Page 10 - New England Condominium July 2022

10 NEW ENGLAND CONDOMINIUM -JULY 2022 NEWENGLANDCONDO.COM sociated with the reduced home values due to being situated on hazardous soil. (D-Fla.) and Debbie Wasserman Schultz Although the jury sided with the plain- tiffs, it awarded the condo only half that cess to Financing for Exterior Repairs amount—just over $1.4 million, accord- ing to the Sun . Attorneys for the associa- tion moved to add prejudgment interest collapse in Surfside, Florida in June fectively extends the time that planned to the award, which would accrue since 2021 that killed 98 people. Described as real estate development associations— the trial began in 2012. While the court “legislation that will make it easier for including condos and co-ops—have to accepted the city’s motion to deny that condominium owners to afford special file certain claims against developers. interest, Grand Manor appealed and assessments for structural and safety Specifically, it sets the start of the six- was granted 12% simple interest by the repairs,” the Act proposes low-interest year clock to the date that the owners/ Massachusetts Court of Appeals, mean- ing that the 31 plaintiffs will receive an grams guaranteed by the U.S. Depart- additional $170,346 for every trial year ment of Housing and Urban Develop- since 2012. A final court order is expected soon, according to the Sun. Meanwhile, Lowell is in its “final re- mediation” phase of cleanup at the site, ing and championing the legislation and amendment echoes similar legislation according to senior environmental plan- ner Sarah Brown, followed by a plan for routine soil sampling. “We have to go through a public pro- curement process here at the city, we have to put the project out to bid, so that will be the next step,” Brown tells the Sun . “We actually haven’t discussed how frequently we were going to conduct that sampling. Once we install the system, we have to get it started first and we have to see what those initial results are first before we determine what our sampling program is going to entail.” Recent NYC Case Reaffirms the Business Judgment Rule In the 2021 case of 800 Grand Con- course Owners v. Thompson, the co-op board voted to terminate a shareholder’s stock and lease due to the shareholder bringing a series of frivolous and du- plicative lawsuits against the board and its members. This resulted in the board incurring considerable expense and the loss of insurance coverage. (For more on the damage that frequent and ongo- ing litigation can do to a community, see this issue’s companion article, “The Im- pact of Litigation in Co-ops, Condos, & HOAs.”) Attorney Geoffrey Mazel, founding partner of New York law firm Hankin nities home. We are pleased that Reps. You might have some interplay—that’ll & Mazel PLLC and counsel and execu- tive member of the Presidents Co-op & Condo Council (PCCC), says, “The court specifically noted that the board followed proper procedures and had acted in good faith within the scope of their authority and in the best interests of the other shareholders. In addition, the court noted that the shareholder was provided multiple opportunities to be heard, to defend, and to abate the ob- jectionable conduct. In light of all this, the court found that the board’s decision to terminate the shareholder’s stock and lease was protected by the Business Judg- ment Rule, and deferred to the board’s take meaningful steps to help prevent finding and decision.” SAFER in Condos Act Proposes HUD Loans for Structural Repairs U.S. Representatives Charlie Crist (D-Fla.) introduced the Securing Ac- (SAFER) in Condos Act earlier this year, phy signed into law an amendment to the in response to the catastrophic condo New Jersey Statute of Limitations that ef- loans to fund repairs through two pro- ment (HUD). Multifamily housing advocacy groups New Jersey Supreme Court decision in such as the Community Associations Institute (CAI) were involved in craft- praise its introduction. “Since the tragic making its way through the Massachu- condominium collapse in Surfside, Flor- ida,” says Thomas M. Skiba, CAE, CAI’s jected to a final judgment, a dismissal,” chief executive officer, “CAI has worked he continues, “and we still do have out closely with state and federal lawmakers there this 10-year construction statute of to introduce critical legislation that sup- ports condominium safety for the mil- lions of people who call these commu- Crist and Wasserman Shultz have in- troduced this impactful legislation that lation now signed into law is a terrific helps us honor the memories of the 98 thing for communities in this state.” people who lost their lives last June and will help prevent another tragedy. We’re hopeful that the bill moves forward ex- peditiously.” In a press statement, Rep. Wasser- man Shultz says, “While we still mourn all those we lost in Surfside, the harsh reality is that untold numbers of ag- ing condos just like Champlain Towers South may face similar structural safety problems… This legislation that Con- gressman Charlie Crist is leading will that from ever happening again by help- ing make it easier for condo owners to afford special assessments when costly structural and safety repairs arise.” Defect Statute of Limitations Extended in NJ Early in the year, Governor Phil Mur- shareholders take control of the board, rather than the date of substantial com- pletion of the development. Thought to be a reaction to the 2017 Palisades at Fort Lee Condominium As- sociation v. 100 Old Palisade, LLC , the setts Legislature, as mentioned in our 2021 Legal Roundup (https://neweng- landcondo.com/article/legal-legislative- roundup). The Palisades decision set substantial completion as the date by which the six-year accrual starts, but also applied the discovery rule to such cases, meaning that the date on which any owner—even if it is the developer— knew or should have known of the defect would begin the accrual, even if the sub- sequent owner did not learn of the defect until a later date. This effectively short- ened the time the unit-owner-controlled association had to file suit. Now that the law in New Jersey tolls the statute of limitations on a defect claim to when the unit owners take con- trol of the board, “it’s a real sea change,” says Scott Piekarsky, partner at Hacken- sack law firm Phillips Nizer LLP. “This amendment really benefits community associations and owners. Of course, it doesn’t affect a case that was already sub- repose, which provides that all construc- tion defect claims must be brought with- in 10 years of substantial completion. remain to be seen—but this new legis- n Darcey Gerstein is Associate Editor and a Staff Writer for New England Condomin- ium. THE YEAR IN... continued from page 8 “CAI has worked closely with state and federal lawmakers to introduce critical legislation that supports condominium safety for the millions of people who call these communities home.” — Thomas M. Skiba Service Residential New England, “that makes things very uncomfortable and awkward for all involved. Ongoing litiga- tion can be very taxing on all parties, and can have a multitude of negative impacts. I would say one of the biggest negative im- pacts is board burnout and resignation. Finding candidates for board seats can be very difficult in many communities, so it can be very detrimental if board members resign.” “All of this makes for some difficult lo- gistics,” adds Andrew Freedland, an attor- ney with Herrick, Feinstein in New York City. “If you have a shareholder suing the co-op,” he continues, “it goes without say- ing that depending on what the suit is, large or small, you may not be able to release any details at an annual meeting. Other share- holders may be very curious, because they are ultimately responsible if there is a judg- ment against the co-op, which could result in an assessment.” This brings up two important issues surrounding any community’s legal imbro- glios: who knows, and who pays. In fact, questions about transparency and liability are the two that appear most frequently in New England Condominium reader emails, online comments, and social media chan- nels. If you are wondering why your board won’t share details about ongoing litigation with the other owners or shareholders, or if you expect that you won’t be financially responsible for someone else’s lawsuit, read on. Condo Confidential In most jurisdictions, even where own- ers/shareholders have statutory rights to access specific information and documen- tation about their community, litigation is one area where certain details and discus- sions must be kept confidential. As soon as even a suggestion of litigation arises, boards should proceed with extreme cir- cumspection. Hartwell is firm on the subject. “Board members should not discuss a lawsuit with other unit owners,” he states. “They shouldn’t attempt to try a lawsuit by public opinion within the community.” “Don’t discuss the case,” echoes Mark Hakim, attorney with New York City law firm Schwartz Sladkus Reich Greenberg Atlas LLP. “Don’t admit anything. If you run into the complainant in the elevator, say ‘Hi’ and get out of the elevator. There is no good to having a discussion, whether on or off the record. The last thing you want to do is prejudice the case by saying the wrong thing with the right intent.” That said, attorney David Berkey of New York City-based law firm Gallet Dreyer Berkey, LLP notes that “A co-op or condo- minium is usually required to list pending lawsuits in its financial statements if they THE IMPACT OF... continued from page 1 continued on page 12