How to Know You Have the Right Transition Attorney for Your Community Association

When community association board members hire a transition attorney for their condominium or homeowners association, they may not know exactly what to look for. They may not know much about transition to begin with, or may not know the right questions to ask in order to find the right transition attorney. If your association is looking for a transition attorney, or you are reconsidering the one you have, the following may help you to identify the right transition attorney.

Your transition attorney will not be afraid to go to trial and should have plenty of trial experience.

Not all transition cases need to go to trial. Many transitions will settle on satisfactory terms without the expense of trial. However, when a sponsor is negotiating with association attorneys, it is clear which are experienced litigators and which ones rarely or never go to trial. If a sponsor knows an association attorney is unlikely to take a case to trial, the sponsor may believe the attorney will settle cheap. That means the association might be leaving money on the table.

On the other hand, if a sponsor knows an association attorney has significant trial experience and would take a case to trial if necessary, that sponsor may weigh the costs of trial and the potential of a large verdict and agree on a generous settlement. That means more money for the association to remediate deficiencies. And, of course, if you do end up at trial, your association would need an experienced litigator. Ask your transition attorney about his or her trial experience, trial verdicts, and settlements at trial and decide if that experience is right for your association’s transition.

Your transition attorney will understand the importance of insurance in a transition case.

New Jersey allows builders and contractors to create limited liability companies to conduct business in the state. This means that most sponsors, contractors, and design professionals conduct their construction work through corporate entities designed to shield them from personal liability for damages caused by their negligence. As a result, the prime source of recovery dollars in construction defect cases is the insurance policies that these sponsors, contractors, and design professionals have in place to cover their companies in the event they are sued.

Accordingly, the transition attorney would need to fully understand how insurance coverage works for construction defect claims. An attorney who does not understand which types of damages insurance policies cover in a construction suit and which types of damages they do not cover, will cause an association to waste considerable amounts of money pursuing claims that may never be paid. Ask your transition attorney about the insurance policies relevant to your matter and how they will help your association.

Your transition attorney will have competent general counsel and collection counsel to support transition efforts.

Transition cases can involve numerous issues which may not be the specialty of your litigation attorney. An association in transition may require a special assessment or bank loan. These issues often require a detailed review of the association’s governing documents and legal opinion to understand the requirements and procedures; resolutions may be required for special assessments or a loan and closing counsel is required for a loan. Associations with sponsors which still own units but do not pay maintenance fees will require diligent and competent collection counsel able to think of aggressive and creative ways to coerce payment. Also, unit owners who cannot pay transition special assessments or increased assessments will need to be addressed. Ask to meet an attorney’s general counsel/collection counsel to help determine their breadth of expertise.

Your transition attorney will not waste time (or money) pursuing claims that do not make financial sense.

If your association is considering litigation over construction issues in your community, it is extremely important to choose a transition attorney with knowledge about the costs and risks associated with such a suit. That attorney will have the experience necessary to explain the concept of risk-reward, as it applies to every one of the association’s claims, so that your board can make an informed choice on whether or not to pursue litigation.

By way of example, your community may have a significant problem with dying trees or shrubs installed by the sponsor. The cost to replace all of the dying landscaping may be upwards of $80,000, an amount your unit owners feel is worth suing over. An experienced transition attorney, however, would explain to your community that you would need an expert to investigate the cause of the problem and render a report suitable for trial at a potential cost of $20,000 to $30,000, or more. The attorney would also explain that attorneys’ fees for pursuing the landscaping claim could be another $30,000 to $40,000. The board and unit owners would then have a choice: 1) to spend $50,000 to $70,000, or more, to litigate for two to three years to collect $80,000.00; or 2) to simply fix the problem themselves.

Unfortunately, many transition attorneys do not have that kind of fully informed discussion with their clients prior to charging off to court. Ask your transition attorney about the numbers to ensure your case makes financial sense.

Your transition attorney will offer various payment options, including contingency.

As a board is evaluating deficiencies in its community, an hourly fee arrangement makes sense. If it’s an easy transition that does not require litigation, an hourly arrangement will continue to be appropriate. However, if your community has significant deficiencies and the sponsor and its contractors are not addressing them satisfactorily, a board may need to make the decision to litigate. Not every association can afford to fund litigation on an hourly basis, since large litigation cases can cost millions of dollars in attorneys’ fees and expert expenses.

Without other payment options, a board must make the difficult decision to not pursue litigation and remediate deficiencies using common funds (money the association still doesn’t have). The right transition attorney will provide various payment options. That might mean hourly, contingency (the attorney gets paid when the association gets paid), or some combination of the two. Ask your transition attorney about options for payment.

Your transition attorney will understand the statute of limitations and statute of repose.

This would seem to be an obvious competency test for transition attorneys. However, if your transition attorney is telling you that either of these dates have anything to do with the date of homeowner control, you may need a second opinion – quick. The six-year statute of limitations will start to run once you know or should have known of a deficiency.

Depending on circumstances, this date can be well before the date of homeowner control. In any event, the statute of limitations is capped by the ten-year statute of repose which (typically) starts to run upon the issuance of a certificate of occupancy or a temporary certificate of occupancy. Failing to settle or file a claim before these dates could be catastrophic for your association’s transition case. Ask your transition attorney for a timetable of these important dates.

If you have any questions about the issues discussed in this article, please feel free to reach out to the authors, Mary Barrett, Esq., and J. Randy Sawyer, Esq..

Stark & Stark offers Boot Camps for Board members on a wide variety of topics including transition. Learn while enjoying lunch, dinner or happy hour at a convenient location near you. If your Board is interested in learning more about transition or any other topic, please contact us for upcoming dates or to customize a Boot Camp for your Board.

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Though Unattractive, You Still Need a Pre-Nup or Cohabitation Agreement

A shortage of economically attractive men is yet another reason you may need a pre-nup before tying the knot. A recent Cornell University study published in the Journal of Marriage and Family says that one of the reasons the U.S. has seen a decline in marriage is because there is a shortage of men who are “economically attractive.” The study attributes the shortage to various factors, including the economy, which currently has more lower-paying and unstable jobs. Additionally, women are climbing the economic ladder and now have different expectations for a spouse.

So, what do you do if you fall in love with someone who you view as economically unattractive? Particularly, if you are in a better economic circumstance and earn a significantly higher income, a prenuptial agreement may be a way to marry your true love and still feel secure in the event the marriage doesn’t work (divorce rates are slowly going down, but then again, fewer people are getting married).

Alternatively, if you just want to live with your love to try it out, a cohabitation agreement can protect you against problems down the line.

Both pre-nuptial and cohabitation agreements should have several components and address several outcomes. Pre-nuptial agreements in New Jersey are governed by the Uniform Premarital and Pre-Civil Union Agreement Act, which requires certain matters to be covered in the agreement in order for it to be enforceable.

For both prenuptial agreements and cohabitation agreements, these are the types of things that are helpful to decide before the marriage or cohabitation:

• The rights and obligations of the parties when it comes to property or debts (who pays for what);
• Whether assets, including those earned during the relationship, will be co-mingled and considered joint;
• If one person pays pre-existing debts of the other during the relationship, whether there be a credit at the end;
• What the parties expectations are for future debt to be incurred during the relationship;
• Whether a bread winner, or person earning a higher income, can be responsible to support the other, and if so, which income can be considered when determining the appropriate level of support;
• What happens if one party receives an inheritance during the relationship and uses it fund the lifestyle of the relationship;
• How the assets and debts are distributed after the relationship or marriage is over;
• How real property will be titled during the relationship
• Who can live in or have possession of property after the relationship is over (this one is particularly relevant when there are children);
• Who takes possession of, and who pays expenses associated with Furry Friends; and
• If you are mobile, which state law will govern any future break-up

This is only a sampling of what issues can be resolved before a relationship or marriage is entered into. Talking to a professional can help you decide if a Pre-nuptial or Cohabitation Agreement is right for you.

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The ABCs of CBD in Food and Beverages

CBD products: you may have seen them at your local grocery store, convenience store, or chiropractor’s office in the form of gummies, brownies, sodas, and cookies. CBD is one of many cannabinoids found in the cannabis plant. Unlike THC, which gives users a “high,” CBD contains little to no psychoactive properties, but comes with many benefits. CBD is being heavily studied and is showing great promise as a nutritional and wellness supplement. CBD products are currently being used to treat pain, inflammation, stress, and symptoms resulting from a wide range of medical conditions, such as epilepsy, multiple sclerosis, arthritis, anxiety, and chronic pain. CBD binds to the body’s cannabinoid receptors to induce feelings of calmness and pain relief. It has been hailed as a safer, more natural alternative to opioids and other addictive drugs.

While the CBD craze has resulted in an influx of CBD products hitting the market, the CBD market remains unregulated and susceptible to abuse and deceptive practices. The Food and Drug Administration (FDA) seized various CBD products from store shelves across the country after health claims relating to products which are not approved by the FDA, but suggest they are approved and/or intended for use in the diagnosis, cure, mitigation, treatment, or prevention of diseases like cancer and Alzheimer’s disease. After the passage of the Agricultural Improvement Act (the “Farm Bill”), which legalized the cultivation, processing, and sale of hemp and hemp products, the FDA Commissioner reaffirmed that CBD, regardless of whether or not it is derived from hemp, cannot be lawfully marketed with a claim of therapeutic benefit without prior FDA approval.

The FDA urged that CBD-infused products, whether derived from cannabis or hemp, are still considered drugs and must complete the FDA’s drug approval process before they are marketed in the U.S for sale as capable of being used in the diagnosis, cure, mitigation, treatment, or prevention of diseases. Lastly, the Commissioner reiterated the illegality of introducing food containing CBD or THC into interstate commerce regardless of whether the substances are hemp or marijuana-derived.

It is important to note that the FDA’s stance does not apply to CBD sold as part of a state’s medical marijuana program, which provides regulation and oversight including testing of products to ensure purity and cannabinoid percentage accuracy.

FDA enforcement efforts have been springing up across the country. A smoke shop owner in Arizona reported the FDA seized a variety of CBD products from his shelves with instruction to anticipate follow-up paperwork. This was a few days after the FDA had visited the shop and asked what products were intended for humans. On the day of the seizure, FDA officials informed the owner that CBD could not be sold for human consumption.

In New York City, various businesses ranging from bakeries to bars received visits from the New York City Department of Health, which confiscated CBD-infused foods and drinks and classified them as “embargoed,” meaning that the goods are identified, itemized, and removed. The Department of Health has not yet issued a public statement or additional information, but some health inspectors explained to business owners that CBD cannot be used as a “food additive.”

In New Jersey, there have not been reports of FDA seizures or other action letters regarding the sale of CBD-infused food and beverage products, but some municipalities have moved to ban cannabis before it is legalized for recreational purposes in the state. William Patterson University in New Jersey formed a Cannabis Institute to advise local and state officials on cannabis policy. Pennsylvania has also not yet reported any seizures of CBD-infused products, but the Governor announced last month that there would be a series of town hall-style sessions to discuss legalizing recreational marijuana in the state.

In Maine, a state that has legalized marijuana for recreational purposes, the Department of Health and Human Services has informed various businesses that they must remove all CBD-infused foods, tinctures, and capsules form their shelves per an internal report from the state’s Attorney General’s Office. Other states, like Ohio, have banned certain CBD-infused products from local stores.

In contrast, California Assembly Member Cecilia Aguiar-Curry introduced a piece of hemp legislation that would add two provisions to the California Health and Safety Code. The proposed bill narrowly targets California regulators’ abilities to penalize companies for selling hemp-derived CBD beverages or foods on the ground that they are “adulterated” under California law.

There is also a movement to regulate CBD-infused foods outside of the United States. The European equivalent of the FDA—the European Food Safety Authority—recently changed its guidance on cannabinoids and declared that all new food products infused with the plant or its derivatives are classified under the “novel food” catalogue and must receive pre-market approval under the EU’s “novel food” regulation. Per Regulation 2015-2283, foods containing hemp extracts with CBD levels not higher than naturally occurring in European industrial hemp have been and are regarded as traditional food (not novel) by food business operators. The new guidance drastically expands the categories of cannabinoids that would require pre-market approval; however, hemp seeds, flour and seed oil remain traditional foods not subject to pre-market approval which can take up to three years. This certainly complicates U.S. CBD companies’ ability to export their products overseas and presents risks of seizure by Customs and Border Protection enforcement.

The FDA, however, has yet to release guidelines on shipping CBD products to other countries. Customs agents likely do not have a sophisticated understanding of the difference between hemp and marijuana, and therefore, could end up seizing a legal hemp-derived CBD shipment, which is permissible under both EU and US laws. The FDA understands the need for regulation and standards and has set out to re-examine its current policy toward hemp and cannabis derived CBD to provide clarity. In the meantime, stakeholders with an interest in consumer-based CBD products as well as in developing other hemp-derived cannabinoid compounds for the market may wish to consider an FDA engagement strategy as part of their business development plans.

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No Prima Facie Showing of Cohabitation = No Right to Discovery to Try to Prove It

For the second time in about a month, the Appellate Division has reversed improvidently granted discovery when there hadn’t been a showing of a change of circumstance.  As noted by Eliana Baer on this blog on August 12,  2019 (about a case she and I were involved in) in a post entitled Appellate Division Rules: No Custody Evaluation Without Finding of Changed Circumstances , when the trial court found that the father failed to meet his burden of showing a change of circumstances, it was error to allow him to get a custody expert.  In a similar ruling in the case of Landau v. Landau, a reported (precedential) Appellate Division decision from September 12, 2019, the Appellate Division once again prohibited the putting of the cart before the horse – this time in the context of a motion to modify alimony based upon cohabitation.

In this case, in a divorce agreement entered into in late 2014, after the alimony statute was amended, which included a new paradigm about how to deal with cohabitation going forward, the husband agreed to pay substantial alimony to the wife for 7 1/2 years.  Their agreement provided “[n]otwithstanding anything contained herein to the contrary, the Wife’s cohabitation as defined by then current statutory and case law shall be a basis for the Husband to file an application seeking a review and potential  modification, suspension or termination of alimony pursuant to New Jersey law.”   In his reply, he submitted a Certification from a private investigator who asserted that the wife and her boyfriend “cohabit in each other’s residence approximately 75% of the time period examined”, however, he only spotted defendant or her boyfriend leaving the other’s home in the morning on two occasions.

In December 2017, the husband moved to terminate, suspend or modify alimony based upon the wife’s relationship of more than a year.  Specifically, he alleged:

Plaintiff filed a certification in support of the motion alleging the two had traveled together, attended social activities as a couple and posted photos and accounts of their activities on social media sites. Plaintiff alleged the man engaged in many activities with the parties’ children and regularly slept over at defendant’s home, as she did at his home. Plaintiff claimed the man attended events he used to attend with defendant, including family birthday dinners with her parents. He further claimed the man attended the Bar Mitzvah of one of the parties’ sons and was seated next to defendant in the position of honor for a parent of the child being Bar Mitzvahed. At the celebration afterwards, plaintiff alleged defendant publicly acknowledged the man and their relationship in her speech. He also claimed defendant told him she moved her brokerage accounts to the firm where the man works and got a “friends and family discount.”

The Wife’s acknowledged the relationship but denied cohabitation, claiming:

She averred the two had “never discussed [their] ‘future’ with respect to merging [their] lives,” performed no household chores for one another, had no intertwined finances, do not share living expenses and do not  have authority over one another’s children. She noted each of them took separate family vacations, not something that married couples typically do. Defendant also noted she often attended social events alone, and that her boyfriend did not attend her law school graduation or her swearing-in ceremony, something he certainly would have done had they been in a relationship akin to marriage. As to her son’s Bar Mitzvah, defendant noted her boyfriend attended as her “date” and thus sat next to her, but did not participate in the ceremony and his presence was not commemorated by being included in any family photos. She denied she received any discount in connection with moving her brokerage accounts, and noted her boyfriend had nothing to do with her accounts at the firm. Defendant averred that while she
and her boyfriend enjoyed one another’s company, they were simply dating on a regular basis and had “no obligations” to one another.

Generally, to modify either custody or support, the seminal case of Lepis v. Lepis requires the moving party to make a prima facie showing of changed circumstances, before the court will grant discovery.  Prima-Facie legally means that an evidence is sufficient to raise a presumption of fact or to establish the fact in question unless questioned.

In Landau, the trial court did not find that the husband made a prima facie showing of cohabitation. Rather, the court held:

Although acknowledging the “general task for the judge hearing the [cohabitation] motion is to determine whether the moving party has established  a prima facie case of cohabitation,” meaning that plaintiff’s “proffered evidence, if . . . unrebutted would . . . sustain a judgment” in his favor, the judge “decided that [he was] not going to decide whether . . . plaintiff has made out a prima facie case, but [he was] going to allow discovery . . . to allow . . . plaintiff the opportunity to make a showing of a prima facie case, or
not, as the case may be.”

Put another way, the judge allowed the husband to conduct very broad and intrusive discovery to try to be able to make a prima facie showing of cohabitation.  The Appellate Division first stayed and then reversed the trial court’s Order allowing discovery.  In doing so, the Appellate Division rejected the husband’s argument that the new statute altered the Lepis rubric when it came to cohabitation.  The Court’s rationale is boiled down in the following two paragraphs:

There is no question but that a prima facie showing of cohabitation can  be difficult to establish, see Konzelman, 158 N.J. at 191-92 (describing the seven days a week, 127 days of surveillance of Mrs. Konzelman’s residence), precisely for the reason the trial court identified, that the readily available evidence is often “consistent with either a dating relationship or a cohabitation relationship.” But that is hardly a new problem and it cannot justify the invasion of defendant’s privacy represented by the order entered here. We are confident the Lepis paradigm requiring the party seeking modification to establish “[a] prima facie showing of changed circumstances . . . before a court will order discovery of an ex-spouse’s financial status,” 83 N.J. at 157, continues to strike a fair and workable balance between the parties’ competing interests, which was not altered by the 2014 amendments to the alimony
statute.

Because the trial court judge found plaintiff had not established a prima facie case of the changed circumstance of defendant’s cohabitation, plaintiff was plainly not entitled to discovery under Lepis. See ibid. As nothing in the 2014 amendments to the alimony statute altered “the procedures that a court should employ when passing upon a modification petition — particularly the allocation of the burdens of proof and the conditions for compelling production of tax returns,” id. at 145, the Court adopted in Lepis, we reverse the order for discovery.

Thus, while the consensus was that the 2014 amendment to the alimony statute made it easier to suspend or eliminate alimony based upon cohabitation in cases the ended after the amendment was signed into law, it is not so easy to allow a person alleging cohabitation to get discovery to try to prove cohabitation.  More importantly, because the rationale of the decision goes back to Lepis, this case should be argued each time someone is seeking discovery to prove a change of circumstances.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

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