Receivers May Take Contol Of Dysfunctional Boards

In New United Corporation v. Essex County, a New Jersey appeals court recently addressed the thorny issue of how a court may resolve a dysfunctional condominium board.   In this case, the common assets were not being maintained in a three unit commercial association.  Essex County was a tenant in two of the units and by contract controlled the association. 

The County planned to use these offices in conjunction with plans to move a medical facility.  Those plans apparently did not materialize and it appears the County lost interest in the commercial units.  Allegedly, the County defaulted on its association responsibilities and things that needed to be maintained were not.

Predictably, litigation arose and the appeals court ruled as follows:  a received could be appointed to run the association, but with limited authority and for a limited duration.   The idea is that the receiver would do the least amount of work needed to maintain the facility.   The association could continue to meet and operate, but had to allow the receiver to perform its court required tasks.

Breaking up is hard to do --and working with a court appointed receiver can be even harder.  But dysfunctional Boards beware --- if you are not getting the job done, a court may very well appoint someone to act in your place until matters can be sorted out.

Invariably, this not a pleasant situation.  Which means that Boards must carry out their responsibilities in an honest, open and fair manner.   If they fail to do so, a Judge may appoint someone to take over control of the association.