Cape May Harbor Village v. Sbraga
22 A.3d 158
| N.J. Super. Ct. App. Div. | 2011Background
- Cape May Harbor Village is a small, private residential community with 24 homes, common areas, and a marina, governed by a Declaration amended in 2009 to prohibit leasing of homes to third parties.
- Appellant Deborah Sbraga bought a home in 2000, built in 2005, and took title solely in 2007 with the intention to occupy it as a personal residence.
- The original Declaration anticipated leasing and could be amended by a 67% vote of the Association; the 2009 amendment was approved by the membership.
- Before the amendment, there had never been a home leasing practice; concerns focused on rentals’ impact on values, noise, parking, and maintenance of a stable atmosphere.
- The Association presented evidence of problems related to boat-slip rentals but none showing prior owner-occupied homes partaking in weekly rentals; the Board sought to preserve non-transient character.
- The trial court held the amendment reasonable and enforceable, granted summary judgment for the Association, and barred Sbraga from leasing effective December 1, 2010; the court also noted interim lease activity occurred during litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reasonableness or business judgment governs review | Apply Mulligan factors; deference due to membership vote. | High-level supermajority vote supports business judgment. | Reasonableness standard governs |
| Whether post-acquisition amendments can bind the appellant | Restrictive amendments cannot affect her immutable rights as a purchaser. | Amendments run with the land; purchaser knew Declaration was amendable. | Amendment applicable to appellant |
| Whether the leasing ban is a reasonable restraint on alienation | Restriction is a significant burden on property rights and potentially unreasonable. | Restriction is tailored, rational, and serves community interests; not capricious. | Amendment is reasonable under Restatement factors |
Key Cases Cited
- Mulligan v. Panther Valley Property Owners Ass'n, 337 N.J. Super. 293 (App.Div. 2001) (reasonableness vs. business judgment, case-specific factors)
- Hammett v. Rosensohn, 46 N.J. Super. 527 (App.Div. 1957) (public policy against restraints on alienation; strict construction of restrictions)
- Ridgely Condo. Ass'n, Inc. v. Smyrnioudis, 343 Md. 357, 681 A.2d 494 (Md. 1996) (notice and timing affect deference to recorded restrictions)
- Villas W. II of Willowridge Homeowners Ass'n, Inc. v. McGlothin, 885 N.E.2d 1274 (Ind. 2008) (restrictive covenants in common-interest communities and deference to master deeds)