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 In addition, in an unpublished portion of the opinion,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.
