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Appellate Division Rules in Favor of Defendants in Condo Association Rent Recievership Case

In Woodlake at King's Grant Condominium Association, Inc. v. Coudriet, the New Jersey Appellate Division addressed the issue of rent receivership in the community association context. Generally, a community association seeks the appointment of a receiver so that it can rent out a vacant unit and use the proceeds to pay overdue assessments, which was the case here.

The Plaintiff Woodlake at King’s Grant Condominium Association, Inc. (“Association”) moved for an order before the trial court to appoint a rent receiver on two vacant units. The unit owners owed large amounts in unpaid assessments, and the units had both been foreclosed upon by the mortgage company and the Association. Despite these facts, the motion judge denied the requests, and the Association appealed.

Reviewing the decision, the Appellate Court held that the motion judge had not abused their discretion in denying the request for rent receivership. The Association had not demonstrated that the defendants had an affirmative obligation to rent their units. Nor could the Association present any authority within the master deed and/or bylaws which provided for the appointment of a rent receiver. Finally, the Association sought to rent out the units and collect the rents without giving notice to the mortgage lender and affording them the opportunity to be heard.

Rent receivership is an extraordinary remedy, and a court will not appoint a rent receiver unless certain basic requirements are met. First and foremost, the remedy must be expressly provided for within an Association’s governing documents. The Governing documents must also include an affirmative obligation on the part of the unit owner to rent the units, so that the unit is not vacant.

Here at Lieberman & Blecher, our attorneys are highly experienced with matters concerning community associations, including rent receivership. Our team is also well versed in other collection and liability matters. L&B also serves as general counsel for multiple Community Associations; if your association is in need of assistance with legal issues, please don’t hesitate to contact our office to discuss how we can help.

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