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Mazdabrook Commons Homeowners’ Association v. Khan

A-6106-08T3 (N.J. Super. App. Div. 2010) (Unpublished)

CONDOMINIUMS — A condominium association’s by-laws can properly assess a 20% charge in lieu of counsel fees when enforcing rules against a unit owner.

A condominium development was governed by the provisions of the New Jersey Planned Real Estate Development Full Disclosure Act. It had a filed Declaration of Covenants and Restrictions and by-laws. An owner purchased his unit and, two years later, was nominated for a municipal office. After seeing election signs in the window of the complex’s model unit, he placed his own election poster in his window. Two or three days later, he received a notice that displaying the poster was prohibited. He was directed to remove it within three days. Although he complied, he was fined $75.

At some point after taking up residence at the complex, he placed a climbing rose bush near his front garage. He was found in violation of a height limit for its planted rose bush and, over several months, fines were imposed. The fourth notice told him, for the first time, that he could appeal the violations within ten days from the date of each notice. The following year, the development’s property manager drafted another notice of violation with respect to the rose bush. This notice alleged that condominium rules prohibited planting without the prior written consent of the association. Fines were assessed, and the owner was informed that he had ten days to dispute the assessment of the fine. Prior to the association filing an action against the owner for unpaid fines, it issued an invoice to the owner for unpaid maintenance fees of $90 per month for seven months, plus late fees. The owner admitted to his nonpayment of maintenance fees, testifying that he was concerned that if they were paid, the payments would be credited against the contested fines. The lower court awarded the association $1,500 in fines for the oversize rose bush for two months, and $2,000 for nonpayment of maintenance fees. It reduced the interest rate due on the maintenance fees from 20% to 10%. The owner appealed.

On appeal, the Appellate Division held that the lower court was mistaken in awarding $1,500 in fines. The evidence disclosed the association passed its resolution regarding plant height the day before the owner was first fined. The Court referenced a by-law provision which required written notice and a ten-day notice period before fines could be levied. The only evidence of proper notice came pursuant the fourth notice letter. Because there was less than ten days between issuance of notice and the owner’s cure, no fines were due.

The association had cross-appealed the lower court’s reduction of “interest” charged on unpaid maintenance fees from 20% to 10%. The Court agreed that the lower court was mistaken in having done so, as the 20% payment was not interest but constituted a liquidated damages provision established in the association’s by-laws of the association in lieu of an assessment of counsel fees in instances where legal action on the association’s behalf was required. The Court said the owner offered no evidence that would suggest the liquidated damages provision was in any way unreasonable. In fact, the resultant counsel fees, in lieu of the 20% charge, would have been substantially higher.

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