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Sunday, August 10, 2014

CLAIR W. FLINN, ET AL. VS. AMBOY NATIONAL BANK AND AB MONMOUTH, LLC A-4216-12T1

CLAIR W. FLINN, ET AL. VS. AMBOY NATIONAL BANK AND AB MONMOUTH, LLC
A-4216-12T1
Plaintiffs, the owners of eighteen of the forty-eight constructed units in a partially-built, ninety-six-unit condominium complex, sought an order from the trial court granting them control of the condominium association's governing board. Plaintiffs relied on a provision within the New Jersey Condominium Act, N.J.S.A. 46:8B-12.1(a), which provides that "when some of the units of a condominium have been conveyed to purchasers and none of the others are being constructed or offered for sale by the developer in the ordinary course of business," then such unit owners "shall be entitled to elect all of the members of the [association's] governing board."
The trial court denied plaintiffs' request, relying upon N.J.A.C. 5:26-8.4(d), a regulation cited by defendants. The regulation states that "[a] developer may surrender control of the executive board of the [condominium] association prior to the time as specified [under the statute's percentage-based, lock-step procedures that are otherwise to be followed], provided the owners agree by a majority vote to assume control." The trial court ruled that plaintiffs were not entitled to an order transferring control because they had not agreed to assume such control by a majority vote of unit owners.
We reverse the trial court's decision because the cited regulation pertains to a developer's voluntary request to surrender control and does not pertain to the present situation of a request for involuntary surrender. In addition, the terms of the regulation cannot trump or negate the mandatory language of the statute.
The case is remanded for an evidentiary hearing to resolve the parties' factual dispute over whether or not the current developer is constructing or offering units for sale in the "ordinary course of business." In addition, in an unpublished portion of the opinion, we reversed the trial court's dismissal with prejudice of other counts of the complaint.