August 8, 2011
Amendment Prohibiting Leases Valid if Reasonable
Written By: Ronald L. Perl
An amendment to association governing documents adopted by the requisite number of association members that prohibits rental of units is valid if it is reasonable, a New Jersey appellate court has held. In Cape May Harbor Village and Yacht Club, Inc. v. Sbraga, the Appellate Division of Superior Court rejected the homeowner’s argument that since leases were permitted when she bought her home, the members could not amend the declaration to prevent her from leasing. The court concluded that because the community’s declaration stated that homes were subject to the declaration and any amendments, the amendment would apply to an objecting owner provided it is substantively valid. Agreeing with an earlier Appellate Division holding, Mulligan v. Panther Valley Property Owners Association, 337 N.J. Super. 293 (App. Div. 2003), and the trial court’s determination, the court applied the reasonableness standard to decide if the amendment was valid. Noting that the reasonableness standard is fact dependent, the court concluded that based on the facts in this case, the members had a reasonable basis for adopting the amendment. Therefore, all homeowners were bound.
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