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Condominium Owner May Not Withhold Payment of Assessments Because of Claimed Water Infiltration and Mold

A unit owner in a top floor of a Union City condominium recently decided to pay his monthly assessments into an escrow account, alleging that the condominium association had failed to maintain the roof, proximately causing damage to the unit, and personal injury to the owners living inside. In this matter, the owners filed a suit against the condominium, its board members and its managing agent, seeking damages associated with what they contend is a breach of duty on the condominium's part. The owners vacated their unit, and now claim that the condominium must restore the unit's interior and there after pay money to plaintiffs to compensate them for the loss of use of the unit and for disease and other maladies from which they contend to be suffering. In response, the condominium recorded a lien and filed a counterclaim seeking a judgment for all unpaid assessments, late fees and attorney fees. With the case still in its early stages, Megan Christensen and I filed a motion for partial summary judgment, on the condominium's behalf, seeking a judgment against the owners for all unpaid assessments and late fees. We argued that it is clear and fundamental under New Jersey law that a condominium owner must pay assessments regardless of what condition the unit may or may not be in. We asserted, basically, that there is no lawful reason why a condominium owner can ever fail and/or refuse to pay assessments. In response, the owners argued that the alleged, subjective, condition of their unit excused their nonpayment and/or that they should be freed from paying assessments until those conditions are remedied.

Fortunately, for the good of all members of this condominium, the court agreed with us, ruling that these owners are forbidden from withholding payment of assessments, and entering a judgment against the owners. The court also awarded late fees to the condominium. While the owners are still permitted to continue their suit against the Association, they have a judgment against them for all unpaid assessments and late fees. The condominium can execute on that judgment and, also, base a foreclosure action on this decision.

In the end, this case is another decision in a long line of decisions that reiterate the following basic principle under New Jersey law: a condominium owner is absolutely forbidden from withholding, or refusing to pay, assessments, for any reason. Condominiums should continue to hold the line against owners that try to hold their neighbors hostage by withholding the payment of assessments. While condominiums can always try to negotiate or otherwise discuss the dispute with owners, and reach an agreement or not, they should enter such a process from a position of strength, as they can always get the court to force the offending owner to pay his assessments, despite whatever else may be happening.

Full post as published by New Jersey Law Blog on April 28, 2008 (boomark / email).