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Monthly Insights
Jim Yost, owner of Elite Management and Ocean Property Management, writes regular condominium association informational newsletters. These informational pieces are linked below.
For additional advisory services on any of the information in the articles you can contact Jim Yost at 609-675-6835.
Insight Article Links
Why your Condo Should Rely on an Engineer
For starters, many New Jersey associations will need an engineer to comply with the Structural Integrity Act, (the “Act”) state legislation (S2760/A4384) signed in 2024, which mandates periodic structural inspections of "covered buildings" (buildings constructed of concrete, steel and/or masonry) to ensure safety and prevent structural failures. Engineers are required to conduct inspections and oversee repairs to ensure structural integrity.
Should Board Member Get Paid
The New Jersey Condominium Act does not explicitly prohibit board members from being paid, but it is rare and generally discouraged. Most association governing documents (bylaws) state that board members cannot be compensated. Payment to board members can raise issues with insurance, attract self-serving individuals, fiduciary duty breaches, and complicate financial oversight, though expense reimbursement is standard.
The New Jersey Condo Act
The New Jersey Condominium Act (NJSA 46:8B-1 et seq.) is the state law that creates the legal framework for condominium creation, governance, and management, covering everything from master deed requirements and owner rights to association powers (like levying fines, enforcing rules) and responsibilities (like maintaining common areas) for condos formed after 1970, working alongside other laws like the Nonprofit Corporation Act and recent updates for mandatory structural inspections.
Condos (and condo owners) Are Good For Cape May County
Guests staying in condos pay local lodging, occupancy, and tourist taxes, increasing the tax base beyond just property taxes.
Condos are a boost to local tourism because they increase the available inventory for travelers looking for local accommodations.
Condos benefit business owners in resort areas by driving consistent, high-volume tourist traffic, resulting in increased local spending.
Capital Improvements & Special Assessments
A capital improvement for a condominium, community or homeowner’s association is generally defined as a permanent structural enhancement, change, addition, or major renovation to the association’s common elements that increases the property's value, increases its utility, and/or appreciably prolongs its useful life. Unlike routine repairs which restore an item to its original condition, capital improvements are substantial, long-term investments that modernize the property. As such, they are capitalized, added to the asset's cost basis, and depreciated over time.
Director's & Officers Insurance
Director’s & Officer’s insurance (“D&O”) is a specialized policy designed to protect the board members and officers of a condominium association from personal liability if they are sued for alleged wrongful acts while carrying out their duties. Condo directors and officers (“D&O”) insurance protects the personal assets of board members from lawsuits alleging wrongful acts while managing the association.
Adequacy
In the context of condominiums and homeowner associations (HOAs), "adequacy" primarily refers to the financial health and sufficiency of the reserve funds. Specifically, it means the association has enough money in its reserve accounts to cover the anticipated costs of major repairs and replacements of common elements (such as roofs, building exteriors, or elevators) over a long-term period without needing to impose a special assessment on unit owners or significantly raise regular fees.
Completing the Condominium Project Questionnaire Form 1076 Part 2
The Form 1076 questionnaire wants to find out when the building was last inspected; if the board is aware of any defects, damage or violations of code requirements, and if so, is there a plan and budget to get things fixed. The Form also wants confirmation that the association board has a maintenance plan, including schedules and that the board includes maintenance in the annual operating budget.
Completing the Condominium Project Questionnaire – Form 1076 Part 1
Completing the Form 1076 Condominium Project Questionnaire, otherwise known as the condo questionnaire, has become more challenging, confusing to some, and even onerous for volunteer board members. New requirements on mortgage approvals for condominium units are being imposed based on building inspections and capital reserve studies as a result of changes in the Fannie Mae and Freddie Mac secondary loan markets.