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California Villas Condominium Association v. Bajo

A-4382-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

CONDOMINIUMS—It is unreasonable and undemocratic for a condominium association to exercise its right of first refusal to buy a unit for the purpose of limiting the number of votes available to a unit owner.

Two condominium unit owners served as directors on the association’s board. Together, they owned four units. As board members, they “commenced a course to disrupt board meetings and business,” and ultimately the association obtained a restraining order against such conduct. Then, the two of them contracted to buy three additional units between them. The condominium’s Master Deed gave the association the right of first refusal on the sale of units. The association attempted to exercise that right and the two unit owners filed suit. In that suit, they argued that the right of first refusal provision in the Master Deed was invalid under a statute reading: “There is hereby established a rebuttable presumption of unconscionability with respect to ... affording the developer or the association a right of first refusal… . Such presumption may be rebutted ... by the presentation of evidence of the existence of facts and circumstances sufficient to justify and validate [such a provision] which would otherwise appear to be unconscionable under the provisions of this section.” The association responded that the obstructionist tactics of the two unit owners justified the association’s determination to buy the units. The association believed that if the unit owners bought these additional units, it would increase their voting power and cause additional problems. The lower court concluded that “the desire to prevent [the two unit owners] from increasing their voting strength within the condominium was not a sufficient justification to overcome the statutory presumption of unconscionability.” The lower court’s opinion stated: “Our system has always recognized that political differences are so involved in the political arena, not by preventing the accumulation of votes to be presented. If the ideas are not acceptable, they should be rejected at the ballet [sic] box.” The fact that the unit owners could gain additional votes was not something that the lower court believed should be prevented. It would not permit the association’s board “to say that nobody that who will not vote for us, for example, can purchase the unit.” The Appellate Division was in full accord with the views of the lower court. It pointed out that even if the unit owners bought the additional units, they “must still convince the other unit owners of the soundness of their views.” Further, there was nothing in the record indicating to the Appellate Division that, “as a result of these purchases, [the two unit owners] would control a sufficient number of shares as to dictate the outcome of any election.”

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