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and counsel. In the Highlands case,
the facts exposed that although the
association and its counsel thought
they were participating in non-binding
mediation, the record reflected that
the proceeding was referred to and
treated as an arbitration. Arbitration
contemplates a binding proceeding.
Opportunity to overturn an arbitrator’s
award is extremely narrow and limit-
ed. Examine your governing docu-
ments, if your ADR procedure refers
to arbitration as the form of alternative
dispute resolution, it may be time for
an amendment. Also, if your asso-
ciation becomes involved with ADR,
to avoid unintended results, confirm
that all submission documents refer to
the proceeding as mediation and not
arbitration.
YEAR IN REVIEW...
from page 11.
Lender Responsibility for
Delinquent Maintenance Fees
Until legislation is passed, unless a
lender is an actual “mortgagee in pos-
session”, it cannot be compelled to pay
maintenance fees. Two recent cases
have held that incidental activity under-
taken by a lender to protect its security
interest does not suffice to obligate
the lender to pay maintenance fees.
Hence, the acts of winterizing a unit,
changing locks, remediating stink bugs,
landscaping and making repairs do
not constitute sufficient activity to deem
the lender to be in possession. See,
Woodlands Community Association,
Inc. v. Mitchell,
450 N.J. Super. 310
(App. Div. June 6, 2017);
Union Hill
Condominium Association, Inc. v.
Wells Fargo Bank, N.A.,
2017 WL
5478310 (App. Div. November 15,
2017). This applies notwithstanding
CONT I NU E S ON PAGE 14
the pendency of a mortgage foreclo-
sure action.
Based on these decisions, it would
not be prudent to join the lender as a
defendant in a suit to collect a money
judgment for delinquent maintenance
fees.
Bankruptcy Updates
This year, there were at least four
decisions from the Bankruptcy Courts
attempting to confirm the status of a
priority condominium claim of lien in
a Chapter 13 bankruptcy. The man-
ner in which the lien will be treated
and paid out under a Chapter 13
plan, depends on whether the lien
is classified as a statutory lien or
a consensual lien. All four decision
acknowledge that a condominium
lien is a created by statute and by the
association’s governing documents.
The courts acknowledge that the New
Jersey Condominium Act, N.J.S.A. §
46:8B-21 (b) (1) affords a claim of
lien a limited six-month priority over a
prior recorded mortgage.
The anti-modification provisions of
the Bankruptcy Code, prohibit a debt-
or from modifying the rights of claims
"Examine your governing
documents, if your ADR
procedure refers to
arbitration as the form
of alternative dispute
resolution, it may be time
for an amendment."
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