By Deborah Goonan, Independent American Communities
Last August, IAC introduced readers to a complex New Jersey legal dispute involving property owners near Crystal and Mirror Lakes. Since the 1950s, both lakes and related recreational facilities have been maintained by Ramapo Mountain Lakes (RML), Inc.
According to legal records, the community was developed in the 1940s as a stock corporation. Developer control expired in 1960, when the common areas, including two lakes, were handed over to RML.
Over the decades, as homes were sold or conveyed to new owners, many of the stock certificates got lost in the shuffle. RML lake was operated primarily as a voluntary membership club, and, in more recent decades, membership was extended to the general public.
As explained in a previous post, wear and tear on lake infrastructure, including dams and flood gates, has taken its toll. Several lakeshore properties have suffered flooding as a result of years of deferred maintenance. But RML lacks sufficient funds to make repairs to its dam as required by the state of New Jersey.
In order to raise money to save Crystal and Mirror Lakes, RML decided to assess 1,645 property owners bound by decades-old covenants and restrictions.
The problem is, most homeowners do not live on the shores of either lake, nor do they take advantage of voluntary recreational memberships offered by RML. Hundreds of owners do not believe they are obligated to pay maintenance fees for facilities they never use.
In fact, hundreds of property owners have filed lawsuits against RML (including a pending class action), in order to stop the Lake Association from billing them for recreational facility maintenance fees. They say that when they purchased their homes, there was no disclosure of an HOA, much less a requirement to pay mandatory lake maintenance assessments. Their understanding was that nearby lake membership was purely optional.
In turn, RML is suing property owners to compel them to pay their ‘fair share’ of lake maintenance, based upon original covenants and maps filed with Bergen County.
According to RML’s most recently amended complaint, visible in the window below, the developer granted the HOA the right to annually assess members of the community for use of the lakes. However, it’s also written that if a member elects not to pay annual assessments, the only consequence is that the member “may be barred from use of the facilities and from all participation in Club activities until payment in full has been made.” (See Item 12. In the Verified Complaint.)
Ramapo Mountain Lakes, Inc. Complaint, Jan. 13, 2018
RML asks the court to compel mandatory “maintenance” assessments from all property owners, with the legal right to place a lien on properties for nonpayment.
The argument appears to be weak, given that the developer’s own intent was voluntary payment by members who actually enjoy the use of the lakes, as well as social activities with neighbors.
More importantly, the reader must take note of Count II, Amendment to Planned Real Estate Development Full Disclosure Act (PREDFDA), starting with Item 34 in the amended complaint.
The amendment, effective November 1, 2017, “require(s) that the rights and protections of PREDFDA exist, regardless of whether a developer established a community prior to the effective date of PREDFDA, which was 1977.”
The amendment, known as the Radburn Bill, was prompted by highly publicized election disputes in the large-scale planned community. According to the Legislature, in order to convey greater rights to association residents in elections, the 2017 PREDFDA provisions are intended to override bylaws of existing association-governed communities.
The PREDFDA was previously amended in 1993, to mandate that developers form community associations (HOAs), in order to maintain common property. Case law in NJ has ruled that those 1993 amendments are retroactive to communities created as early as 1977.
But now, according to RML’s complaint, the 2017 amendment applies to all planned communities in New Jersey, including those formed prior to 1977.
Therefore, counsel for RML argues, all members of Ramapo Mountain Lakes “community” are compelled by state law to pay assessments for maintenance of their common property, regardless of representations made to homeowners prior to taking title to their properties.
So much for the sanctity of the “contract” governing RML corporation and its members.
Is RML’s amended complaint merely an unintended consequence of the passage of the Radburn Bill? Or was it the intent of the authors of the 2017 legislation to extend additional powers to pre-1977 association governing boards? Does PREDFDA now bestow absolute power to create mandatory assessments, rendering pre-1977 covenants useless in protecting the property rights of individual owners?
Remember — CC&Rs can, and sometimes do, exist independently of a mandatory membership HOA.
Consider the far-reaching implications. If the court agrees with RML, then any group of property owners would be able organize and legally compel all owners in the neighborhood to pay for the maintenance of an old lake or pond, a run-down clubhouse, a private road or beach access, or any other so-called rarely-used common property.