NJ court: homeowners are members of HOA, must pay fees for lakes

By Deborah Goonan, Independent American Communities

Last month, State Superior Court Judge Christine A. Farrington issued her opinion on a 2-year-old legal dispute over Ramapo Mountain Lake (RML) Association’s legal rights to demand dues and place liens on more than 800 of its nearby homes.

In short, Farrington ruled that RML is a common interest community (planned real estate development). As such, each property owner is legally obligated to pay annual assessments to maintain its two lakes and dams, and adjacent common property.

The community is located in the Borough of Oakland, Bergen County, NJ.

In essence, according to the December 21, 2018, court ruling, RML is governed by a mandatory membership HOA — even though hundreds of homeowners say they were never made aware of their obligations to a lake association at the time they bought their homes.

RML’s common property includes both Crystal and Mirror Lakes and the surrouding beach front.

2017 amendments to state law

Farrington’s opinion relies, in part, upon a 2017 amendment to the New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA).

NJSA 45:22A-21 “provides that all members of a planned real estate development are members of the association”

PREDFDA 2017 amendment RML PREDFDA 2017 amendment RML (Dec. 21, 2018 opinion)

 

RML NJ PREDFDA 2017 amendment Farrington on RML NJ PREDFDA 2017 amendment (Dec. 21, 2018 opinion)

 

Furthermore, Farrington relies upon case law that makes 1993 and 2017 amendments to PREDFDA retroactive. That means that these changes to state law apply to all common interest communities and HOAs, even if they were established many years prior to PREDFDA.

RML Amended Verified Complaint FEb 2018 RML Amended Verified Complaint – 2/8/18

 

Property Servitudes apply

In addition, Farrington bases her opinion on the definition of a common interest community in the Restatement (Third) of Property: Servitudes 6 (2000) and Condominium and Homeowner Association Practice: Community Association Law, 2nd Ed., Wayne S. Hyatt.

Note that the Judge rejects the definition of a community association as specified in the Uniform Common Interest Ownership Act (UCIOA), because UCIOA is not the law in New Jersey.

RML Farrington on Property Servitudes 6 Judge Farrington on Property Servitudes 6, (RML Court decision Dec. 21, 2018)

 

Homeowners cannot deny “notice” of their obligation to pay dues to RML

To summarize, Judge Farrington rules that 67-year-old deeds in the chain of title “gave notice” of the existence of a planned real estate development (common interest community), even though RML covenants and restrictions expired in 1960.

Farrington on FML expired covenants Farrington on FML expired covenants (Dec. 21, 2018 opinion)

Farrington writes that it is the buyer’s responsibility, or, alternatively, their title company’s responsibility, to fully research the title history of all properties, to avoid the current situation of purchasing property with no knowledge of a Planned Real Estate Development and the financial obligations tied to common ownership.

 

Appeal in the works?

In a report of the North Jersey Record, an attorney for the homeowners says an appeal is likely.

The court will still allow defendant homeowners to proceed with other legal arguments, such as whether RML Association waived or abandoned its rights to collect assessments, or otherwise breached the covenants by opening up lake memberships to the public.

 

How the industry uses its legislative influence to sway court opinions

PREDFDA was amended in 2017, one year after the start of RML’s lawsuit against homeowners.

Among several other amendments concerning voting rights of association members, drafters of Assembly Bill 4091 added the requirement that all owners of property in a common interest community be members of an association, with mandatory payment of dues or assessments.

Is it a mere coincidence that the 2017 amendments were written and supported by Community Associations Institute, New Jersey Legislative Action Committee? Is it also a coincidence that RML’s attorney, Eileen McCarthy Born (Dolan and Dolan) is a member of CAI?

Screen shot of NJ Atty Eileen Born CAI Screen shot of NJ Atty Eileen Born CAI, Source: www.dolanlaw.com/profiles/profile.php?p=born

 

History of Ramapo Mountain Lakes:

Developer established a property owners corporation for Crystal and Mirror Lakes, and a clubhouse, in 1954. He issued stock certificates to original owners, attaching each parcel to membership in the community.

In 1980, the center of the Country Club, its clubhouse, burned to the ground. RML membership sharply declined after that.

At its peak, RML had 1,700 members. That dwindled down to 60 paying members by 2006, when RML association decided to open membership to the general public.

When the state of NJ required RML to repair its aging dams, the association realized it lacked the money to make those repairs, even with pubic memberships.

So, to cover dam repair costs, RML began charging 1,645 lot owners, located on 45 borough streets, annual dues in 2011.

When owners refused to pay, RML sued more than 800 property owners for payment of back dues. Defendant lot owners and their title companies argued that the chain of title was defective.

Attorney for RML, Eileen Born, presented a sample of 12 title chains, linking each one to orignal maps and stock certificates. A Judge ruled that all properties are members of a common interest community association (RML), and that decades-old County records serve as “proof” of mandatory membership and obligation to pay assessments.

Ramapo Mountain Lakes can charge dues, place liens on homes, judge rules

Marsha Stoltz, North Jersey Record Published 6:04 p.m. ET Dec. 28, 2018

OAKLAND — Ramapo Mountain Lakes is a common interest community that can assess its 1,645 homeowners for dues and place liens on properties that aren’t paid up, ruled a State Superior Court judge.

The ruling comes two years after the lake group sued residents of the 700-acre former summer vacation community for failure to pay dues for five years. Many owners said they were unaware they were members of the organization.

Five attorneys argued on behalf of residents, title companies and other interested parties in the suit.

“We respectfully disagree with the Court’s ruling and will be taking appropriate legal action,” said Jason Finkelstein of Cole Schotz, one of the attorneys present.

Ramapo Mountain Lakes began to send out dues statements to its members in 2011 when memberships and volunteer donations to its private Crystal Lake Beach Club were no longer covering annual costs. Annual fees now range from $390 for 64 of the Crystal Lake lakefront properties, $95 for 37 of the Mirror Lake lakefront properties, and $47.75 for the remaining 1,544 non-lakefront properties.

Read more:

Ramapo Mountain Lakes can charge dues, place liens on homes, judge rules

Reference (Posted by Crystal Lake Beach Club, NJ)

www.crystallakebeachclubnj.com/ramapo-mountain-lakes-inc-rml/verified-complaint-and-decision-122118

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