Highpoint at Lakewood Condominium Association, Inc. v. The
121 A.3d 413
| N.J. Super. Ct. App. Div. | 2015Background
- High Point at Lakewood Condominium was created by a 1971 master deed that contemplated 396 units; only 260 were ever built. The remaining 136 "phantom" units sat on an undeveloped ~9.8-acre parcel (Block 423, Parcel 1A).
- The master deed included a section (§13) reserving the developer an irrevocable right to "remove" unsold units and purported to grant the developer automatic, irrevocable powers of attorney from unit owners to execute any required Deed(s) of Revocation.
- HPDC conveyed rights (including the claimed removal rights) to Unisave in 1971. Unisave failed to pay property taxes on the 136 phantom units; Lakewood Township foreclosed in rem on tax sale certificates and received a 1980 foreclosure judgment transferring fee-simple title to those units.
- High Point sued in 2012 to quiet title to the undeveloped parcel (or alternatively to recover unpaid common-area assessments), arguing the units remained condominium common property and that the foreclosure was void for lack of notice and improper removal.
- The trial court upheld the foreclosure and ruled Lakewood owned the undeveloped parcel in fee simple, free of the master deed/condominium regime. On appeal the court affirmed taxation and foreclosure but reversed that the foreclosure effected a removal from the condominium because no deed of revocation was recorded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are "phantom" (unbuilt) condominium units subject to separate real-estate taxation and in rem tax foreclosure? | Phantom units are not taxable separate "units" absent physical improvements; foreclosure on common property was improper. | Phantom units are separate units under the Condominium Act and subject to separate tax assessment and foreclosure. | Held: Phantom units are taxable and subject to in rem foreclosure; publication notice was sufficient to bind others (owner of record must receive actual notice). |
| Did Lakewood's 1980 foreclosure judgment operate as a deed of revocation, thereby removing the phantom units from the condominium and conveying fee simple title free of the master deed? | Foreclosure did not remove units; without a recorded deed of revocation the parcels remain part of the condominium. | Foreclosure effectuated removal and Lakewood succeeded to developer removal rights, giving fee simple title outside the condominium. | Held: Rejected. Foreclosure judgment did not satisfy statutory requirement for a recorded deed of revocation; phantom units remain integrated in the condominium until a valid deed of revocation is filed. |
| Are the developer's automatic, irrevocable powers-of-attorney (in master deed) enforceable to effect removal without unit owners' unanimous consent, and did such powers transfer to Lakewood? | Powers of attorney are invalid as contrary to the Condominium Act and public policy; their transfer and self-execution are doubtful. | Powers of attorney were conveyed and justify removal upon successor's assertion. | Held: Court expressed substantial doubts about validity and transferability; even if valid and transferred, they are not self-executing and do not obviate the recorded deed requirement. |
| Is Lakewood liable for unpaid common-area assessments on the phantom units since foreclosure (or for recent years claimed)? | If Lakewood holds title to units, it should pay assessments (High Point sought ~2006 onward). | Lakewood argues defenses (e.g., laches, waiver, statute of limitations) and that assessment methodology may differ for unbuilt units. | Held: Phantom units can be subject to assessments; remanded to determine liability, offset by possible defenses (waiver, laches) and limitations on retroactive recovery. |
Key Cases Cited
- Henry v. N.J. Dep't of Human Servs., 204 N.J. 320 (2010) (standard of appellate review for summary judgment)
- Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366 (1995) (de novo review of deed/master deed interpretation)
- Township of Montville v. Block 69, Lot 10, 74 N.J. 1 (1977) (owner of record entitled to actual notice in in rem tax foreclosure)
- Perth Amboy Gen. Hosp. v. City of Perth Amboy, 176 N.J. Super. 307 (App. Div. 1980) (a condominium unit is separately assessed for tax purposes)
- Cigolini Assocs. v. Borough of Fairview, 208 N.J. Super. 654 (App. Div. 1986) (separate tax assessment of condominium units even if retained by declarant)