Q&A: Rules for Renters

My condo board rarely enforces rules, especially in regard to specific unit owners. Some are now renting, and I would like my family to join their ranks. It is quite bizarre, because the board is ostensibly adamant against renting, yet they are very aware that some families are doing so. When one broaches the topic, they make it clear that, were we to rent, their lawyers would sue us. What is the worst that they could do to me and my tenants if I rent the apartment? Our documents allow up to a thousand dollar fine for any violation. Is this all the risk I am exposed to?

—Risk-Averse in Raritan

“Your question raises interesting issues regarding the board’s authority,” says Attorney David R. Dahan, a partner with the law firm of Hyland Levin LLP in Marlton. “An association is governed by its board. A board cannot selectively enforce its governing documents. Also, generally speaking, any rules and regulations adopted by an association must have a reasonable basis.

“Courts generally approach actions taken by a Board in two steps. First, a court will analyze whether the board’s action was authorized by statute or its own governing documents such as its master deed/declaration, bylaws and rules and regulations. Next, a court will consider whether the action was fraudulent, self-dealing or unconscionable.

“Pursuant to the New Jersey Condominium Act, “[e]ach unit shall constitute a separate parcel of real property which may be dealt with by the owner thereof in the same manner as is otherwise permitted by law for any other parcel of real property.” See N.J.S.A. § 46:8B-4 (“Status of Units”). Therefore, statutory law seems to provide unit owners with the ability to lease their individual units.

“However, a board could be authorized to control or prohibit the leasing of individual units pursuant to the governing documents. Your summary did not indicate whether the governing documents provide the board with such authority. It is not uncommon for governing documents to contain some controls or even prohibit leasing. In attempting to resolve almost any issue with the board, it is highly recommended that you first carefully review the governing documents, including the master deed, bylaws, and rules and regulations, to determine if they address your issue. Do any of the documents address leasing your unit? Do they permit, control or prohibit leasing a unit? Are the documents silent on the issue of leasing a unit? If the documents allow owners the ability to lease their units, then the board should not be able to prohibit what is allowed. If there are controls or there is a prohibition, that should be carefully analyzed by a lawyer to determine if they are valid and enforceable. Also, if there are controls or a prohibition, and assuming they are valid, another issue to consider is whether the association waived its right to enforce them if they have not been regularly enforced in the past. A board cannot pick and choose how, when or as to whom it enforces the governing documents.

“If the governing documents permit and/or are silent on leasing, and the board objects to you leasing your unit, I suggest you consider contacting the board in writing and request a response and explanation for its decision in writing. If there are controls or a prohibition, then you may wish to consult a lawyer as to whether they are valid and, if so, whether the right to enforce them has been waived. Additionally, if you are unable to resolve the issue, I suggest you request Alternative Dispute Resolution (ADR) with the board, or contact an experienced attorney for assistance."   

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