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"If I Could Get a Hold Of the Person Who Dreamed up Condos, I'd Give Them a Piece of My Mind!"

12/31/2012 02:16 pm ET | Updated Feb 26, 2013
  • Scott B. Piekarsky Active litigator, lecturer and writer on ethics and trial practice topics

These were the words of a Superior Court Judge in Cape May County in the Chancery Division several years ago. I was representing a local condo site that had continual problems with a resident who intimidated residents and board members at open meetings. The board could not take it any longer and we went to court to get a restraining order. The judge did not just clip his wings; he barred him from subsequent meetings until he could learn how to behave -- sort of an adult timeout. It worked. Not only did he stop but he eventually moved. This is one example of what goes on at a condominium, cooperative and homeowner sites every day. To go to court each time is very time consuming and very expensive. One judge in north Jersey has said to me that I should remind her when she retires not to sell her house and move into a condo. When she gets these tough and sometimes impossible cases, she sends them to me to try to mediate to a resolution which is a heck of a lot cheaper than full blown litigation.

Now, understand that New Jersey does require in most of these settings that the board must offer ADR in the event of such disputes. That is a fancy acronym for alternative dispute resolution or in other words mediation, arbitration or just some alternative to in court litigation. Condo boards can have endless funds that they take from operating accounts, improperly from reserve accounts and they can furthermore specially assess the community for even more money. All the while the affected homeowner must shell out hard-earned money to wage a battle or defend an offensive. They all happen and all too frequently. An out-of-control homeowner or a renegade board can launch a scorched earth, take no prisoners offensive that does little more than waste precious resources.

Unfortunately, there is virtually no law that exists that could stop this endless, wasteful battle. Much like the about-to-be-divorced couple that just wish to bury the other, when at the end, hard-earned money and assets gets spent on the lawyers. However, that just affects them and their family, not a whole community.

I have a client whose building had excessive settlement in marshy soils and the walls separated from the ceiling, floors are out of plumb, etc. It's a mess. The board refused to fix the building and unit. Litigation ensued and the board has spent probably close to $300,000 in litigating and took the funds from the capital reserves. Now they must also spend to effect repairs. The client as well incurred huge legal bills, most of which he will never be able to pay.

Our government does not have the resources to create a further bureaucracy to really control this mess. Developers are required to put the ADR requirement into the governing documents and sometimes create committees intended to carry out this important charge. However, that is simply not enough. Time and time again, since not prohibited, boards spend and deplete capital reserve funds intended to replace roofs, siding, etc. and spend it on legal battles that they alone choose to fight without even a vote of the community.

If our legislatures have bigger fish to fry then someone else should lead the charge. Developers have the control and ability to at least incorporate some sound solutions like prohibiting the expenditure of reserve money on litigation. After all, if the money does not exist then the community is burdened with the special assessments. In addition, banks are finally calming down and getting tougher on throwing out money to buyers in these communities. Let the lenders as well get tough on these issues. Banks and builders have the power to solve this social and economic dilemma. We have been feeling the hard pinch of terrible economic times. A solution in this arena would inure to the benefit of thousands and thousands of people. One trade newspaper in this industry tells me there are over 4,000 condo communities in New Jersey alone. Sixty million people nationally live in this form of housing. Let's try to solve this problem through creative solutions. In addition, existing communities as well can vote to amend their governing documents to try to effect these changes. The time has come to stop wasting money in fighting with your neighbors. Make peace in your community not war.