheeling Steel v. Glander, 337 U.S. $62, 69 S. Ct. 1291, 93

es Me BOOS CIDKE oo ccc ccc ccc ccccccseccces 17

Contents

Page

Williams v. Bruffy, 102 U.S, 248, 26 L. Ed. 135 (1880) ;

See eee See esedueseevoceeeaddecaeeeces esos ben v.0's l

Worthen v, Kavanaugh, 295 U.S, 56, 79 L. Ed. 1298 (1935)

Seve deed endeeasecdes purer abies dcedeverecnetnats cde 14

Wright v. Georgia, 373 U.S, 284, 10 L, Ed. 349, 83S. Ct. 1240

LENT TESTE LOTTE TER EE eee l

Statutes Cited:

MEY DUTEID isc eke cusehpestiensuaannwedeeneee 2

Se ASE con Tndeccdsescuspenbecevascsceuceu iii

Pas GE OG GUS kpc che cdcneeuencenebeuhsbelcdereses i, 3

NE CR os es bese eV ecendsanbane Juba etenenued i, 17

Daa Sh pend ee uenenav eed Cake dy eakean gues 1:9, i

a IE inn h Rake Vales hewn Kepabeed aces Seeake en is, 17

United States Constitution:

FPOUSCCCIER AGRORGIROME .00 0c ccccsccccsctscsnces i, ii, 3, 16

Article I, Section 10, Clause 1........cescccceees i, 3, 11, 14

Rules Cited:

United States Supreme Court Rules:

IL PE EEER TET COLTER CEET ET TERE yr ii, 19

Contents

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RE CG SO docatecacacos devas cnt ase oeiee

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APPENDIX

Opinion of the Supreme Court of New Jersey ..........

Opinion of the Superior Court of New Jersey, Appellate

I aha banat cs cane 60s bageenPisnniseuuvakent

Judgment and Order of the Superior Court of New Jersey,

et I oa cana rea b aWke nd bnaweenckenee

Excerpts of Verified Complaint Filed November 13, 1980 with

Po idieain 0064446 Caticlan n00cc vt ches cakes

Excerpts from Original Brief in Superior Court, Chancery

Division, on Defendants’ Motion to Dismiss Complaint

RS BE Tay To cnc cedndcdenawensyele’

Excerpts from Hearing Transcript of Motion to Dismiss

Complaint Heard by New Jersey Superior Court,

Chancery Division Dated December 19, 1980........

Excerpts from Brief Before Superior Court of New Jersey,

ON OE acc vec ce uve s cweun cub ens neleanen

Excerpts from Petition for Certification to the New Jersey

ED, CNS Cau den ecvcdvess vatnedisenteeawe

I Ee ns edge 6b eels ene eee

17a

47a

No.

In The

Supreme Court of the Hnited States

o—

October Term, 1983

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife; FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER

single,

Petitioners,

and

HARMON COVE CONDOMINIUM II ASSOCIATION, INC.,

intervenor,

vs.

HARTZ MOUNTAIN ASSOCIATES, a corporation; HARMON

COVE I CONDOMINIUM ASSOCIATION, INC., a

corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE SUPREME

COURT OF NEW JERSEY

The petitioners, Sidney Siller, ef a/., pray that a writ of

certiorari issue to review the judgment of the Supreme Court of

New Jersey entered in the above case on June 16, 1983.

OPINIONS BELOW

1. The opinion of the Superior Court of New Jersey,

Chancery Division, dated July 29, 1981 is reported in 184 N.J.

Super. 450 (1981).

2. The per curiam opinion of the Appellate Division of the

Superior Court of New Jersey dated April 28, 1982 affirming the

opinion below, is reported in 184 N.J. Super. 442 (1982).

3. The opinion of the Supreme Court of New Jersey dated

June 16, 1983 is reported in 93 N.J. 370 (1983).

JURISDICTION

1. Summary judgment at the trial level of the Superior Court

of New Jersey was entered August 7, 1981 dismissing Counts 1,

2, 3 and $ of the complaint (20a).

2. The judgment was affirmed per curiam by ithe Appellate

Division, Superior Court of New Jersey on April 28, } 382 without

opinion (18a).

3. The judgment was modified and affirmed as to the real

estate common elements by the Supreme Court of New Jersey,

by judgment dated June 16, 1983, and this petition for writ of

certiorari is filed within 90 days thereof (1a).

4. This Court’s jurisdiction is invoked under 28 U.S.C.

§1257(3).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

United States Constitution, Article I, Section 10, Clause 1

(in pertinent part):

**No State shall .. . pass any . . . law impairing the

obligation of contracts... .’’

United States Constitution, Fourteenth Amendment, Section

1 (in pertinent part):

**No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal

protection of the laws.”’

New Jersey Revised Statutes (New Jersey Real Estate

Condominium Law) R.S. 46:8B-1 to R.S. 46:8B-30:

Appears in Appendix, infra at 54a, ef seq.

STATEMENT OF THE CASE

1. Respondent Hartz Mountain Associates was the owner

and developer of the Harmon Cove I Complex in Secaucus, New

Jersey, which consists of residential condominiums known as

Harmon Cove Area I, Harmon Cove Area II and ‘‘common

elements’’ including streets, marina, swimming pool, recreation

building and related facilities.

2. Hartz Mountain filed a condominium deed, submitting

the Harmon Cove Area I to the New Jersey Condominium Act,

R.S. 46:8B-1, ef seg., and has done likewise with Harmon Cove

Area II; and the common recreation facilities for both areas I

and II.

3. Hartz Mountain planned, designed, built and developed

Harmon Cove I Condominium Area I, by building and selling

individual residential townhouse condominium units to owners,

including petitioners, and also planned, designed, built, developed

and conveyed common elements, including a recreation area, a

boardwalk area, landscaped areas, swimming pool, tennis courts,

niarina and related walks, streets, curbs and facilities, which

common elements, by statute are associated with, and owned in

proportionate parts, by the unit owners.

4. Hartz Mountain organized a non-profit association under

said condominium law, to manage and administer the common

elements relating to Harmon Cove Area I, known as the Harmon

Cove I Condominium Association. At its inception, all the

members thereof were owners, employees or nominees of Hartz

Mountain.

5. Hartz Mountain Associates established a Recreation

Association to manage and administer the joint recreation facilities

in common for the joint benefit of the unit owners of

Condominium Area I. At its inception, all the members thereof

were owners, employees or nominees of Hartz Mountain.

6. Petitioners, individual unit owners in Condominium Area

I have vital interests in the planning, design, construction and

development of the townhouses, all of the common elements and

all of the recreational facilities.

7. Allegations of breach of express and implied contract

warranties, and negligent and defective planning, design,

constructing, developing and conveying of said units and the

common elements and related relief, have been made by the

petitioners against developer, Hartz Mountain, in this case on

behalf of themselves, as individual owners, and on behalf of all

others similarly situated in the class; namely, owners of

condominium property in Area I and in Area II, which were

planned, designed, built and developed by Hartz Mountain

Associates, and which share the common elements, as well as the

recreation facilities serving same. Serious settlement problems of

the subsoil under both areas are involved, which could not be

immediately known or discovered, and which petitioners allege

are continuing, and which will get worse in the future, adversely

affecting the value of all individual units, as well as the common

elements and recreational facilities, associated therewith and a

part thereof.

8. Under applicable statutes and private documents,

developer Hartz Mountain established and controlled all said

respondent associations for several critical years, and did not

relinquish control until several years later (6a).

9. The Harmon Cove I Condominium Association and the

Joint Recreation Association purported to settle all claims of all

unit owners and interested persons against developer, Hartz

Mountain, relating to all claims for deficiencies in individual units,

as well as in the common elements.

10. Individual unit owners filed suit against developer for

specific performance of real estate sales contracts; breach of

contract; breach of warranty; accounting as to monies collected

and spent to correct deficiencies; and to block ‘‘settlement of all

claims’’ on the ground that only owners can decide such questions,

since they own dwelling units and (by percentage ownership) the

common elements.

11. Petitioners contend:

(a) that they have standing to sue Hartz Mountain

Associates;

(o) for themselves as individual unit owners;

(¢) as representatives of the class of unit owners of

Harmon Cove Area I, and as to the common elements

for all claims; and

(d) that the respondent associations have no

jurisdiction, right or standing to (1) litigate, or (2) settle

the case.

12. The New Jersey Supreme Court modified judgment of

the lower courts but held, as to common elements, the non-profit

association named to maintain and administer the common

elements had exclusive rights to vindicate such rights.

13. Petitioners seek certiorari and contend that construing

the statute thus (i) impairs their contract rights; (ii) discriminates

against them as owners of real estate compared to other real estate

owners; and (iii) deprives them of property rights without due

process of law.

14. Petitioners seek certiorari.

HOW AND WHEN FEDERAL CONSTITUTIONAL

QUESTIONS WERE PRESENTED AND DISPOSED OF

1. Petitioners raised the question of vested contract rights

and property rights as real estate owners at the very inception

of the case in the complaint (32a) alleging their right as property

owners to protect their investment and to sue for specific

performance of their contracts (32a); damages for breach of

warranty and accounting (34a-36a), on all aspects, including the

common elements they own, appurtenant to their home units.

2. When their standing was challenged at the Superior Court,

Chancery Division (trial level), their initial brief (40a) emphasized

their right to sue as real estate owners equal to all other real estate

owners; with vested owner rights (paragraphs 9 and 10). The brief

urged that a purchaser-owner of real estate, their property and

contract rights to sue for breach of contract and warranty had

never been surrendered.

3. At oral argument (42a) it was reiterated that petitioners

were owners of property rights, equal to all other owners of real

estate (43a).

4. It was also urged that they had every right to vindicate

their ‘‘contract property rights’’ (45a).

5. Throughout the argument the owners’ vested property and

contract rights were emphasized, and that the association had no

authority to litigate or settle their contract claims.

6. The court did not deny that such rights existed, and could

be vindicated against the developer, but construed the statute so

as to vest exc/usive authority in the association to do so, on behalf

of the owners.

7. The court rejected petitioners’ claims that (27a):

**. , ,assertion of substantial claims against the original developer-

owner involves ‘attributes of ownership and vindication of

fundamental rights’ ’’ which are beyond the statute, master deed

and by-laws.

8. Those ‘‘fundamental rights’’ urged were the equal

protection of laws similar to all other real property owners; and

the owner-contract property rights: above set forth, which are

constitutionally protected, and were squarely raised and rejected.

9. When Counts 1, 2, 3, and 5 of the complaint were

dismissed (seeking to sue the developer) petitioners appealed to

the Superior Court, Appellate Division. (Note: Petitioners were

not allowed to sue the developer ar aii, at this stage.)

10. As the brief in the Appellate Division discloses (47a):

(a) The argument was repeated that petitioners had

equal rights to sue, like all other real estate owners

(paragraph 13, 47a);

(b) Breach of contract were owners’ property rights

(48a);

real property owners enjoyed their property the same’. . .

as permitted by law for any other parcel of real property’’

(Point II, paragraph 2, 48a);

(d) The brief then urged that accordingly the

petitioners ‘*. .. have the right to protect their investment

and its market value .. .’’ (and to litigate their rights,

for all the relief sought in the complaint) (Point II,

paragraph 3, 48a);

(e) The petitioners then squarely presented the federal

question: (Point IV, paragraph 11) (49a):

‘‘Any other rule would deprive

condominium property owners of

property rights without due process of

law.”’

(f) The Appellate Division affirmed without opinion.

11. Certification was sought and granted by the New Jersey

Supreme Court.

12. Although facially the New Jersey Condominium Law

appears to confer equal protection (R.S. 46:8B-4 — condominium

owners accorded full rights **. . .permitted by law for any other

parcel of real property’’) (R.S. 46:8B — unit owners own in ‘‘fee

simple’’) actually the lower court had denied unit owners the right

to sue for specific performance of their contract; breach of

contract; breach of warranty, etc. — while other real estate owners

did enjoy all such rights.

13. Petitioners accordingly raised the question in the petition

for certification whether such construction (50a of petition) does

‘*. . . discriminate against them as owners of real property in fee

simple, and deprive them of property rights without legal

protection and without due process of law... .’’ even though

the statute R.S. 46:8B-4 purported to treat them equally, like any

other owners of real property.

14. Petitioners urged that (51a) there ‘‘. . .is no basis in law

for depriving contract owners in fee simple of their right, as real

Parties in interest, to sue developer for breach of contract; breach

of warranty, etc. The role of the association is to ‘administer and

manage’ the common elements, mot usurp the independent

property right of owners.’’ (Emphasis in original.)

1$. Petitioners urged (Sla) that if the rights of contract

owners to protect and vindicate their property rights were

**transferred’’ to volunteer members of non-profit ‘‘associations’’

involuntarily, ‘‘...such construction would unlawfully

discriminate against such condominium owners as a class of real

estate owners — as opposed to other owners of real property.

It would deprive condominium owners of valuable property rights,

without due process of law.’’

16. It was urged (Sla) this would damage the

**. . .marketability and value of such condominium real estate. . .”’

which ‘*. . .is a vested right in real estate... .”’

17. It was expressly urged that (52a) ‘‘. . .the vested reports

of such owners cannot be diminished, taken away or prejudiced

without due process of law.’’ and that ‘‘No cause is shown to

discriminate against condominium real estate buyers in their right

to sue for breach of contract . . . equal to the buyer-owners of

any other real estate’’ (emphasis in original).

18. It could not be put more bluntly then was stated in

paragraph 9, page 52a:

**The Constitutions of the United States and

of New Jersey prohibit such lack of due process;

discrimination among those similarly situated; and

lack of equal protection of the laws.’’

19. Paragraph 10, page 52a of said petition pointed out that

**constitutional equal protection . . .’’ applies to courts as well

as legislatures and paragraph 11 averred that ‘‘No rational basis

or classification to bar plaintiffs as buyer-owners of real estate

from sueing seller-developer appears.’’ and such bar must fall

(paragraph 11, $3a) ‘‘...as an unlawful deprival of vested

property rights, without due process of law or equal protection

of law.”’

20. The New Jersey Supreme Court did not deny such rights

existed, but construed the statute as requiring the non-profit

association to sue and vindicate such contract and ownership rights

rather than the owners themselves.

21. Unlike the courts below, the Supreme Court recognized

the due process-property argument to some extent, for it modified

the judgment as to the residential units, and allowed partial suit

against the developer as to those residential home units.

22. However, as to the common elements position, which

are unequivocally and inextricably part of each condominium

property (R.S. 46:8B-6), it barred suit for specific performance

or otherwise by owners, citing alleged ‘‘policy’’ considerations

for having the association ‘‘represent’’ the owners (even against

their will); yet allowing owners to proceed, if the association did

not do so — in effect converting real estate owners to stockholders

of a non-profit corporation only.

23. This runs contrary to the constitutional guarantees which

do not permit the impairing of contract rights; or the taking of

property rights without due process, on general grounds of

‘*policy’’ or ‘‘convenience’’, or discrimination against

condominium real estate owners, not equally applicable to a// real

estate owners as a class.

24. The Supreme Court tried to compromise, and fully

recognized the right to sue the developer, but couched its response

in a ruled procedure which bars owners from enforcing and

enjoying their contract and property rights.

REASONS FOR GRANTING THE WRIT

I. State Action

Although facially the New Jersey Condominium Law appears

to confer equality on condominium real estate owners with all

owners of real estates (R.S. 46:8B-4), as construed by the New

Jersey Supreme Court it deprives petitioners of contract and

property rights and this becomes ‘‘state action’’ which cannot

violate Article I, Section 10, Clause 1 (impair obligation of

contract) or the Fourteenth Amendment (deny equal protection

of laws or deprivation of property without due process) and binds

courts as well as legislatures, even though supposedly resting on

state grounds. Bandini v. Superior Ct., 284 U.S. 8 at 18, 52 S.

Ct. 103, 73 L. Ed. 130 (1931); citing Lindsley v. Natural Carbonic

Gas, 220 U.S. 61, 73; Coombes v. Getz, 2850 S. 434, 52 S.Ct.

435, 76 L. Ed. 866 (1932); Columbia Railway v. South Carolina,

261 U.S. 236, 67 L. Ed. 629; General Motors v. Washington,

377 U.S. 436, 84 S.Ct. 1564, 12 L. Ed. 2d 430 (1964); Demorest

v. City Bank, 321 U.S. 36, 64S. Ct. 384, 88 L. Ed. 526 (1943);

Shelley v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161 (1947); Standard

Oil v. Johnson, 316 U.S. 481, 62 S. Ct. 1168, 86 L. Ed. 1611

(1942); Williams v. Bruffy, 102 U.S. 248, 26 L. Ed. 135 (1880).

The remedy is certiorari. Rooker v. Fidelity Trust, 263 U.S.

413, 44S. Ct. 149, 68 L. Ed. 362 (1923); Bricker v. Crane, 468

F. 2d 1228, cert. denied, 410 U.S. 930 (C.A. $, 1972).

In such cases, the construction of the highest state court as

to the meaning and application of the state statute is accepted,

and tested as against constitutional standards as applied. Hanover

Ins. Co. v. Harding, 272 U.S. 494, 47S. Ct. 179, 71 L. Ed. 372

(1926).

Il. Raising Federal Question

No particular formal language is needed to raise federal

constitutional rights, as was done in this case, and their denial

is reviewable on certiorari. Huffman v. Pursue, 420 U.S. $92,

95 S. Ct. 1200, 43 L. Ed. 2d 482 (1975).

So long as feceral rights were urged ‘‘. . . with fair precision

and in due time ...”’ for the court to rule therecn, denial is

reviewable.

**And if the record as a whole shows either

expressly or by clear intendment that this was done,

the cliim is to be regarded as having been

adequately presented.’’

Naming the constitutional section or some special form of words

is not necessary. Street v. New York, 394 U.S. 576, 89 S. Ct.

1354, 22 L. Ed. 2d 572 (1969); Douglas v. Alabama, 380 U.S.

415, 85 S. Ct. 1074, 13 L. Ed. 2d 934 (1965).

In considering the action complained of as denying federal

rights, the United States Supreme Court must determine the effect

of the action taken and is not bound by local determinations that

such action is merely a matter of local procedure or a rule of

evidence or the like. Truax v. Corrigan, 257 U.S. 312, 42 S. Ct.

124, 66 L. Ed. 2d 254 (1921).

It will look to substance and effect, rather than form. Dept.

of Revenue (Ky.) v. Beam Distilling, 377 U.S. 341, 84S. Ct. 1247,

12 L. Ed. 2d 362 (1964); Bantam Books v. Sullivan, 372 U.S.

58, 83 S. Ct. 631, 9 L. Ed. 2d 584 at p. 591 (1963). And it must

ultimately decide what is due process. Even Congress, much less

a state court, ‘‘. . .does not have the final say as to what constitutes

due process under the Fourteenth Amendment.’’ State Bd.

Insurance v. Todd Shipyards, 370 U.S. 451, 82 S.Ct. 1380, 8 L.

Ed. 2d 620 (1962).

Proper presentation of the federal questions is itself a federal

question. Wright v. Georgia, 373 U.S. 284, 289-291, 10 L. Ed.

349, 354, 83 S. Ct. 1240.

It is submitted the federal constitutional rights were urged

and considered during the entire case, at all levels.

Ill. Impairment of Contract

It is fundamental that competent persons

**. . . Shall have the utmost liberty of contracting

”

and contracts fairly made

«|. shall be held valid and enforced in the

courts.’’ Twin City Pipeline Co. v. Harding Glass,

283 U.S. 353, 7§ L. Ed. 1112 (1931).

Interference with the right to contract should occur only in

exceptional circumstances. Adkias v. Children’s Hospital, 261 U.S.

$25, 67 L. Ed. 78 (1923) and is protected by both the contract

clause (Article I, Section 10, Clause 1) and the due process clause

of the Fourteenth Amendment. Bayside Fish Flour Co. v. Gentry,

299 U.S. 422, 80 L. Ed. 772 (1936); Irving Trust v. Day, 314

U.S. 556, 86 L. Ed. 453 (1942). Note: the Adkins case was

overruled for a minimum wage law. West Coast Hotel v. Parrish,

300 U.S. 400, 81 L. Ed. 713, $7 Sup. Ct. $86 (1937).

Without enforcement rights in the courts, contract rights have

little substance or value and the ‘‘obligation’’ of contracts which

states may not impair under Article I, Section 10, Clause | is

precisely the enforcement or remedy. When that is diluted or taken

away, contract rights are unlawfully impaired. Louisana v. Police

Jury, 111 U.S. 716, 28 L. Ed. $74 (1884); Worthen v. Kavanaugh,

295 U.S. 56, 79 L. Ed. 1298 (1935).

Not to impair contracts is one of the strictest duties placed

on the states by the United States Constitution. Murray v. City

Council, Charleston, 24 L. Ed. 760, 96 U.S. 432 (1878), and the

provision applies to all contracts **. . .executory and executed

contracts, by whomsoever made.’’ Farrington v. Tennessee, 95

U.S. 679, 24 L. Ed. $58 (1878).

The prohibition is universal and concerns the effecr of state

action as ‘*. . impairing the rights resting on contract’’ whether

it permits deviation from contract terms of dispensing with

performance, however minute. Columbia Railway v. South

Carolina, 261 U.S. 236, 67 L. Ed. 629.

This applies to contracts with the state or with third persons

based on statutory rights. Combes v. Getz, 285 U.S. 434, 76 L.

Ed. 866, $2 S. Ct. 435 (1932).

Finally, it is not a matter of degree. Unless there is lawful

cause, contracts cannot be impaired at all. Ohio State Life Ins.

Co. v. Clark, 274 F. 2d 771, cert. denied, 80 S.Ct. 1599, 363

U.S. 828, 42 L. Ed. 2d, $23; Farrington v. Tennessee, 95 U.S.

679, 24 L. Ed. $58 (1878).

Vested causes of action are property rights constitutionally

protected. Pritchard v. Norton, 106 U.S. 124, 137, 27 L. Ed. 104,

1S. Ct. 102.

It is true that redress to courts may be controlled, moderately

postponed, have uniform conditions attached, and the like, so

long as the ‘‘. . .right to redress by some effective procedure’

is preserved. Giffes v. Zimmerman, 290 U.S. 326, 78 L. Ed. 342

(1933).

What was done here was to totally eliminate redress to the

courts by petitioners to vindicate their contract and property rights

as real estate contract buyers against contract sellers, ‘‘giving’’

such rights to another entity, and depriving petitioners of the

**. .. Fight to resort to the appropriate courts for redress’’

Bowman vy. Lewis, 101 U.S. 22, 25 L. Ed. 989 (1880).

This contravenes their right to

**. . .acquire and enjoy property; that they should

have like access to the courts of the country for

the protection of their persons and property, the

prevention and redress of wrongs, and the

enforcement of contracts. . .’’ Corting v. Godard,

183 U.S. 78, 46 L. Ed. 92 (1900).

IV. Denial of Equal Protection of Laws

Under the Fourteenth Amendment even ‘‘police powers’’

cannot deprive citizens of constitutional rights; and reasonable

controls must be fairly and equally applied, including equal access

to the courts to protect property and enforce contracts. Connolly

v. Union Sewer Pipe Co., 184 U.S. 539, 46 L. Ed. 679 (1902).

Note: The Connolly case was modified to allow partial exceptions

in anti-trust cases. Tigner v. Texas, 310 U.S. 144, 84L. Ed. 1126,

60 Sup. Ct. 880 (1940).

Here precisely the opposite happened. The right to sue

developer to enforce on all real estate sale obligations was expressly

recognized, but taken away from petitioner contract owners, and

**given’’ to another entity (not an owner, not a contractor) for

supposed ‘‘policy’’ or ‘‘convenience’’ reasons, and only

condominium real estate owners singled out for such unequal

treatment.

Control of access, designation of legal forums etc. are lawful,

so long as ultimately

‘*. . . fundamental rights are equally protected and

preserved.’’ Cincinnati Street Railway v. Snell, 193

U.S. 30, 48 L. Ed. 604 (1904).

This flies directly in the face of the requirement that “‘. . . all

persons similarly circumstanced shail be treated alike.’’ Hartford

Steamboiler Co. v. Harrison, 301 U.S. 459, 8i L. Ed. 1223 (1937)

which applies to

**. . , all the powers of the state which can affect

the individual or his property.’’ (p. 1226).

A ‘*... mere difference ...’’ is not enough for unequal

treatment, there must be a valid reason for some dissatisfaction

resulting in unequal treatment (p. 1226).

Such unequal treatment cannot be conjectural or

unreasonable. Borden’s Farm Products v. Baldwin, 293 U.S. 194,

79 L. Ed. 281, 55 S. Ct. 87. Merely citing ‘‘public health’’ or

some label is not sufficient. Adkins v. Children’s Hospital, 261

U.S. 525, 67 L. Ed. 185 (1923).

Discriminatory treatment offends equal protection of the laws.

Wheeling Steel v. Glander, 337 U.S. 562, 69 S. Ct. 1291, 93 L.

Ed. 1544 (1948) for

**. . . equal protection to all is the basic principle

upon which justice under law rests.’’ Pierre v.

Louisiana, 306 U.S. 354, 83 L. Ed. 757, 59 Sup.

Ct. 536 (1939).

Absent some real ‘‘emergency”’ such as rent control, applied

to all real estate owners equally or urban redevelopment related

to public welfare or the like, Berman v. Parker, 348 U.S. 26,

75S. Ct. 98, 99 L. Ed. 27 (1954) (and applying eminent domain

principles in proper cases) property rights may not be taken on

an unequal basis.

That is the case here, where purely private real estate

ownership contract and property rights are involved, and the court

construes the statute to deny on/y to condominium real estate

owners the right to enforce their contracts, ‘‘giving’’ them to

another entity (the association designed to maintain common

elements, not sue on antecedent contracts of purchase) where the

residential units and the common elements both belong to

petitioners under R.S. 46:8B-6 in fee simple [R.S. 46:8B-3(q)].

There is no reasonable ground for treating condominium real

estate owners differently in such circumstances from all other real

estate owners, and the constitutional guarantees of equal protection

should be construed ‘‘. . . liberally. . .”’ to protect personal and

property rights.

It is not enough that ‘‘classification’’ is attempted (here by

the court, not by the legislature) but it must be reasonable, based

on some palpable and just reason or ground. Gulf, Colorado &

Santa Fe Railroad v. Ellis, 165 U.S. 50, 41 L. Ed. 666 (1896);

Allied Stores, Ohio v. Bowers, 358 U.S. 522, 3 L. Ed. 2d 480

(1958).

It is submitted such reasonable ground or basis is lacking.

The court speaks (i0a) of convenience, greater efficiency, less

cost etc. but those matters are the concern or problem of the

owners of the contract enforcement rights, and no ground for

taking away their property and contract enforcement remedies

in such discriminatory and unequal fashion and the judgment

should be reversed, it is submitted.

VY. Deprivations of Property Without Due Process

Petitioners sought specific performance to enforce contract

rights, and to establish breach of contract; breach of warranty;

accounting; to protect their property and investment, recoup

damage to marketability; resale values, etc. of their condominium

real estate property.

Depriving them of access to the courts to enforce and vindicate

such rights also deprives them of property without due process

of law aside from denial of equal protection, which is a different

right. Bayside Fish Flour Co. v. Gentry, 297 U.S. 422, 80 L. Ed.

722 (1936); Truax v. Corrigan, 257 U.S. 312, 42 S. Ct. 124, 66

L. Ed. 254 (1921); Connolly v. Union Sewer Pipe Co., 184 U.S.

539, 46 L. Ed. 679 (1902); Barbier v. Connolly, 113 U.S. 27, 31,

28 L. Ed. 923, 924, § S. Ct. 357, 359; Bowman v. Lewis, 101

U.S. 22, 25 L. Ed. 989.

Action may also impair contracts and offend the due process

clause, which are also different rights. /rving Trust v. Day, 314

U.S. 556, 86 L. Ed. 453 (1942).

It is submitted taking away their right to enforce their rights,

takes their property without due process.

In sum, the right of the association for ‘‘administration and

management’’ of common elements, once /awfully delivered

pursuant to contract, has been expanded to the enforcement of

the original contract, claimed to have been breached and not

performed, which antedated delivery, to the detriment of contract

owners who own the property, the common elements and the

contract, the enjoyment and enforcement of which they cannot

be deprived of without just compensation or appropriate due

process of law.

VI. The Decision of the New Jersey Supreme Court Goes Contrary

to the Decisions of Courts of Last Resort in Many States that

Have Passed on Similar Questions, and Requires Review Under

Rule 17.1(b).

Various courts of last resort in several states have passed

on the same question (rights of unit owners to sue developer on

contract for non-performance; breach of warranty, etc. as to

residential units and as to common elements appurtenant thereto)

and have uniformly upheld their contract and property rights

relating thereto, such as:

1. (CALIFORNIA) Friendly Village v. Silva & Hill Const.

Co., 31 Cal. App. 3d 220, 107 Cal. Reptr. 123 (1973) held that

owners, not condominium association, have right to sue as party

in interest.

2. (FLORIDA) Rubenstein v. Burleigh, 305 So. 2d 311, 313

(Fla. 3d D.C.A. 1978) held that owners, not condominium

associations, have standing to sue.

See also, Imperial Towers Condo v. Brown, 338 So. 2d 1081

(Fla. 4th D.C.A. 1976) held that even after statute amended,

condominium association could only sue as to common elements;

Avila South Condo Ass'n v. Kappa, 347 So. 2d $99 (1976) held

that statute found to be invalid, as trenching on judicial power

to determine standing, which requires a court rule to confer

standing on condominium association, The Florida Bar, 353 So.

2d 45 (1977).

3. Even after amendment of court rule, standing of owners

not diminished; The Florida Bar, supra at 608.

4. (NEVADA) Nevada J.C. Deal v. 999 Lake Shore Ass'n,

94 Nev. Adv. Sh. 87, 579 P. 2d 775 (1978) at p. 77 held that

only owners ‘‘. . . have standing to sue for construction or design

defects to the common areas. . ."’ Only they eventually bear costs,

and are the real parties in interest.

$. (CONNECTICUT) Governor’s Grove v. Hill

Development, 35 Conn. Sup. 199, 404 A. 2d 131 (1979) held that

only owners can maintain action against developer before statute

expressly allows condominium association to sue on behalf of

owners as real parties in interest.

(CONNECTICUT) Doyle v. A. P. Realty, 36 Conn. Rep.

126, 414 A. 2d 204 (1980) held that even after such statute, both

Semble: Greentree v. RSP Corp. (cited by the court below

in this case) 36 Conn. Sup. 160, 415 A. 2d 2481 (1980) held that

both ass’n and owners have standing to sue.

6. (COLORADO) Ireland v. Wynkoop, 539 P. 2d 1349

(Colo. App. 1975) where the court distinguished between

association contracts where association had privity and could sue;

and (p. 1359) claim of owners on their purchase agreements, which

remain owner’s claims on which only they could proceed.

7. (MAINE) Goldenfarb v. Land Design, 409 A. 2d 662

(Maine 1979) where suit by owners on breach of warranty (parking)

was upheld. Award made to each owner, though condominium

association existed, assigned parking, etc.

8. (NEW YORK) Bd. Managers of Woodgate Village v.

pC oe 0 Ul

1976) held that condominium association could sue because of

a special statute allowing it to sue ‘‘. . . on behalf of two or more

unit owners... ’’, and distinguished the otherwise persuasive

California case of Friendly Village, supra, because California (nen

had no such statute. (Other cases are cited in the briefs.)

In Florida and Connecticut, even amendments allowing

associations to sue as to common elements do mor bar owners;

and in New York the statute was not used in the case cited to

bar owners, but to allow association to sue a third party.

The concept of condominium real estate ownership is so

important and widespread, and involves varied and extensive

contract and property rights federally protected; involving now

millions of dollars and commercial, recreational and business

applications, as well as residences, that the federal contract and

property rights involved should be uniformly treated, protected

and upheld, it is submitted.

Accordingly, an anomalous decision involving those federal

rights (impairment of contract; equal protection; holding and

vindicating property rights under due process) such as was rendered

in this case, should be reviewed and corrected, it is submitted.

CONCLUSION

For these reasons, petitioners submit the petition for writ

of certiorari should be granted.

Respectfully submitted,

JOHN TOMASIN

Attorney for Petitioners

OPINION OF THE SUPREME COURT OF NEW JERSEY

SUPREME COURT OF NEW JERSEY

A-72 September Term 1982

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE J. GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife; FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER,

single,

Plaintiffs-Appellants,

and

HARMON COVE CONDOMINIUM II ASSOCIATION, INC.,

Plaintiff-Intervenor,

Vv.

HARTZ MOUNTAIN ASSOCIATES, a corporation; HARMON

COVE I CONDOMINIUM ASSOCIATION, INC., a

corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Defendants-Respondents.

On certification to the Superior Court, Appellate Division, whose

opinion is reported at 184 N.J. Super. 442 (1982).

Argued February 8, 1983 — Decided June 16, 1983

John Tomasin argued the cause for appellants.

Opinion of the Supreme Court of New Jersey

Jerome A. Vogel argued the cause for respondent Hartz Mountain

Associates, etc. (Jeffer, Hopkinson & Vogel, attorneys).

Richard S. Miller argued the cause for respondents Harmon Cove

I Condominium Association, Inc., etc., et al. (Williams, Caliri,

Miller & Otley, attorneys).

The opinion of the Court was delivered by

SCHREIBER, J.

We are called upon in this case to consider certain aspects

of the Condominium Act, N.J.S.A. 46:8B-1 through 38, in

particular those concerning the relationship of the owner of a

unit to the associations representing all unit owners with respect

to claims against the builder of the condominium. Plaintiffs,

owners and inhabitants of housing units in the condominium

community ‘‘Harmon Cove’’ in Secaucus, New Jersey, sued the

developer, Hartz Mountain Associates (Developer), and the unit

owner associations, Harmon Cove I Condominium Association,

Inc. (Association), and Harmon Cove Recreation Association,

Inc. (Recreation Association) (collectively the Associations). The

suit related to alleged defects in and about the units and common

areas and facilities and to a settlement that the two associations

were prepared to effectuate on behalf of all unit owners, including

plaintiffs, with the Developer.

The plaintiffs, as individual unit owners and on behalf of

others similarly situated, had instituted the suit by filing a verified

complaint and an order to show cause, in which they sought

temporary restraints to prevent consummation of the settlement

between the Developer and the Associations. The trial court denied

any temporary restraints, signed an order directing the parties

to file briefs ‘as to the standing of plaintiffs to bring this action”’

Opinion of the Supreme Court of New Jersey

and set a date for a hearing on the standing issue. In addition

to the briefs, the plaintiffs submitted an affidavit of one unit owner

with copies of various documents including the master deed.

Defendant Hartz Mountain also submitted a certificate of the

director of its residential department with certain attachments and

the defendant Association submitted a certified statement of its

president with certain attachments.’ The parties and the trial court

considered the matter as if defendants had filed a motion for

summary judgment on the ground that plaintiffs lacked standing

to institute and maintain the action.

The trial court dismissed the complaint against the Developer

and permitted the defendants to consummate the settlement at

their own risk. It sustained part of one count of plaintiff's

complaint against the Associations. 184 N.J. Super. 450 (Ch. Div.

1981). Plaintiffs appealed and the Appellate Division affirmed.

184 N.J. Super. 442 (1982). We granted plaintiffs’ petition for

certification. N.J. (1982).

The complaint contained five counts. The first, second, third

and fifth counts were directed solely against the Developer.

Generally they asserted that the Developer had planned and built

the condominium known as Harmon Cove I in Secaucus and had

sold units to the five plaintiffs. They alleged that the condominiums

and the common elements had numerous defects and deficiencies,

all attributable to the Developer. The complaint specified improper

insulation of the individual units; inadequate caulking of windows

and doors; improper heating system; inadequate driveways and

sound insulation; defects in the marina dock area, swimming pool,

1. The trial court had not examined the defendants’ certificates at the time

of oral argument because they were submitted shortly before the hearing. It

undoubtedly considered them before filing its written opinion.

Opinion of the Supreme Court of New Jersey

and boardwalk; and soil settlement problems throughout the entire

development. It is important to note that, though most complaints

in these counts pertained to the common elements and areas, some

related to the individual units. The trial court dismissed these four

counts (first, second, third and fifth) with prejudice.

The fourth count, directed solely against the Associations,

alleged that settlement negotiations between the Association, the

Recreation Association’ and the Developer with respect to claims

arising from the design and building of the ‘‘condominiums and

the common elements’’ were near completion. The trial court

sustained that part of the fourth count’ that challenged the actions

taken by both Associations on protedural and substantive grounds

and permitted the plaintiffs to amend the complaint to express

this clearly. This count, as subsequently amended by plaintiffs,

charged that the proposed settlement was unreasonable, unlawful,

and inadequate, that the Associations had breached their fiduciary

duties and responsibilities to plaintiffs, and that the Developer,

which at one time properly controlled the Associations, had

continued unlawfully to exercise control and influence over the

Associations. Moreover, the plaintiffs asserted that the

Associations and the Developer were settling claims pertaining

to the individual units as well as the common elements.

2. The Association, composed of all unit owners, managed the condominium

property. The Recreation Association, also composed of al! unit owners, managed

the common recreation facilities.

3. The original fourth count also charged that the Association had no

authority to settle the claims against the Developer.

Opinion of the Supreme Court of New Jersey

The Legislature recognized a new form of ownership of real

property in enacting the Condominium Act.‘ NV.J.S.A. 46:8B-1

through -38. The Act requires the developer to execute and file

a master deed describing the land, identifying the units, defining

the common elements, and providing for an association of unit

owners. The condominium property consists of the land and all

improvements. N.J.S.A. 46:8B-3(i). The individual condominium

purchaser owns his unit together with an undivided interest in

common elements. Each unit is a separate parcel of real property

which the owner may deal with ‘‘in the same manner as is otherwise

permitted by law for any parcel of real property.’’ N.J.S.A.

46:8B-4. The result is that the unit owner, having a fee simple

title, enjoys exclusive ownership of his individual apartment or

unit, while retaining an undivided interest as a tenant in common

in the common facilities and grounds used by all the residents.

Kerr, ‘‘Condominium--Statutory Implementation,’’ 38 St. Johns

L. Rev. 1, 2 (1963); Berger, ‘Condominium: Shelter on a Statutory

Foundation,’ 63 Colum. L. Rev. 987, 989 (1963); ISA Am. Jur.

2d, Condominiums and Cooperative Apartments, §1.

4. The history of condominiums has been traced back to ancient Rome,

Note, ‘‘Land Without Earth--Condominium,”’ 1§ U. of Fle. L. Rev. 203, 208

(1962), though this has been disputed, Berger, ‘Condominium: Shelter on a

Statutory Foundation,’’ 63 Colum. L. Rev. 987, 987 n. $ (1963). Others contend

that the concept can be traced back to the ancient Hebrews in the Fifth Century

B.C., Kerr, ‘*Condominium--Statutory Implementation,’’ 38 St. Johns L. Rev.

1;3 (1963); Note, ‘‘The FHA Condominium,” 31 Geo. Wash. L. Rev. 1014, 1015

(1963). There is recognition of the concept in common law. Coke on Littleton,

quoted in Ball, ‘Division in Horizontal Strata of the Landscape Above the

Surface,"’ 39 Yale L.J. 616, 621 (1930).

Opinion of the Supreme Court of New Jersey

The Act also provides that the condominium will be

administered and managed by the association. N.J.S.A.

46:8B-3(b); 46:8B-12. The business form of the association is

unrestricted. N.J.S.A. 46:8B-12. The developer initially controls

the association. When 25% of the units have been sold, the unit

owners are entitled to elect at least 25% of the association’s

governing body. N.J.S.A. 46:8B-12.1(a). The unit owners’

authority is increased to 40% when half of the units have been

sold. When the unit owners own 75%, they are entitled to elect

all the members of the governing body. V.J.S.A. 46:8B-12.1(a).’

Once that occurs, the developer is required to‘'relinquish control

of the association.’’ N.J.S.A. 46:8B-12.1(d).

The association is charged with the ‘‘maintenance, repair,

replacement, cleaning and sanitation of the common elements.”’

N.J.S.A. 46:8B-14(a). The common elements are defined as

follows:

*‘Common elements’’ means:

(i) the land described in the master deed;

(ii) as to any improvement, the foundations.

structural and bearing parts, supports, main walls,

roofs, basements, halls, corridors, lobbies,

$. The developer can retain one representative on the governing body in

certain circumstances.

Notwithstanding any of the provisions of subsection a

of this section, the developer shall be entitled to elect at least

one member of the governing board or other form of

administration of an association as long as the developer holds

for sale in the ordinary course of business one or more units

in a condominium operated by the association. [N.J.S.A.

46:8B-12.1(a))

Opinion of the Supreme Court of New Jersey

Stairways, elevators, entrances, exits and other

means of access, excluding any specifically reserved

or limited to a particular unit or group of units;

(iii) yards, gardens, walkways, parking areas

and driveways, excluding any specifically reserved

or limited to a particular unit or group of units;

(iv) portions of the iand or any improvement

Or appurtenance reserved exclusively for the

management, Operation or maintenance of the

common elements or of the condominium

property;

(v) installations of all central services and

utilities;

(vii) all other elements of any improvement

necessary or convenient to the existence,

management, Operation, maintenance and safety

of the condominium property or normally in

common use; and

(viii) such other elements and facilities as are

designated in the master deed as common elements.

[N.J.S.A. 46:8B-3(d)]

It should be noted that under subsection (d)(viii) above, the

common elements may be expanded to include other ‘‘elements

and facilities’’ designated in the master deed. The association has

a right of access to each unit ‘‘as may be necessary for the

maintenance, repair or replacement of any common elements

therein or accessible therefrom."’ N.J.S.A. 46:8B-15(b).

The association is empowered to assess and collect funds from

unit owners for common expenses, to maintain accounting records,

and to obtain insurance against loss by fire or other casualties

damaging the common elements and al! structural portions of

the condominium property. N.J.S.A. 46:8B-14(b), (d) and (g).

Opinion of the Supreme Court of New Jersey

The statute authorizes the association to ‘‘enter into contracts,

bring suit and be sued.’’ NV.J.S.A. 46:8B-15(a).* No unit owner,

except as an officer of the association, may bind the association.

N.J.S.A. 46:8B-16(a). Nor may a unit owner ‘‘contract for or

perform any maintenance, repair, replacement, removal, alteration

or modification of the common elements or any additions thereto,

except through the association and its officers.”’ N.J.S.A.

46:8B-18. If a unit owner fails to comply with the rules and

regulations or any of the provisions in the master deed, he may

be subject to a suit for injunctive relief by the association or by

any other unit owner. N.J.S.A. 46:8B-16(b).

All parties agree that the clear import, express and implied,

of the statutory scheme is that the association may sue third parties

for damages to the common elements, collect the funds when

successful, and apply the proceeds for repair of the property. The

statutory provisions empowering the association to sue, imposing

the duty on it to repair, and authorizing it to charge and collect

*‘common expenses,’’’ coupled with the prohibition against a unit

6. In this case the Association is a nonprofit corporation. As such it may,

under the terms of N.J.S.A. 1$:1-4(b), ‘sue and be sued, complain and defend

in any court’’ any action. Unincorporated associations consisting of seven or

more persons may sue or be sued “‘in any civil action affecting [the unincorporated

association's] common property, rights and liabilities.’’ V.J.S.A. 2A:64-1.

7. Common expenses are defined as ‘expenses for which the unit owners

are proportionately liable, including but not limited to:

(i) all expenses of administration, maintenance, repair and

replacement of the common elements;

(ii) expenses agreed upon as common by al! unit owners;

and

(Cont'd)

Opinion of the Supreme Court of New Jersey

owner performing any such work on common elements, are

compelling indicia that the association may institute legal action

on behalf of the unit owners for damages to common elements

caused by third persons.

In the absence of any statutory plan, we have acknowledged

the standing of an association of tenants in an apartment building

to sue their landlord. Crescent Pk. Tenants Assoc. v. Realty Eq.

Corp. of N.Y., §8 N.J. 98 (1971). The plaintiff tenant association

in Crescent Park was a nonprofit organization composed of tenants

of a high-rise luxury apartment building. It charged the landlord

with responsibility for defects in various parts of the common

elements, such as the air conditioning system, elevators, laundry

rooms and swimming pool. The complaint was dismissed on the

ground that the plaintiff had no standing. Justice Jacobs, writing

on behalf of this Court, reversed. He observed that the individual

tenants could have brought such a suit and that by acting together

their bargaining power was enhanced. Jd. at 108. He noted that

the complaint was

confined strictly to matters of common interest and

[did] not include any individual grievance which

might perhaps be dealt with more appropriately

in a proceeding between the individual tenant and

the landlord. So far as common grievances are

(Cont'd)

(iii) expenses declared common by provisions of this act

or by the master deed or by the bylaws."’ [NV./.S.A. 46:8B-3(e)]

It has been held that an association by virtue of its assessment power may

include the litigation costs as a common expense. See Margate Village

Condominium Ass'n, Inc. v. Wilfred, Inc., 3$0 So. 2d 16, 17 (Fla. App. 1977)

(upholding association's right to assess all owners, including developer, for

litigation expenses, including those of an action against developer).

10a

Opinion of the Supreme Court of New Jersey

concerned they may readily and indeed more

appropriately be dealt with in a proceeding between

the Association, on the one hand, and the landlord,

on the other, thus incidentally avoiding the

procedural burdens accompanying multiple party

litigation.’’ [Jd. at 109]

Justice Jacobs concluded that ‘‘it [was] difficult to conceive of

any policy consideration or any consideration of justice which

would fairly preclude the Association from maintaining, on behalf

of its member tenants, the present proceeding between itself as

plaintiff and the landlord and its parent company as defendants.”’

Id. See, e.g., Piscataway Apt. Assoc. v. Tp. of Piscataway, 66

N.J. 106 (1974) (nonprofit association of apartment house owners

maintained action).

We find nothing in the legislative scheme governing

condominiumis to indicate policy considerations different from

those expressed in Crescent Park. Avoidance of a multiplicity of

suits, economic savings incident to one trial, elimination of

contradictory adjudications, expedition in resolution of

controversies, accomplishment of repairs, and the positive effect

on judicial administration are supportive policy reasons.’

Moreover, the financial burden on an individual owner may be

sO great and so disproportionate to his potential recovery that

he could not or would not proceed with litigation. Other

jurisdictions have also interpreted their statutes governing

8. The plaintiffs, though not addressing the issue squarely, have implicitly

indicated that the Legislature would have no authority to determine whether

associations would have a right to sue because this is ‘procedural’ and exclusively

within the jurisdiction of the Supreme Court. Winberry v. Salisbury, $ N.J. 240,

255 (1950). It is not necessary for us to address that question since we are in

full agreement with the policy expressed.

Opinion of the Supreme Court of New Jersey

condominiums to authorize unit owner associations to sue with

respect to claims pertaining to common elements.’ /000 Grandview —

Ass’n v. Mt. Washington Associates, 434 A.2d 796 (Pa. Super.

Ct. 1981); Governors Grove Condominium Ass'n, Inc. v. Hill

Development Corp., 404 A.2d 131, 134(Conn. Super. Ct. 1979);

see also Avila South Condominium Ass’n v. Kappa Corp., 347

So. 2d 599, 607-609 (Fla. Sup. Ct. 1979), in which the Florida

Supreme Court held that the legislature did not have authority

to empower the association to sue, but accomplished the same

effect by promulgating a court rule. Contra, Deal v. 999 Lakeshore

Ass’n, 579 P.2d 775, 777-78 (Nev. 1978) (dictum); Friendly Village

Community Ass’n, Inc. v. Silva & Hill Constr. Co., 31 Cal. App.

3d 220, 225, 107 Cal. Rptr. 123, 126, 69 A.L.R.3d 1142, 1146

(1973). See generally Annot., ‘‘Standing to bring act relating to

real property of condominiums,’’ 72 A.L.R.3d 314 (1976); Annot.,

‘**Proper party plaintiff in action for injury to common areas of

condominium development,’’ 69 A.L.R.3d 1148 (1976); Note,

“Condominium Class Actions,’’ 48 St. Johns L. Rev. 1168,

1180-81 (1974).

If, as we have held, the association may sue to protect the

rights and interests of the unit owners in the common elemens,

does it have the exclusive right to maintain those actions?

Obviously, the unit owner has an interest in claims against the

developer arising out of damages to or defects in the common

elements. However, the association has been charged with and

9. Many condominium statutes were modeled after the Federal Housing

Administration's Mode! Statute for the Creation of Apartment Ownership, which

acknowledges the right of the association to sue on behalf of the unit owner.

See §7 of FHA Model Statute reprinted in Rohan and Reskin, 1A Condominium

Law & Practice, Appendix B-3.

l2a

Opinion of the Supreme Court of New Jersey

delegated the primary responsibility to protect those interests. ‘‘The

association .. . shall be responsible for the . . . maintenance,

repair, replacement, cleaning, and sanitation of the common

elements.’’ N.J.S.A. 46:8B-14. So long as it carries out those

functions and duties, the unit owners may not pursue individual

claims for damages to or defects in the common elements

predicated upon their tenant in common interest. The

Condominium Act contemplates as much. The association, not

the individual unit owner, may maintain and repair the common

elements. ‘‘No unit owner shall contract for or perform any

maintenance, repair, replacement, removal, alteration or

modification of the common elements or any additions thereto,

except through the association and its officers.’’ N.J.S.A.

46:8B-18. Indeed the statute authorizes the association to assess

the membership to raise those funds designated as ‘‘common

expenses.”’ NV.J.S.A. 46:8B-3(e). ‘‘A unit owner [is], by acceptance

of title .. . conclusively presumed to have agreed to pay his

proportionate share of common expenses.’’ NV.J.S.A. 46:8B-17.

It would be impractical indeed to sanction lawsuits by

individual unit owners in which their damages would represent

but a fraction of the whole. If the individual owner were permitted

to prosecute claims regarding common elements, any recovery

equitably would have to be transmitted to the association to pay

for repairs and replacements. A sensible reading of the statute

leads to the conclusion that such causes of action belong exclusively

to the association, which, unlike the individual unit owner, may

apply the funds recovered on behalf of all the owners of the

common elements. See W. Hyatt, Condominium and Homeowner

Association Practice: Community Association Law 105 (1981),

suggesting that only association be permitted to maintain action.

This is not to say that a unit owner may not act on a common

element claim upon the association’s failure to do so. In that event

13a

Opinion of the Supreme Court of New Jersey

the unit owner’s claim should be considered derivative in nature

and the association must be named as a party. Rule 4:32-5 would

be applicable. That Rule governs actions ‘‘brought to enforce a

secondary right on the part of one or more shareholders in an

association, incorporated or umincorporated, because the

association refuses to enforce rights which may properly be asserted

by it.’’

The unit owner may also sue the developer on behalf of the

association irrespective of its governing board’s willingness to sue

during the period of time that the association remains under the

control of the developer. The inherent conflict of interest is such

that the association would not be in a position to resolve conflicts

with the developer in the absence of the approval of the unit

owners, other than the developer.'* See Berman v. Gurwicz, No.

C-4576-74 (Ch. Div. 1981), aff'd o.b., No. A-3821-81-T2 (App.

Div. 1983), certif. denied, N.J. (1983). In this situation

the procedure of R. 4:32-5 would also appear to be appropriate.

The unit owner, of course, does have primary rights to

safeguard his interests in the unit he owns. N.J.S.A. 48:8B-4.

The physical extent of that property depends upon what has been

included in the common elements. This may be ascertained by

10. A similar concern about overreaching by the developer led the Legislature

to establish a rebuttable presumption of unconscionability of leases not executed

by representatives of condominium unit owners other than the developer.

N.J.S.A,. 46:8B-32(a). Rebuttable presumptions of unconscionability also apply

to numerous provisions that may be found in ‘‘leases involving condominium

property, including .. . recreational or other common facilities or areas.’’

N.J.S.A. 46:8B-32.

11. This is expressly recognized in the instant case in the Association's by-

laws. Art. 6, § 3, p. 75.

l4a

Opinion of the Supreme Court of New Jersey

examination of the statutory definition and the master deed.

Moreover, defective conditions in the common elements may also

result in injury to the unit owner and damages to his persona!

property and the unit. For example, a faulty roof may result in

personal property damage in the unit. The unit owner’s right to

maintain an action for compensation for that loss against the

wrongdoer is not extinguished or abridged by the association’s

exclusive right to seek compensation for damage to the common

element.

Further, the association’s primary right to sue does not

diminish any claim that the unit owner may have against the

association. The association’s board of directors, trustees or other

governing body have a fiduciary relationship to the unit owners,

comparable to the obligation that a board of directors of a

corporation owes to its stockholders. Acts of the governing body

should be properly authorized. Fraud, self-dealing or

unconscionable conduct at the very least should be subject to

exposure and relief. See, e.g., Papalexiou v. Tower West

Condominium, 167 N.J. Super. $16, $27 (Ch. Div. 1979); Ryan

v. Baptiste, $65 S.W.2d 196, 198 (Mo. Ct. App. 1976); Hidden

Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. D.

Ct. App. 1975).

Our attention must next be directed to the application of

the stated principles to the facts of this case. Beginning with the

election of November 10, 1977, Hartz Mountain selected only

one of nine of the Association’s board of directors. Further, the

Developer had no directors on the board of the Recreation

Association after October 19, 1978. In January 1978 the

Association’s board of directors designated a Legal Action

Committee chaired by Sidney Siller, a plaintiff in this case, to

Opinion of the Supreme Court of New Jersey

investigate claims against the Developer relating to (a) construction

and design and (b) misrepresentation or fraud. This Committee

reported to the Board of Directors in June 1978 that major

deficiencies attributable to the Developer involved heat, air

conditioning and insulation; noise, leaks and erosion; and

inadequate parking, clubhouse, swimming and marina facilities.

There were also questions concerning shrubbery and foliage. The

Committee recommended engaging an attorney, who later became

plaintiffs’ attorney in this action, to institute the necessary

litigation. The board of directors adopted this recommendation,

but shortly thereafter the board rescinded the action engaging

that attorney and instead utilized the Association's general counsel

in its negotiations with the Developer.

A settlement was negotiated providing for the Developer to

pay $400,000 to the Association and Recreation Association and

for the Developer to receive a general release except for ‘‘repair

and replacement’’ of underground utility breaks on that part of

the common elements known as Sea Isle for a period of three years.

Insofar as the claims and general release are confined to the

common areas and facilities, we agree with the trial court and

the Appellate Division that the Association had exclusive standing

to maintain the action. We also agree with the trial court and

the Appellate Division that plaintiffs are entitled to proceed under

the fourth count of the complaint against the Association and

Recreation Association because of allegedly wrongful actions taken

by their respective boards of directors.

Plaintiffs as unit owners may also continue with their

individual causes of action based upon damages to their individual

units. Their complaint referred to such damages. The common

elements as defined in the statute, V.J.S.A. 46:8B-3(d), and in

the master deed, do not include certain items peculiar to the

individual units, such as doors and windows that open from a

16a

Opinion of the Supreme Court of New Jersey

unit. The Associations cannot preclude plaintiffs from pursuing

these claims. Each plaintiff should be prepared at the pretrial

conference to itemize these individual unit owner claims. We do

not pass upon the propriety of the class action, an issue which

is not before us.

The judgment of the Appellate Division is affirmed in part

and reversed in part. The cause is remanded for trial, costs to

abide the event.

Chief Justice Wilentz and Justices Clifford, Pollock, O’Hern

and Garibaldi join in this opinion.

Justice Handler did not participate.

17a

OPINION OF THE SUPERIOR COURT OF NEW JERSEY,

APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

A-292-81T2

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE J. GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife; FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER,

single,

Plaintiffs-Appellants,

and

HARMON COVE CONDOMINIUM II ASSOCIATION, INC.,

Plaintiff-Intervenor-

Respondent,

Vv.

HARTZ MOUNTAIN ASSOCIATES, a corporation; HARMON

COVE I CONDOMINIUM ASSOCIATION, INC., a

corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Defendants-Respondents.

Argued April 5, 1982 Decided April 28, 1982

Before Judges Allcorn, Francis and Morton I.

Greenberg.

18a

Opinion of the Superior Court of New Jersey, Appellate Division

On appeal from Superior Court, Chancery Division,

Hudson County.

John Tomasin argued the cause for appellants.

Jerome A. Vogel argued the cause for defendant-

respondent Hartz Mountain Industries Inc. (Jeffer,

Hopkinson & Vogel, attorneys).

Richard S. Miller argued the cause for defendants-

respondents Harmon Cove I Condominium Association,

Inc. and Harmon Cove Recreation Association Inc.

(Williams, Caliri, Miller, Otley & Horn, attorneys).

PER CURIAM

The judgment of the Chancery Division is affirmed

essentially for the reasons set forth by Judge Gaulkin

in his written opinion dated July 29, 1981.

Affirmed.

I hereby certify that the foregoing is a true copy of the original

on file in my office.

s/ Elizabeth McLaughlin

Clerk

19a

JUDGMENT AND ORDER OF THE SUPERIOR COURT OF

NEW JERSEY, CHANCERY DIVISION

SUPERIOR COURT OF NEW JERSEY

CHANCERY DIVISION

HUDSON COUNTY

DOCKET NO. C-969-80

Civil Action

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE J. GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife; FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER,

single,

Plaintiffs-Appellants,

and

HARMON COVE CONDOMINIUM II ASSOCIATION, INC.,

Plaintiff-Intervenor-

Respondent,

Vv.

HARTZ MOUNTAIN ASSOCIATES, a corporation; HARMON

COVE I CONDOMINIUM ASSOCIATION, INC., a

corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Defendants-Respondents.

20a

Judgment and Order

ORDER OF DISMISSAL

(In Part)

This matter having come on before this Court on defendants’

motion to dismiss plaintiffs’ complaint on motion of Jeffer,

Hopkinson & Vogel, Esqs., Jerome A. Vogel, Esq. appearing,

attorneys for defendant Hartz Mountain Associates (erroneously

named as Hartz Mountain Industries, Inc. in the complaint but

amended on the record to Hartz Mountain Associates) and

Williams, Caliri, Miller, Otley & Horn, P.A., Terrence Dwyer,

Esq. appearing for defendants Harmon Cove I Condominium

Association, Inc. and Harmon Cove I Recreation Association,

Inc. in the presence of John Tomasin, Esq., attorney for plaintiffs,

and Feuerstein, Sachs & Maitlin, Esq., Allan Maitlin, Esq.

appearing, attorneys for Harmon Cove Condominium II

Association, Inc., and the Court having considered the pleadings,

briefs and arguments of respective counsel, and good cause

appearing therefore in accordance with the written decision of

this Court dated July 29, 1981;

It is, on this 7th day of August, 1981,

ORDERED as follows:

1. The First, Second, Third and Fifth Counts of the

complaint be and they are hereby dismissed with prejudice.

2. Plaintiffs be and they are hereby accorded an opportunity

to amend and supplement the Fourth Count of the complaint,

if they choose, to specify whether and in what manner and on

what grounds they challenge the actions of the defendants Harmon

Cove I Condominium Association, Inc. and Harmon Cove

Recreation Association, Inc., and which amendment shall be filed

on or before September 14, 1981 and in the absence of such a

2la

Judgment and Order

clarifying amendment, the Fourth Count of the complaint shall

be dismissed with prejudice.

s/ Geoffrey Gaulkin

HONORABLE GEOFFREY

GAULKIN, J.S.C.

22a

Judgment and Order

SUPERIOR COURT OF NEW JERSEY

CHANCERY DIVISION

Chambers of Geoffrey Gaulkin

Judge

Hudson County Courthouse

Administration Building

Jersey City, N.J. 07306

July 29, 1981

John Tomasin, Esq. P.A.

4800 Kennedy Boulevard W.

Union City, New Jersey 07087

Jerome A. Vogel, Esq.

Jeffer, Hopkinson & Vogel, Esaqs.

Law Building, Route 208

Hawthorne, New Jersey 07507

Terrence Dwyer, Esq.

Williams, Caliri, Miller, Otley & Horn, P.A.

1428 Route 23

Wayne, New Jersey 07470

Allan Maitlin, Esq.

Feuerstein, Sachs & Maitlin, Esqs.

80 Main Street

West Orange, New Jersey 07052

Re: Sidney Siller, er als v. Hartz Mountain

Associates, efc., et als

Docket No. C-969-80

23a

Judgment and Order

Gentlemen:

Plaintiffs Sidney Siller, et a/s., owners of five residence units at

Harmon Cove I, a condominium development in Secaucus, New

Jersey, brought this action seeking a variety of relief against

defendants Hartz Mountain Associates (Hartz Mountain),*

Harmon Cove I Condominium Association, Inc. (Association)

and Harmon Cove Recreation Association, Inc. (Recreation

Association). By consent of the then parties, Harmon Cove II

Condominium Association, Inc. has joined as a plaintiff-

intervenor, seeking some of the same relief demanded by the

plaintiffs as well as other relief. Defendants have moved to dismiss

the plaintiffs’ complaint on grounds that they are without capacity

or standing to assert the causes of action set forth in their verified

complaint.

The complaint alleges that Hartz Mountain was the planner,

developer, builder and seller of both the Harmon Cove I and

Harmon Cove II developments; that the Association is a non-

profit corporation which ‘‘took over the common elements’’ in

the Harmon Cove I development pursuant to the master deed

and bylaws of the Association; and that the Recreation Association

is a non-profit corporation ‘‘to which has been transferred and

conveyed control of the recreational facilities at said Harmon Cove

development . . .’’. Plaintiffs further allege that Hartz Mountain

built the premises and the common elements in a defective and

improper manner and in breach of express and implied warranties,

specifying a variety of asserted construction defects both in the

residential buildings and in the outlying structures and areas,

* Hartz Mountain was erroneously named as Hartz Mountain Industries,

Inc., a corporation; the appropriate amendment was noted on the record at

argument but was never memorialized in an order.

24a

Judgment and Order

including recreational areas. Based on those allegations, plaintiffs

seek ‘‘specific performance to compel Hartz Mountain to

specifically perform its undertakings’’ (First Count) as well as

for damages (Second Count). Plaintiffs further seek certification

of their action as a class action (Third Count).

The critical issues on the present application are focused by the

Fourth Count, in which plaintiffs allege that the Association and

the Recreation Association undertook to assert and to negotiate

and were purporting to settle the claims of all unit owners against

Hartz Mountain; that plaintiffs and other unit owners have not

been adequately informed or consulted with respect to any such

negotiations or settlement; and that in any event the causes of

action against Hartz Mountain are not within the authority of

the Association or the Recreation Association to settle. Accordingly

plaintiffs seek declaratory judgment ‘‘that such settlement is

beyond the powers’’ of the Association and Recreation

Association; and they seek an injunction against the settlement

without the consent of the unit owners and ‘‘a majority of property

owners after full disclosure of all facts and reports as to common

elements... .’’.

When the complaint was filed plaintiffs’ application for temporary

restraints against the consummation of the contemplated settlement

was denied upon representations by counsel for all defendants

that any settlement would ‘‘be subject to any and all future rulings

of the court upon the issues pleaded in the verified complaint.”’

An order memorializing that understanding was entered November

24, 1980.

No question is raised here as to plaintiffs’ rights, as members

of the Association and Recreation Association, to seek relief

against those entities for any assertedly wrongful actions taken

by their managements. See Papalexious v. Tower West

25a

‘Judgment and Order

Condominium, 167 N.J. Super. 516 (Ch. Div. 1979). Nor does

this motion present the question whether individual unit owners

can assert claims on behalf of all when their association fails to

act. What is at issue, rather, is whether the Association and

Recreation Association are without lawful authority to settle, on

behalf of all the unit owners, the claims against Hartz Mountain.

The relations and rights of the parties are fixed by the

Condominium Act, V.J.S.A. 46:8B-1, et seg. The act defines a

**condominium’”’ as

. . . the form of ownership of real property under

a master deed providing for ownership by one or

more owners of units of improvements together

with an undivided interest in common elements

appurtenant to each such unit. [N.J.S.A.

46:8B-3(h)]

The ‘‘unit’’ owned by the ‘‘unit owner’’ is defined as being ‘‘a

part of the condominium property designed or intended for any

type of independent use. . .”’ and includes ‘‘the proportionate

undivided interest in the common elements...”’ N.J.S.A.

46:8B-3(0). ‘‘Common elements”’ is defined to include essentially

all of the portions of the development which are alleged by

plaintiffs here to havc been improperly constructed:

(iii) yards, gardens, walkways, parking areas and

driveways, excluding any specifically reserved or

limited to a particular unit or group of units;

(iv) portions of the land or any improvement or

appurtenance reserved exclusively for the

management, operation or maintenance of the

26a

Judgment and Order

common elements or of the condominium

property;

(v) installations of all central services and utilities;

(vi) all apparatus and installations existing or

intended for common use;

(vii) all other elements of any improvement

necessary or convenient to the existence,

management, Operation, maintenance and safety

of the condominium property or normally in

common use. [N.J.S.A. 46:8B-3(d)]

The proportionate interest in the common elements is ‘‘inseparable

from such unit’’ and

... Shall remain undivided and shall not be the

object of an action for partition or division. The

right of any unit owner to the use of the common

elements shall be a right in common with all other

unit owners (except to the extent that the master

deed provides for limited common elements) to use

such common elements in accordance with the

reasonable purposes for which they are intended

without encroaching upon the lawful rights of the

other unit owners. [NV.J.S.A. 46:8B-6].

Creation of a condominium requires the execution and recording

of a master deed, NV.J.S.A. 46:8B-8, which must include ‘‘the

name and nature of the association. . ."’, N.J.S.A. 46:8B-k).

“Association is defined as “‘the entity responsible for the

administration of a condominium, which entity may be

incorporated or unincorporated.’ N.J.S.A. 46:B-3(b).

27a

Judgment and Order

The association thus required by statute is

.. responsible for the administration and

management of the condominium and

condominium property, including but not limited

to the conduct of all activities of common interest

to the unit owners. [N.J.S.A. 46:8B-12]

Among its duties are ‘‘the maintenance, repair, replacement,

cleaning and sanitation of the common elements.’’ N.J.S.A.

46:8B-14. And, subject to the provisions of the master deed and

its bylaws, the association ‘‘shall be an entity which shall act

through its officers and may enter into contracts, bring suit and

be sued.”’ N.J.S.A. 46:8B-15(a).

These provisions, read together with the remaining provisions of

the Condominium Act, make abundantly clear the legislative intent

to provide a mechanism by which the common interests of unit

owners will be protected and advanced. That mechanism is the

association, which, granted responsibility to conduct ‘‘all activities

of common interest to the unit owners’’, indisputably has authority

to act in behalf of all unit owners with respect to common

elements. Indeed, at oral argument, counsel for plaintiffs

acknowledged that an association could properly contract on

behalf of all unit owners, for example, to repave a parking area;

and that, if the quality of the contractor’s performance was

disputed, the association could properly institute and settle

litigation on behalf of all unit owners. Plaintiffs argue, however,

that the statute allots to the association responsibility only for

“‘administration’’, ‘‘management’’ and ‘“‘operation’’ of the

common elements, while the assertion of substantial claims against

the original developer-owner involves ‘‘attributes of ownership

and vindication of fundamental rights’’ which are beyond the

28a

Judgment and Order

contemplation of the statute, the master deed or the relevant

bylaws.

Neither the language nor the sense of the statute, the master deed

or the Association or Recreation Association bylaws warrants the

distinction thus urged. Realistic and practical application of the

Statutory scheme requires that the language used in and pursuant

to the statute be liberaliy construed to include the assertion and

settlement of claims on behalf of unit owners against the developer

with respect to common elements. To deprive the associations

of the right to act on behalf of all unit owners in such matters

would leave the responsibility for and authority over the common

elements fragmented and thus make vindication of the common

rights highly uncertain, difficult and burdensome. The statute is

clearly designed to avoid just that result.

The law cited from other jurisdictions is not persuasive of a

contrary view. The cases upon which plaintiffs rely arose under

early condominium statutes which were silent as to the right of

the association to sue on behalf of unit owners; finding no specific

authority granted to the association, courts relied on strict local

pleading rules to find that claims must be prosecuted by the real

parties in interest, that is, the unit owners themselves. See, e.z.,

Friendly Village Community Assoc., Inc. v. Silva & Hill Const.

Co., 31 Cal. App. 3d 220, 107 Cal. Rptr. 123 (1973); Rubenstein

v. Burleigh House, Inc., 305 So. 2d 311 (Fla. Dist. Ct. App. 1974);

Deal v. 999 Lakeshore Association, 94 Nev. 301, 579 P. 2d 775

(1978). On the other hand, where the legislative language or local

pleading rules have been found to permit, the right of the

association to sue in behalf of all unit owners with respect to

common elements has been upheld. See, e.g., Owens v. Tiber

Island Condominium Assoc., 373 A 2d 890 (D.C. 1977); Greentree

Condominium Assoc., Inc. v. RSP Corp., 36 Conn. Supp. 160,

415 A 2d 248 (Super. Ct. 1980); Wittington Condominium

29a

Judgment and Order

Apartments, Inc. v. Braemar Corp., 313 So. 2d 463 (Dist. Ct.

App. 1975), cert. den. 327 So. 2d 31 (Fla. 1976). See, generally,

Note, ‘‘Condominium Class Actions’’, 48 St. John's L. Rev. 1168

(1974); Annots., 72 ALR 3d 314 (1976), 69 ALR 3d 1148 (1976).

In New Jersey representative associations have long had standing

to sue on behalf of their members even in the absence of statutory

authority. See, e.g., Crescent Park Tenants Assoc. v. Realty

Equities Corp. of N.Y., §8 N.J. 98 (1971). Our Condominium

Act goes well beyond a mere permissive grant of standing: the

statute fixes the substantive rights and duties of a condominium

association. By describing rights in common elements as indivisible

and held in common and giving to the association all responsibility

for ‘‘administration and management”’ and for ‘‘the conduct of

all activities of common interest’’ with the right to ‘‘bring suit’’,

the statute must be said to grant to the Association and Recreation

Association here the right to act on behalf of all unit owners in

asserting and litigating or settling their common elements claims

against Hartz Mountain. Defendants’ application to dismiss the

complaint is therefore granted with respect to the First, Second,

Third and Fifth Counts, all of which assert causes of action against

Hartz Mountain alone.

As earlier noted, however, that disposition does not determine

or limit the rights of plaintiffs to challenge on either procedural

or substantive grounds the actions taken or contemplated on their

behalf by the Association and the Recreation Association. See

Papalexiou v. Tower West Condominium, supra. The Fourth

Count of the complaint may be read as addressing such issues,

though indistinctly. Plaintiffs shall be accorded 30 days from the

date hereof to amend and supplement the Fourth Count of the

complaint, if they choose, to specify whether and in what manner

and on what grounds they challenge the actions of the Association

or Recreation Association; in the absence of such a clarifying

30a

Judgment and Order

amendment, the Fourth Count will as well be dismissed on the

grounds already stated.

Defendants may submit an appropriate form of order pursuant

to R. 4:42-1.

Very truly yours,

s/ Geoffrey Gaulkin

GEOFFREY GAULKIN, J.S.C.

GG/rs

3la

EXCERPTS OF VERIFIED COMPLAINT FILED NOVEMBER

13, 1980 WITH ATTACHMENT

SUPERIOR COURT OF NEW JERSEY

CHANCERY DIVISION-HUDSON COUNTY

DOCKET NO.:

SIDNEY SILLER and SHIRLEY SILLER, his wife; IRVING

GAINES and CORALIE GAINES, his wife; MARSHALL

NATAPOFF and JANET NATAPOFF, his wife, FRANCIS

CLARK and LUCILLE CLARK, his wife; and JOEL KRAMER,

single;

Plaintiffs,

VS.

HARTZ MOUNTAIN INDUSTRIES, INC., a corporation;

HARMON COVE I CONDOMINIUM ASSOCIATION, INC.,

a corporation; and HARMON COVE RECREATION

ASSOCIATION, INC., a corporation,

Defendants.

Plaintiffs, residing at Harmon Cove, Secaucus, New Jersey,

say:

FIRST COUNT

1. Plaintiffs are individual owners of residences at Harmon

Cove I, a condominium development located in Secaucus,

10. Plaintiffs bring this action on behalf of themselves and

on behalf of all owners of condominium properties in Harmon

32a

Excerpts of Verified Complaint

Cove Development Area I, Secaucus, New Jersey, similarly

situated; (some 360 homes valued at approx. $100,000.00 each

or more) and will move for an appropriate Order to determine

the existence and propriety of such class action element to this

lawsuit.

11. Plaintiffs, as individual property owners, have individual

rights as property owners to protect their own investment and

the present and future value of their individual condominium

properties, including future resale value, aside and apart from

their proportionate interest as holders of rights in the common

elements, which are administered by the defendant associations.

12. Plaintiffs seek Judgment for specific performance to

compel Hartz Mountain Industries, Inc. to specifically perform

its undertakings, to plan, design, develop and build the

condominium homes and the common elements of adequate

materials and workmanship, in a safe and reliable manner; and

seek Judgment compelling Hartz Mountain Industries, Inc. to

specifically perform said obligations and to correct, replace and

reconstruct all the defects and deficiencies caused by their breach

of express and implied warranties, arising from the development

and sale by it of said condominium premises aforesaid.

13. There 1s no adequate remedy at law for the relief required,

as plaintiffs have taken title, moved in and live in the Harmon

Cove I Development Area.

i4. Such rights and claims did not merge in any closing

because (a) not discoverable until after closing; (b) were continuing

warranties under appropriate law; (c) were renewed by Hartz

Mountain Industries at each closing; (d) continued due to Hartz

Mountain influence and representation on the Boards of defendant

associations after closings.

33a

Excerpts of Verified Complaint

WHEREFORE, plaintiffs demand Judgment for specific

performance, requiring Hartz Mountain Industries, Inc. to correct,

replace and reconstruct all of the said defects and deficiencies

resulting from the breach of express warranties and implied

warranties aforesaid.

SECOND COUNT

1. Plaintiffs repeat the allegations contained in the First

Count.

2. Hartz Mountain Industries, Inc. planned, designed,

developed, built and sold said condominium properties and the

said common elements in such a negligent and defective manner,

with negligent and inadequate studies and testing; with inadequate

plans, specifications and safeguards for the conditions at the site;

and with inadequate supervision, testing and inspection; and of

such defective materials and workmanship, as to allow the

condominium units in Harmon Cove I and the common elements

to be built in an unsafe and defective manner, which defects were

not apparent when the individual premises, as well as the common

element premises, were transferred by the seller, as aforesaid.

3. As the direct and proximate result of the carelessness and

negligence of the defendant Hartz Mountain Industries, Inc., the

individual condominium premises were improperly designed,

planned, developed and built; as were the common elements; and

after passage of some time, said serious defects and deficiencies

became known, to the damage of plaintiffs, as well as all property

owners in the class, who own property in said development; and

who have a proportional interest in the common elements, as

aforesaid.

4. Hartz Mountain Industries, Inc. knew, or ought to have

known, that the tests and studies were inadequate and that the

34a

Excerpts of Verified Complaint

individual units, as well as the common elements, were defective,

as designed, planned, developed and built; and as a direct and

proximate result of the carelessness and negligence of Hartz

Mountain Industries, Inc., the plaintiffs, as well as all owners

in the same class similarly situated, and all owners of proportional

interests in the common elements, have suffered damage, and will

in the future suffer additional damage, as follows:

(a) Substantial monies have been spent in past years to try

to correct the defects caused by the negligence and carelessness

of defendants, which sums should be reimbursed to plaintiffs and

to the two defendant associations, with interest, counsel fees and

costs;

(b) Future costs necessitated by present and future efforts

to stabilize and correct the defects and deficiencies above stated,

should be determined and reimbursed by defendant Hartz

Mountain Industries, Inc. to plaintiffs and to the two defendant

associations;

limitations, and future decrease, in value of the common elements,

as the defects continue and the common elements deteriorate, due

to the negligence, carelessness, defects and deficiencies, and

breaches of warranty caused by defendant Hartz Mountain

Industries, Inc.

(d) The present and future loss and damages caused by present

limitation and future decrease in value of the individual homes

of individual property owners, as such defect continue and the

individual units deteriorate, due to the negligence, carelessness,

defects, deficiencies and breaches of warranty caused by defendant

Hartz Mountain Industries, Inc.

35a

Excerpts of Verified Complaint

WHEREFORE, plaintiffs demand Judgment for damages,

interest, counsel fees and costs.

THIRD COUNT

1. Plaintiffs repeat the allegations contained in the First and

Second Counts.

2. The property owners in Harmon Cove Area I, other than

plaintiffs, are similarly situated and common questions of law

and fact apply to their individual condominium units, which also

have similar defects and deficiencies caused by the breach of

express and implied warranties, as well as the carelessness and

negligence of Hartz Mountain Industries, Inc.; including their

proportionate share of the common elements, which are

administered by the defendant associations, and adequate notice,

reports and participation in this litigation, are required if a class

action should be approved; and plaintiffs seek Orders establishing

such class and making adequate provisions for notice, reports

and for representation for the benefit of all members of said class,

as aforesaid.

WHEREFORE, plaintiffs demand Judgment for similar relief

to be granted in this case to all members in the class; namely

all owners of condominium properties, and proportional owners

of the common elements, in Harmon Cove Area I, Secaucus, N.J.

FIFTH COUNT

1. Plaintiffs repeat the allegations contained in the First,

Second, Third and Fourth Counts.

36a

Excerpts of Verified Complaint

2. As the result of the breach of the express and implied

warranties by of Hartz Mountain Industries, Inc. and their

carelessness and negligent design, planning, development and

construction of the said condominium units and common elements,

as aforesaid, numerous expenditures and repairs have been made

by the defendant associations, which are properly attributable to

and the responsibility of, the defendant Hartz Mountain Industries,

Inc.

3. No adequate record or accounting of such expenses (as

opposed to proper ordinary and regular association upkeep and

maintenance expenses) have ever been compiled or allocated, and

made available to the individual property owners, as well as to

the members of the defendant associations. Such accounting is

necessary in order that Hartz Mountain Industries, Inc. may

reimburse plaintiffs and home owners similarly situated, as well

as the defendant associations, for such costs and charges, and

accordingly, an accounting thereof is absolutely essential by Hartz

Mountain Industries, Inc. and by defendant associations.

4. In addition, individual property owners have been put to

various expenses to try to correct and ameliorate the effects of

such defects and deficiencies in their own units, which expenses

must also be reimbursed to the individual property owners by

the defendant Hartz Mountain Industries, Inc.

5. Such calculations will be numerous, detailed and complex,

and an accounting will be necessary in order to adequately

determine the nature and extent of all such allocations and

payments, and to determine the amounts that Hartz Mountain

Industries, Inc. should reimburse plaintiffs and others similarly

situated, as well as the two defendant associations, for all expenses

and outlays in all past years, caused by the breachs of warranty

and the negligence and carelessness of defendant Hartz Mountain

37a

Excerpts of Verified Complaint

Industries, Inc., and by its negligent design, planning, development

and building of said Harmon Cove I Condominiums and common

elements (a) to do equity, and (b) to prevent unjust enrichment

of defendant Hartz Mountain Industries, Inc.

WHEREFORE, plaintiffs demand Judgment for accounting

and reimbursement by defendant Hartz Mountain Industries, Inc.,

(a) to plaintiffs and all others similarly situated for

reimbursement of such expenses and outlays as to

individual condominium units;

(b) to defendant associations for reimbursement of

such expenses and outlays as to the common elements;

be just and equitable.

JOHN TOMASIN, ESQ. P.A.

s/ John Tomasin

JOHN TOMASIN,

ATTORNEY FOR PLAINTIFFS

EXHIBIT ‘‘A”’

WILLIAMS, CALIRI, MILLER, OTLEY & HORN

A Professional Corporation

1428 Route 23, Wayne, New Jersey 07470

[Area Code 201] 694-0600

38a

Excerpts of Verified Comp’aint

October 23, 1980

Mr. Eugene Heller

Hartz Mountain Industries, Inc.

One Harmon Plaza

P.O. Box 1411

Secaucus, NJ 07094

Re: Harmon Cove I Condominium Association and

Harmon Cove Recreation Association -

Dispute with Hartz

Dear Mr. Heller:

This will confirm the settlement proposal put forth by your

organization at our meeting today. Subject to Board approvals

the above dispute will be settled upon the following terms:

1. Hartz will pay Harmon Cove I and Harmon Cove

Recreation Association the sum of $150,000.00 now.

2. Hartz will pay Harmon Cove I and Harmon Cove

Recreation an additional $250,000.00 in six equal annual

installments. There will be no interest payable on the outstanding

balances. The payments will commence one year after the

settlement.

3. Hartz will be entitled to a General Release from Harmon

Cove Recreation Association which release will specifically include

but not be limited to problems which may be experienced with

the Marina Bulkhead.

4. Hartz will be entitled to a General Release from Harmon

Cove I with the following described exception.

39a

Excerpts of Verified Complaint

5. Hartz acknowledges its responsibility for the cost of

repairing underground utility breaks on Sea Isle for a period of

three years.

As I advised you, I will recommend the settlement to the

two Boards. It is my belief that they should and will find this

acceptable. I further acknowledge that this is Hartz’s final offer

and that any further negotiations will prove fruitless.

We hope to convene special meeting of the Boards during

the next week or ten days to secure the requisite approvals.

Sincerely,

s/ Terry Dwyer

Terrence Dwyer

TD:dk

40a

EXCERPTS FROM ORIGINAL BRIEF IN SUPERIOR

COURT, CHANCERY DIVISION, ON DEFENDANTS’

MOTION TO DISMISS COMPLAINT ARGUED DECEMBER

19, 1980

Page 4 (Paragraph 9):

This is of crucial importance because the

Condominium Act expressly guarantees to unit

owners full and complete rights, as owners of real

property — equal to ail other owners of real estate.

(Emphasis in original.)

Page 5 (Paragraph 10):

.. (Role of Association is to administer and

maintain facilities). . .not to settle the claims all

owners have, for breach of warranty in the

contract, performance and sale of the

condominiums, to the owners. (Emphasis in

original.)

Page 5 (Paragraph 11):

11. The Unit Owners, by permitting the

associations to administer and manage the common

elements, thus never gave up their property rights

as owners, including their individual claims and

collective class actions as purchase-owners, for

breach of warranty, for the original defective

design, planning, building and development of the

condominium property, and as further stated in

the complaint. (Emphasis in original.)

4la

Excerpts from Original Brief

Page 5 (Paragraph 12):

12. Nothing in the brief of either defendant

contains any authoritative provision to the

contrary, and the inherently limited and

subordinate role of the associations can in no way

deprive the Unit Owners of their own individual

and collective property rights, including their right

to vindicate all ownership rights for breach of

warranty for defective plumbing, design, building

and development of the condominium property.

42a

EXCERPTS FROM HEARING TRANSCRIPT OF MOTION

TO DISMISS COMPLAINT HEARD BY NEW JERSEY

SUPERIOR COURT, CHANCERY DIVISION DATED

DECEMBER 19, 1980

[Commencing at page 16]

To me what we now have to do is look at the statutory

scheme. Was that the intent of the Legislature.

THE COURT: That’s a problem, and I think one of the

briefs calls that the tail wagging the dog.

MR. TOMASIN: May I respond to that briefly, your

Honor.

THE COURT: Yes.

MR. TOMASIN: Counsel would love to have this whole

case in point degenerate into a question of dissidents, because

that begs the question that the plaintiffs are members of the

Association, and that that completely defines their rights and

status.

We're not in a business. We’re owners of property who have

property rights independent of the Association, whose role it was

for the owners to run the condominium, if it had been properly

built in the first place. It is a very clever way of limiting the

question here by talking of dissidents and dissatisfied people.

We're not dissidents. We’re just owners of property under

the statute like every other owner, who [17] has rights pertaining

to ownership, . .

43a

Excerpts from Hearing Transcript

This case, I think, your Honor, must hinge on the nature

of the condominium law. No provision, no argument, can go

beyond the intent and purpose of the statute itself, and the statute

itself made it clear that the unit owners own property like any

other owner of real estate, and that the common elements are

[18] inextricably connected with that ownership, that any

convenience or device, whether it be by means of an association

or otherwise, to administer those are still subject and subordinate

to the ownership rights of each individual owner, and even when

legal title to one small portion in the recreational field, and nakedly

the title is in the association, the equitable title is with the owners

of the real estate whose property is enhanced and whose value

is determined by the common elements.

This argument that Cou..sel makes, that the Associations have

some superior, exclusive or overriding right, has been decided

in the states where you expect condominium law to be made —

California, Florida, Connecticut. We cited the cases. In each and

every case, the exact question was decided, and the condominium

associations had no such standing. They were not the real parties

in interest. The class actions inured in the owners and only the

owners.

[19] In the New Jersey law, the only phrase that they can

point to is a phrase that a condominium association can sue and

be sued. Of course it can. If it hires somebody to plow the parking

lot or to fix the building within their sphere, naturally they have

to be able to vindicate that right.

dda

Excerpts from Hearing Transcript

MR. TOMASIN: Yes, and any argument can be carried

out to an extreme where the extreme makes the rule look peculiar;

but, as a matter of fact, the question here is as to a claim against

the developer by an owner. When he says I want to sue the

developer, the [20] question is does he have that right or doesn’t

he. Did he give it away somehow or other, and in that case—

THE COURT: So that even though by your theory the

Association would not have standing itself—

MR. TOMASIN: Precisely.

{Commencing at page 29]

MR. TOMASIN: Just three sentences, if I may.

Mr. Vogel, number one, misunderstands my argument with

respect to lawsuits that the condominium association is involved

in where it buys materials and fixes a building and it collapses.

The owners have no right to interfere in that type of matter.

All of the matters that the Association has with respect to

managing, maintaining, repairing and handling the common

elements, under the statute, they have the right to sue and be

sued. Those decisions and those lawsuits are their exclusive

province. I have never said otherwise.

What I am saying here is the dog is the owners. The tail is

the Association that was delegated for one limited function;

namely, handling the common elements, and it is the owners’

4Sa

Excerpts from Hearing Transcript

rights to vindicate their contract property rights that they are

asserting here in which the Association claims that they have a

right to block.

[30] MR. TOMASIN: It’s acompletely different story from

what we are contending in this case. In this case the rights antedate

the Associations. These rights go back when the place was first

built, before they had conveyed — at the time they were conveyed,

and during the time when Hartz controlled both the Associations,

and it’s a completely different cause of action that’s involved here.

Property rights of owners are involved here.

THE COURT: What’s your position as to the Recreation

Association?

MR. TOMASIN: My position is the Recreation Association

— is that although naked legal title to the recreational facilities

is in the recreation nonprofit corporation, that it has no beneficial

ownership. It is merely a trustee and fiduciary. The equity is in

the owners under the condominium laws, and that all of the [31]

rights and all of the attributes of ownership inure in the owners.

MR. TOMASIN: It’s as if a developer, Hartz here, instead

of selling [32] condominium units, sold a hundred houses with

the land and a little fence and so forth, a conventional house,

to a hundred different owners, and then also conveyed a swimming

pool to an association to run and manage.

The fact that the swimming pool is run jointly or a contract

was made for that association to mow the lawns doesn’t take away

46a

Excerpts from Hearing Transcript

the owners’ rights. The owners’ rights as real estate owners are

not affected.

47a

EXCERPTS FROM BRIEF BEFORE SUPERIOR COURT OF

NEW JERSEY, APPELLATE DIVISION

It is thus clear by relevant statutory language that the ultimate

ownership of a// the condominium property and all the common

elements, remains in the individual owners, who have the right

to sell same; and the right to protect their investment and value

like any other owner of real property; and only they can settle

or litigate claims which have damaged and diminished same in

the past; are continuing; and will damage and diminish same in

the future. Breach of contract between owner and developer was

never entrusted to the association, which merely operates,

maintains and manages the common elements only.

13. The Legislature in creating such flexible and valuable

method of holding, developing, conveying, and owning

condominium property, thus conditioned same, and provided that

the individual condominium owners are true owners in fee simple

of all the units and ail the common elements, with rights equal

with all other types of real estate owners.

14. Under RS 46:8B-7, any private agreement, whether by

deed, by-laws, ‘“‘rules’’, etc. (or court decision?).

**..-contrary to the provisions of this act shall

be void.”’

17. RS 46:8B-14 delineates the ‘‘Duties of the association’’,

which involve basically: —

(a) ‘*The maintenance, repair, replacement, cleaning and

sanitation of the common elements.’’

48a

Excerpts from Brief Before Superior Court of New Jersey,

Appellate Division

(b) assessment of common expenses to owners (which

confirms owners as the real parties in interest, a vital concept).

elements, subject to the right of the owners to change same.

All are obviously related and /imited to, the continuing duty

to administer and manage the condominium property and common

elements, not to own same, or exercise the prerogatives of

ownership, which have not been confided or conveyed to the

associations.

s ¢ 8

POINT II

*s 2 8

2. As tothe purchase and sale agreements with Developer,

the unit owners acquired title to individual condominiums and

the appurtenant proportionate parts by percentage of the common

elements, as real estate owners. As such owners, under the

Condominium Act, they acquired the right to deal with such ‘‘---

real property-—’’ fully, ‘‘---in the same manner as is otherwise

permitted by law for any other parcel of real property’’. RS

46:8B-4.

3. Accordingly, they have the right to protect their

investment and its market value; as well as to litigate for damages,

and for declaratory judgment, accounting; breach of warranty;

49a

Excerpts from Brief Before Superior Court of New Jersey,

Appellate Division

breach of contract; negligence and all the other relief sought in

the complaint.

... Since the Unit Owners will ultimately pay the ¢osts and

assessments, and face liens if they do not, they are the real parties

in interest even as to costs of repairs; not to mention their

additional rights to prevent deterioration of the Common

Elements, due to breach of warranty and negligence, which must

affect the market ability of their property; the value of their

investment; and the past, present and future enjoyment of their

property, and the resale value of their property.

9. It is submitted that nowhere in the country does

general language giving associations the right to contract

and to sue within their sphere, serve to detract or deprive

the unit owners of their property rights as owners in fee

simple of their rights to preserve protect and defend their

property interests, particularly antecedent breach of

contract and warranty claims as between Developer-Seller

and Owner-Buyer.

11. Any other rule would deprive condominium

property owners of property rights without due process

of law.

50a

EXCERPTS FROM PETITION FOR CERTIFICATION TO

THE NEW JERSEY SUPREME COURT

STATEMENT OF QUESTIONS INVOLVED

Under the New Jersey Condominium Act, RS 46:8B-1, et seq:

1. Do individual buyer-owners of individual condominium

townhouse residences in fee simple absolute, under RS 46:8B-6(q),

have standing to sue the seller-developer thereof for breach of

contract, breach of warranty, negligent and defective planning

and design; and negligent and defective construction thereof, and

diminished market value thereof?

4. Is a construction of RS 46:8B-12, that non-profit

associations, formed the ‘‘administration and management’’ of

the condominium property, have exclusive jurisdiction and

standing on all lawsuits and claims whatsoever, against the

developer (including claims of breach of contract, breach of

warranty, etc., that antedate construction, sale and closing of title),

to the exclusion of buyer-owners, sound?

6. Would such a construction discriminate against them as

owners of real property in fee simple, and deprive them of property

rights without legal protection and without due process of law,

in the light of RS 46:8B-4, which provides that owners of

condominium real estate are accorded full rights as ‘‘-—permitted

by law for any other parcel of real property’’.

Sla

Excerpts from Petition for Certification to the New Jersey Supreme

Court

7. It is submitted that there is no basis in law for depriving

contract owners in fee simple of their right, as real parties in

interest, to sue developer for breach of contract; breach of

warranty, etc. The role of the associations is to ‘administer and

manage’ the common elements, nof usurp the independent

property right of owners.

ARGUMENT

POINT THREE

1. If the Condominium Act were construed to relegate

buyer-owners of condominium real estate property to the mere

status of quasi-stockholders or members of non-profit

corporations, whose rights are totally determined by volunteer

Boards of Directors of non-profit corporations, formed to

**manage and administer’ the common elements after contract

of sale and closing, (as if the non-profit corporations were the

beneficial-owners) subject only to a suit against such directors

for fraud or abuse of discretion or the like, such construction

would unlawfully discriminate against such condominium owners

as a class of real estate owners — as opposed to ofher owners

of real property. It would deprive condominium owners of valuable

property rights, without due process of law.

2. Such construction would cause grievous uncertainty and

ultimately chaos in the marketability and value of such

condominium real estate, purchased in reliance on RS 46:8B-6(q)

which expressly provides that condominium owners are owners

of real estate “‘--fee simple—"’ and RS 46:8B-4 that such

condominium owners may deal with their property

52a

Excerpts from Petition for Certification to the New Jersey Supreme

Court

‘‘.—in the same manner as is otherwise

permitted by law for any other parcel of real

property-—"

3. Condominium real property is a vested right in real estate,

which requires stability to maintain marketability.

8. The ownership in fee simple of the condominium real

estate being clear, and the common elements being ‘‘---appurtenant

to each such unit--’’, RS 46:8B-3(h), and ‘‘-—-belonging thereto

or intended for the benefit thereof—’’ to be administered without

**.encroachment upon the lawful rights of the other unit owners’’

(RS 46:8B-6), the vested rights of such owners cannot be

diminished, taken away or prejudiced without due process of law.

No cause is shown to discriminate against condominium real

estate buyers in their right to sue for breach of contract, breach

of warranty; defective design, planning and construction of the

condominium town houses, equal to the buyer-owners of any other

real estate.

9. The Constitutions of the United States and of New Jersey

prohibit such lack of due process; discrimination among those

similarly situated; and lack of equal protection of the laws.

10. Constitutional equal protection applies to acts of the

Legislature, and also ‘‘—-decisions of its Courts’’, Jersey Shore

v. Estate of Baum, 84 N.J. 137 at p. 145 (1980).

11. No rational basis or classification to bar plaintiffs as

buyer-owners of real estate from sueing seller-developer appears.

S3a

Excerpts from Petition for Certification to the New Jersey Supreme

Court

Their real estate contracts antedate the involvment of the

management associations, and are the same as any other real estate

contract. Such bar must fall, as an unlawful deprival of vested

property rights, without due process or equal protection of law.

12. A radical construction of the Condominium Act by

indirection, whereby the general non-mandatory grant of power

to ‘‘sue and be sued’’ to non-profit corporations, becomes an

exclusive right; and the owners are deprived of their rights, has

no basis in law, justice or equity.

13. To exalt the general non-mandatory ‘‘right to sue’’ in

some cases, to deprive owners of their right to sue in other cases,

is to raise simplistic literalness to a commandment, for which there

is no authority in law. The surest way to misconstrue a statute

is to read it too literally. Schiershead v. Birgantine, 29 N.J. 220.

fhe

S4a

RELEVANT STATUTES

RS 46:8B-1. Short title — Revised Statutes of New Jersey

This act shall be known and may be cited as the

*‘Condominium Act.’’ L.1969, c. 257, §1, eff. Jan. 7, 1970.

46:8B-3. Definitions

The following words and phrases as used in this act shall

have the meanings set forth in this section unless the context clearly

indicates otherwise:

a. ‘“‘Assigns’’ means any person to whom rights of a unit

owner have been validly transferred by lease, mortgage or

otherwise.

b. ‘‘Association’’ means the entity responsible for the

administration of a condominium, which entity may be

incorporated or unincorporated.

c. **Bylaws’’ means the governing regulations adopted under

this act for the administration and management of the property.

d. ‘‘Common elements’’ means:

(i) the land described in the master deed;

(ii) as to any improvement, the foundations, structural

and bearing parts, supports, main walls, roofs, basements, halls,

corridors, lobbies, stairways, elevators, entrances, exits and other

means of access, excluding any specifically reserved or limited

to a particular unit or group of units;

* «as

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(iii) yards, gardens, walkways, parking areas and

driveways, excluding any specifically reserved or limited to a

particular unit or group of units;

(iv) portions of the land or any improvement or

appurtenance reserved exclusively for the management, operation

or maintenance of the common elements or of the condominium

property;

(v) installations of all central services and utilities;

(vi) all apparatus and installations existing or intended

for common use;

(vii) all other elements of any improvement necessary

or convenient to the existence, management, operation,

maintenance and safety of the condominium property or normally

in common use; and

(viii) such other elements and facilities as are designated

in the master deed as common elements.

e. ‘Common expenses’’ means expenses for which the unit

owners are proportionately liable, including but not limited to:

(i) all expenses of administration, maintenance, repair

and replacement of the common elements;

(ii) expenses agreed upon as common by all unit owners;

and

(iii) expenses declared common by provisions of this act

or by the master deed or by the bylaws.

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f. ‘“‘Common receipts’’ means:

(i) rent and other charges derived from leasing or

licensing the use of common elements;

(ii) funds collected from unit owners as common

expenses or otherwise; and

(iii) receipts designated as common by the provisions

of this act or by the master deed or the bylaws.

g. ‘“‘Common surplus’’ means the excess of all common

receipts over all common expenses.

h. ‘‘*Condominium’’ means the form of ownership of real

property under a master deed providing for ownership by one

or more owners of units of improvements together with an

undivided interest in common elements appurtenant to each such

unit.

i. ‘*Condominium property’’ means the land covered by the

master deed, whether or not contiguous and all improvements

thereon, all owned either in fee simple or under lease, and all

easements, rights and appurtenances belonging thereto or intended

for the benefit thereof.

j. “‘Developer’’ means the person or persons who create a

condominium or lease, sell or offer to lease or sell a condominium

or units of a condominium in the ordinary course of business,

but does not include an owner or lessee of a unit who has acquired

his unit for his own oécupancy.

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k. “‘Limited common elements’’ means those common

elements which are for the use of one or more specified units

to the exclusion of other units.

l. **Majority’’ or ‘‘majority of the unit owners’’ means the

owners of more than 50% of the aggregate in interest of the

undivided ownership of the common elements as specified in the

master deed. If a different percentage of unit owners is required

to be determined under this act or under the master deed or bylaws

for any purpose, such different percentage of owners shall mean

the owners of an equal percentage of the aggregate in interest

of the undivided ownership of the common elements as so

specified.

m. ‘*Master deed’’ means the master deed recorded under

the terms of section 8 of this act,' as such master deed may be

amended or supplemented from time to time, being the instrument

by which the owner in fee simple or lessee of the property submits

it to the provisions of this chapter.

n. *‘Person’’ means an individual, firm, corporation,

partnership, association, trust or other legal entity, or any

combination thereof.

o. **‘Unit’’ means a part of the condominium property

designed or intended for any type of independent use, having a

direct exit to a public street or way or to a common element or

common elements leading to a public street or way or to an

easement or right of way leading to a public street or way, and

includes the proportionate undivided interest in the common

1. Section 46:8B-8.

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elements and in any limited common elements assigned thereto

in the master deed or any amendment thereof.

p. ‘‘Unit deed’’ means a deed of conveyance of a unit in

recordable form.

q. “‘Unit owner’’ means the person or persons owning a unit

in fee simple.

L.1969, c. 257, §3, eff. Jan. 7, 1970. Amended by L.1973, c.

216, §1, eff. Aug. 23, 1973; L.1979, c. 157, §1, eff. July 19, 1979.

46:8B-4. Status of units

Each unit shall constitute a separate parcel of real property

which may be dealt with by the owner thereof in the same manner

as is otherwise permitted by law for any other parcel of real

property.

L.1969, c. 257, §4, eff. Jan. 7, 1970.

46:8B-5. Types of ownership

Any unit may be held and owned by one or more persons

in any form of ownership, real estate tenancy or relationship

recognized under the laws of this State.

L.1969, c. 257, §5, eff. Jan. 7, 1970.

46:8B-6. Common elements

The proportionate undivided interest in the common elements

assigned to each unit shall be inseparable from such unit, and

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any conveyance, lease, devise or other disposition or mortgage

or other encumbrance of any unit shall extend to and include

such proportionate undivided interest in the common elements,

whether or not expressly referred to in the instrument effecting

the same. The common elements shall remain undivided and shall

not be the object of an action for partition or division. The right

of any unit owner to the use of the common elements shall be

a right in common with all other unit owners (except to the extent

that the master deed provides for limited common elements) to

use such common elements in accordance with the reasonable

purposes for which they are intended without encroaching upon

the lawful rights of the other unit owners.

L.1969, c. 257, §6, eff. Jan. 7, 1970.

46:8B-7. Invalidity of contrary agreements

Any agreement contrary to the provisions of this act shall

be void.

L.1969, c. 257, §7, eff. Jan. 7, 1970.

ARTICLE II. BLANK

ARTICLE III. CREATION OF A CONDOMINIUM

46:8B-8. Method of creation

A condominium may be created and established by recording

in the office of the county recording officer of the county wherein

the land is located a master deed executed and acknowledged by all

owners, or the lessees setting forth the matters required by section

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9 of this act.' This act shall apply solely to real property of interests

therein which have been subjected to the terms of this act as

provided in this section.

L.1969, c. 257, §8, eff. Jan. 7, 1970. Amended by L.1973, c.

216, §2, eff. Aug. 23, 1973.

46:8B-8.1. Establishment of condominium upon land held under

lease

Nothing in the act to which this act is a supplement shall

be construed to prevent the creation and establishment of a

condominium as defined in this act, upon land held under a lease

by the lessee or creator of the condominium, provided that the

master deed required under this act shall be signed, not only by

the lessee, but also by the lessor of the land who holds the legal

title to the land in fee simple.

L.1973, c. 216, §3, eff. Aug. 23, 1973.

46:8B-9. Contents of master deed

The master deed shall set forth, or contain exhibits setting

forth the following matters:

(a) A statement submitting the land described in such master

deed to the provisions of this act.

(6) A name, including the word ‘‘condominium”’ or followed

by the words ‘‘a condominium,’’ by which the property shall

thereafter be identified.

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(d) A survey of the land and plans or other graphic

description of the improvements erected or to be erected thereon

in sufficient detail to show and identify common elements, each

unit and their respective locations and approximate dimensions.

Such plans or other graphic description shall bear a certification

by an engineer or architect authorized to practice his profession

in this State setting forth that such plans constitute a correct

representation of the improvements described.

(e) An identification of each unit by distinctive letter, name

or number so that each unit may be separately described thereafter

by such identification.

(f) A description of the common elements and limited

common elements, if any.

(g) The proportionate undivided interests in the common

elements and limited common elements, if any, appurtenant to

each such unit. Such interests shall in each case be stated as

percentages aggregating 100%.

(h) The voting rights of unit owners.

(i) By-laws.

Gj) A method of amending and supplementing the master

deed, which shall require the recording of any such amendment

or supplement in the same office as the master deed before it

(k) The name and nature of the association and if such

association is not incorporated, the name and residence address,

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within this State of the person designated as agent to receive service

of process upon such association.

(1) The proportions or percentages and manner of sharing

common expenses and owning common surplus.

(m) Such other provisions, not inconsistent with this act, as

may be desired, including but not limited to restrictions or

limitations upon the use, occupancy, transfer, leasing or other

disposition of any unit (provided that any such restriction or

limitation shall be otherwise permitted by law) and limitations

upon the use of common elements.

L.1969, c. 257, §9, eff. Jan. 7, 1970.

46:8B-10. Unit deeds and other instruments

A deed, mortgage, lease or other instrument pertaining to

a unit shall have the same force and effect in regard to such unit

as would be given to a like instrument pertaining to other real

property which has been similarly made, executed, acknowledged

and recorded. A unit deed shall contain the following:

(a) The name of the condominium as set forth in the master

deed, the name of the political subdivision and county in which

the condominium property is located and a reference to the

recording office, the Book and page where the master deed and

any amendment thereto are recorded.

(b) The unit designation as set forth in the master deed.

unit, if previously conveyed.

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(d) A statement of the proportionate undivided interest in

the common elements appurtenant to such unit as set forth in

the master deed or any amendments thereof.

(e) Any other matters, consistent with this act, which the

parties may deem appropriate.

L.1969, c. 257, $10. eff. Jan. 10, 1970.

46:8B-11. Amendments to master deed

The master deed may be amended or supplemented in the

manner set forth therein. Unless otherwise provided therein, no

amendment shall change a unit unless the owner of record thereof

and the holders of record of any liens thereon shall join in the

execution of tue amendment or execute a consent thereto with

the formalities of a deed. Notwithstanding any other provision

of this act or the master deed, the designation of the agent for

service of process named in the master deed may be changed by

an instrument executed by the association and recorded in the

same office as the master deed.

L.1969, c. 257, §11, eff. Jan. 7, 1970.

ARTICLE IV. ADMINISTRATION

46:8B-12. The association

The association provided for by the master deed shall be

responsible for the administration and management of the

condominium and condominium property, including but not

limited to the conduct of all activities of common interest to the

unit owners. The association may be any entity recognized by

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the laws of New Jersey, including but not limited to a business

corporation or a nonprofit corporation.

L.1969, c. 257, §12, eff. Jan. 7, 1970.

46:8B-12.1. Members of governing board; elections; written

approval of actions by developer; control by board; delivery of

items

a. When unit owners other than the developer own 25% or

more of the units in a condominium that will be operated ultimately

by an association, the unit owners other than the developer shall

be entitled to elect not less than 25% of the members of the

governing board or other form of administration of the

association. Unit owners other than the developer shall be entitled

to elect not less than 40% of the members of the governing board

or other form of administration upon the conveyance of 50%

of the units in a condominium. Unit owners other than the

developer shall be entitled to elect all of the members of the

governing board or other form of administration upon the

conveyance of 75% of the units in a condominium. However,

when some of the units of a condominium have been conveyed

to purchasers and none of the others are being constructed or

offered for sale by the developer in the ordinary course of business,

the unit owners other than the developer shall be entitled to elect

all of the members of the governing board or other form of

administration.

Notwithstanding any of the provisions of subsection a of this

section, the developer shall be entitled to elect at least one member

of the governing board or other form of administration of an

association as long as the developer holds for sale in the ordinary

course of business one or more units in a condominium operated

by the association.

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b. Within 30 days after the unit owners other than the

developer are entitled to elect a member or members of the

governing board or other form of administration of an association,

the association shall call, and give not less than 20 days’ nor more

than 30 days’ notice of, a meeting of the unit owners to elect

the members of the governing board or other form of

administration. The meeting may be called and the notice given

by any unit owner if the association fails to do so.

c. If a developer holds one or more units for sale in the

ordinary course of business, none of the following actions may

be taken without approval in writing by the developer:

(1) Assessment of the developer as a unit owner for capital

improvements.

(2) Any action by the association that would be detrimental

to the sales of units by the developer. However, an increase in

assessments for common expenses without discrimination against

the developer shall not be deemed to be detrimental to the sales

of units.

d. Prior to, or not more than 60 days after, the time that

unit owners other than the developer elect a majority of the

members of the governing board or other form of administration

of an association, the developer shall relinquish control of the

association, and the unit owners shall accept control.

Simultaneously, the developer shall deliver to the association all

property of the unit owners and of the association held or

controlled by the developer, including, but not limited to, the

following items, if applicable, as to each condominium operated

by the association:

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(1) A photocopy of the master deed and all amendments

thereto, certified by affidavit of the developer, or an officer or

agent of the developer, as being a complete copy of the actual

master deed.

(2) A certified copy of the association’s articles of

incorporation, or if not incorporated, then copies of the documents

creating the association.

(3) A copy of the bylaws.

(4) The minute books, including al] minutes, and other books

and records of the association, if any.

(5) Any house rules and regulations which have been

promulgated.

(6) Resignations of officers and members of the governing

board or other form of administration who are required to resign

because the developer is required to relinquish control of the

association.

(7) An accounting for all association funds, including capital

accounts and contributions.

(8) Association funds or control thereof.

(9) All tangible personal property that is property of the

association, represented by the developer to be part of the common

elements or ostensibly part of the common elements, and an

_ inventory of that property.

(10) A copy of the plans and specifications utilized in the

construction or remodeling of improvements and the supplying

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of equipment to the condominium and in the construction and

installation of all mechanical components serving the

improvements and the site, with a certificate in affidavit form

of the developer, his agent, or an architect or engineer authorized

to practice in this State that such plans and specifications represent,

to the best of their knowledge and belief, the actual plans and

specifications utilized in the construction and improvement of the

condominium property and for the construction and installation

of the mechanical components serving the improvements. If the

condominium property has been declared a condominium more

than 3 years after the completion of construction or remodeling

of the improvements, the requirements of this paragraph shall

not apply.

(11) Insurance policies.

(12) Copies of any certificates of occupancy which may have

been issued for the condominium property.

(13) Any other permits issued by governmental bodies

applicable to the condominium property in force or issued within

1 year prior to the date the unit owners other than the developer

take control of the association.

(14) All written warranties of the contractor, subcontractors,

suppliers, and manufacturers, if any, that are still effective.

(15) A roster of unit owners and their addresses and telephone

numbers, if known, as shown on the developer’s records.

(16) Leases of the common elements and other leases to which

the association is a party.

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(17) Employment contracts, management cwntracts,

maintenance contracts, contracts for the supply of equipment or

materials, and service contracts in which the association is one

of the contracting parties and maintenance contracts and service

contracts in which the association or the uit owners have an

obligation or responsibility, directly or indirectly to pay some or

all of the fee or charge of the person or persons performing the

service.

(18) All other contracts to which the association is a party.

L.1979, c. 157, §2, eff. July 19, 1979.

Title of Act:

An Act to amend and supplement the ‘‘condominium Act,”’

approved January 7, 1970 (P.L.1969, c. 257). L.1979, c. 157.

Statement: Committee statement to Senate, No. 182—L.1979, c.

157, see §46:8B-3.

46:8B-12.2. Management, employment, service or maintenance

contract or contract for equipment or materials; 2 year limitation

Any management, employment, service or maintenance

contract or contract for the supply of equipment or material, which

is directly or indirectly made by or on behalf of the association,

prior to the unit owners having elected at least 75% of the members

of the governing board or other form of administration of the

association, shall not be entered into for a period in excess of

2 years. Any such contract or lease may not be renewed or extended

for periods in excess of 2 years and at the end of any 2-year period,

the association may terminate any further renewals or extensions

thereof.

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L.1979, c. 157, §3, eff. July 19, 1979.

Statement: Committee statement to Senate, No. 182—L.1979, c.

157, see §46:8B-3.

46:8B-13. By-laws

The administration and management of the condominium

and condominium property and the actions of the association shall

be governed by by-laws which shall initially be recorded with the

master deed and shall provide, in addition to any other lawful

provisions, for the following:

(a) The form of administration, indicating the titles of the

officers and governing board of the association, if any, and

specifying the powers, duties and manner of selection, removal

and compensation, if any, of officers and board members.

(b) The method of calling meetings of unit owners, the

percentage of unit owners or voting rights required to make

decisions and to constitute a quorum, but such by-laws may

nevertheless provide that unit owners may waive notice of meetings

or may act by written agreement without meetings.

shares of common expenses and the method of distribution to

the unit owners of their respective shares of common surplus or

such other application of common surplus as may be duly

authorized by the by-laws.

(d) The method by which the by-laws may be amended,

provided that no amendment shall be effective until recorded in

the same office as the then existing by-laws. The by-laws may

also provide a method for the adoption, amendment and

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enforcement of reasonable administrative rules and regulations

relating to the operation, use, maintenance and enjoyment of the

units and of the common elements including limited common

elements.

L.1969, c. 257, §13, eff. Jan. 7, 1970.

46:8B-14. Duties of the association

The association, acting through its officers or governing

board, shall be responsible for the performance of the following

duties, the costs of which shall be common expenses:

(a) The maintenance, repair, replacement, cleaning and

sanitation of the common elements.

(b) The assessment and collection of funds for common

expenses and the payment thereof.

of rules governing the use and operation of the condominium

and the condominium property and the use of the common

elements subject to the right of a majority of unit owners to change

any such rules.

(d) the maintenance of insurance against loss by fire and other

casualties normally covered under broad-form fire and extended

coverage insurance policies as written in this State, covering all

common elements and all structural portions of the condominium

property and the application of the proceeds of any such insurance

to restoration of such common elements and structural portions

if such restoration shall otherwise be required under the provisions

of this act or the master deed or by-laws.

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(e) The maintenance of insurance against liability for personal

injury and death for accidents occurring within the common

elements whether limited or general and the defense of any actions

brought by reason of injury or death to person, or damage to

property occurring within such common elements and not arising

by reason of any act or negligence of any individual unit owner.

(f) the master deed or by-laws may require the association

to protect blanket mortgages, or unit owners and their mortgages,

as their respective interest may appear, under the policies of

insurance provided under clauses (d) and (e) of this section, or

against such risks with respect to any or all units, and may permit

the assessment and collection from a unit owner of specific charges

for insurance coverage applicable to his unit.

(g) The maintenance of accounting records, in accordance

with generally accepted accounting principles, open to inspection

at reasonable times by unit owners. Such records shall include:

(i) A record of all receipts and expenditures.

(ii) An account for each unit setting forth any shares

of common expenses or other charges due, the due dates thereof,

the present balance due, and any interest in common surplus.

(h) Nothing herein shall preclude any unit owner or other

person having an insurable interest from obtaining insurance at

his own expense and for his own benefit against any risk whether

or not covered by insurance maintained by the association.

(i) Such other duties as may be set forth in the master deed

or by-laws.

L.1969, c. 257, §14, eff. Jan. 7, 1970.

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46:8B-15. Powers of the association

Subject to the provisions of the master deed, the by-laws

and the provisions of this act, the association shall have the

following powers:

(a) Whether or not incorporated, the association shall be an

entity which shall act through its officers and may enter into

contracts, bring suit and be sued. If the association is not

incorporated, it may be deemed to be an entity existing pursuant

to this act and a majority of the members of the governing board

or of the association, as the case may be, shall constitute a quorum

for the transaction of business. Process may be served upon the

association by serving any officer of the association or by serving

the agent designated for service of process. Service of process

upon the association shall not constitute service of process upon

any individual unit owner.

(b) The association shall have access to each unit from time

to time during reasonable hours as may be necessary for the

maintenance, repair or replacement of any common elements

therein or accessible therefrom or for making emergency repairs

necessary to prevent damage to common elements or to any other

unit or units.

and otherwise acquire, hold, lease, mortgage and convey the same.

It may also lease or license the use of common elements in a

manner not inconsistent with the rights of unit owners.

(d) The association may acquire or enter into agreements

whereby it acquires leaseholds, memberships or other possessory

or use interests in lands or facilities including, but not limited

to country clubs, golf courses, marinas and other recreational

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facilities, whether or not contiguous to the condominium property,

intended to provide for the enjoyment, recreation or other use

or benefit of the unit owners. If fully described in the master

deed or by-laws, the fees, costs and expenses of acquiring,

maintaining, operating, repairing and replacing any such

memberships, interests and facilities shall be common expenses.

If not so described in the master deed or by-laws as originally

recorded, no such membership interest or facility shall be acquired

except pursuant to amendment of or supplement to the master

deed or by-laws duly adopted as provided therein and in this act.

In the absence of such amendment or supplement, if some but

not all unit owners desire any such acquisition and agree to assume

among themselves all costs of acquisition, maintenance, operation,

repair and replacement thereof, the association may acquire or

enter into an agreement to acquire the same as limited common

elements appurtenant only to the units of those unit owners who

have agreed to bear the costs and expenses thereof. Such costs

and expenses shall be assessed against and collected from the

agreeing unit owners in the proportions in which they share as

among themselves in the common expenses in the absence of some

other unanimous agreement among themselves. No other unit

owner shall be charged with any such cost or expense; provided,

however, that nothing herein shall preclude the extension of the

interests in such limited common elements to additional unit

owners by subsequent agreement with all those unit owners then

having an interest in such limited common elements.

L.1969, c. 257, §15, eff. Jan. 7, 1970.

46:8B-16. Relationship between unit owners and the association.

(a) No unit owner, except as an officer of the association,

shall have any authority to act for or bind the association.

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(b) Failure to comply with the by-laws and the rules and

regulations governing the details of the use and operation of the

condominium, the condominium property and the common

elements in effect from time to time and with the covenants,

conditions and restrictions set forth in the master deed or in deeds

of units shall be grounds for an action for the recovery of damages

or for injunctive relief or both maintainable by the association

or by any other unit owner or by any person who holds a blanket

mortgage or a mortgage lien upon a unit and is aggrieved by any

such noncompliance.

damages caused by the association or in connection with the use

of the common elements. A unit owner shall be liable for injuries

or damages resulting from an accident in his own unit in the same

manner and to the same extent as the owner of any other real

estate.

L.1969, c. 257, §16, eff. Jan. 7, 1970.

46:8B-17. Common expenses

The common expenses shall be charged to unit owners

according to the percentage of their respective undivided interests

in the common elements as set forth in the master deed and

amendments thereto, or in such other proportions as may be

provided in the master deed or by-laws. The amount of common

expenses charged to each unit shall be a lien against such unit

subject to the provisions of section 21 of this act.' A unit owner

shall, by acceptance of title, be conclusively presumed to have

agreed to pay his proportionate share of common expenses

1. Section 46:8B-21.

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accruing while he is the owner of a unit. However, the liability

of a unit owner for common expenses shall be limited to amounts

duly assessed in accordance with this act, the master deed and

by-laws. No unit owner may exempt himself from liability for

his share of common expenses by waiver of the enjoyment of

the right to use any of the common elements or by abandonment

of his unit or otherwise. The common expenses charged to any

unit shall bear interest from the due date set by the association

at such rate not exceeding the legal interest rate as may be

established by the association or if no rate is so established at

the legal rate.

L.1969, c. 257, §17, eff. Jan. 7, 1970.

46:8B-18. Prohibited work

There shall be no material alteration of or substantial addition

to the common elements except as authorized by the master deed.

No unit owner shall contract for or perform any maintenance,

repair, replacement, removal, alteration or modification of the

common elements or any additions thereto, except through the

association and its officers. No unit owner shall take or cause

to be taken any action within his unit which would jeopardize

the soundness or safety of any part of the condominium property

or impair any easement or right appurtenant thereto or affect

the common elements without the unanimous consent of all unit

owners who might be affected thereby.

L.1969, c. 257, §18, eff. Jan. 7, 1970.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.