Defending the New Jersey Condominium Association and its Property Manager

In 1989, the New Jersey legislature enacted statutory immunity, under certain circumstances, to “qualified common interest communities,” or residential communities comprised of at least four units wherein owners are obliged to contribute to maintenance, improvements, and insurances . See, N.J.S.A. 2A:62A-12 et seq.

Section N.J.S.A. 2A:62A-13(a) declares that whenever a qualifying condominium’s governing bylaws for the association so direct: “the association shall not be liable in any civil action brought by or on behalf of a unit owner to respond in damages as a result of bodily injury to the unit owner occurring on the premises of the qualified common interest community.” As no such provision can be inserted into an association’s bylaws until more than 75% of the units are owned by individuals (i.e., not the developer), the benefits of the statute are implemented by amendment to the bylaws, with prerequisite that the amendment memorializing immunity must be approved by affirmative vote of at least two-thirds of the units held by unit owners.

The New Jersey Supreme Court expressly recognized that “the Legislature was mindful that some associations have had lawsuits filed against them by unit owners whom have sustained injury on common property and, as a direct result, the association may face difficulty either obtaining insurance coverage or maintaining a manageable premium, and therefore, the “statute was intended to ‘permit the members of the association to agree to eliminate this type of suit.’” Qian v. Toll Brothers, Inc..¹ The immunity granted is not unlimited.  In practical effect, and as recognized by the Appellate Division, qualified common interest communities adopting the statutory immunity are immunized from claims of ordinary negligence, but not for any liability associated with wilful, wanton or grossly negligent conduct.

Whenever a personal injury suit is brought by a unit owner in a qualified common interest community with immunity in place, New Jersey Courts are to engage in a case-by-case, fact-specific evaluation of the record, and if the facts could support a finding that rises no higher than a finding of ordinary negligence, the homeowner’s association is immunized and summary judgment dismissal is warranted. In other words, unit owners cannot, and are not permitted to, circumvent the clear intent of the Legislature simply by including allegations of gross negligence. See, Fernicola²; Costa³; Carmona⁴;Basile⁵.

In 2016, the New Jersey Supreme Court formally defined gross negligence as the absence of, or failure to, exercise even the slightest care or diligence, creating an unreasonable risk of reasonably foreseeable harm.⁶ Inattention, mistaken judgment, or failure of the association defendant to exercise ordinary or reasonable care clearly will never suffice.⁷ While the Fernicola; Costa; Carmona; and Basile cases demonstrate the Appellate Division’s leanings on this topic, with a definition of gross negligence now in place, the opportunity to successfully dismiss a claim by a unit owner for injury in the common elements of a Condominium whose association has adopted N.J.S.A. 2A:62A-12 et seq., should be enhanced. Whenever a claimant fails to present a factual record indicating complete inaction or utter disregard for consequences which may follow, the association is immunized. There must genuinely be a record that can actually reasonably support a gross negligence finding for a claim to withstand summary judgment dismissal.

In our experience it is common in New Jersey for a condominium association to retain a property manager to assist the association’s board to exercise its responsibilities under the Condominium Act and its written bylaws. The duties assigned to the property manager, and whether the association retains a level of authority and control over the property manager, are vital inquiries whenever a property manager is named a defendant in a suit by a unit owner injured in a common area with qualified common interest immunity. “The concept of agency posits a consensual relationship in which one person, to one degree or another or respect or another, acts as a representative of or otherwise acts on behalf of another person with power to affect the legal rights and duties of the other person.”⁸ An agency relationship is established when one party consents to have another act on its behalf, with the principal retaining the right to provide instruction, issue direction, or exercise approval over the acts of its agent.⁹ The law in New Jersey is clear: “In situations where the principal owes no duty or less than the normal duty of care to the person harmed, the agent likewise has either no duty or a diminished duty to that third party even ‘for actions that otherwise would constitute a tort.”¹⁰. Therefore, when a traditional agency relationship can be established, barring exceptional factual circumstances, the property managing agent of a condominium association immunized from an ordinary negligence claim pursuant to N.J.S.A. 2A:62A-13 shall also claim immunity, as the agent’s duty can rise no higher than that of its principal.

1. 1. 223 N.J. 124 (2015).
2. 2. 2010 N.J. Super. Unpub. LEXIS 1614, supra.
3. 3. 2013 N.J. Super. Unpub. LEXIS 2342, supra.
4. 4. 2015 N.J. Super. Unpub. LEXIS 1656, supra.
5. 5. 2016 N.J. Super. Unpub. LEXIS 2158, supra.
6. 6. Steinberg v. Sahara Sam’s Oasis, LLC, 226 N.J. 344 (2016).
7. 7. Id.
8. 8. Restatement (Third) of Agency, §1.01 (2006).
9. 9. Sears Mortgage Corp. v. Rose, 134 N.J. 326, 337-338 (1993); Restatement (Third) of Agency, §1.01 (2006).
10. 10. Luchejko v. City of Hoboken, 207 N.J. 191, 201 (2011).