On appeal from the Superior Court of New Jersey, Chancery Division, Cape May County, Docket No. C-68-09.
The opinion of the court was delivered by: Lisa, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lisa, Sabatino and Alvarez.
The opinion of the court was delivered by LISA, P.J.A.D.
The dispute in this case pertains to an amendment to the Declaration of Covenants and Restrictions (Declaration) of a private residential community in the City of Cape May known as Cape May Harbor Village and Yacht Club. The amendment prohibits homeowners from leasing their homes to third parties. Appellant, Deborah L. Sbraga, is a homeowner in the community. She leased her home in violation of the amended Declaration, which prompted Cape May Harbor Village and Yacht Club Association, Inc. (Association) to initiate this litigation, seeking injunctive relief against her. The Association is a nonprofit corporation which has as its members all of the homeowners in the community and which, through its Board of Trustees, is responsible for the management of the affairs of the community. Appellant counterclaimed, seeking a declaration that the amendment to the Declaration was void, and also seeking damages.
In ruling on the parties' cross-motions for summary judgment, the trial court applied a standard of reasonableness, found that the amendment satisfied that standard, and therefore entered final judgment granting the Association's motion and denying appellant's. Accordingly, the judgment declared that the amendment to the Declaration was valid and enforceable, and restrained and enjoined appellant from leasing her property, effective December 1, 2010.*fn1
Appellant argues that the court erred in the manner in which it applied the reasonableness standard when finding that the Association's action to prohibit her exercise of a fundamental property right was legally permissible. Appellant further argues that the amendment to the Declaration, adopted after she took title to the property, cannot be enforced against her.*fn2 We reject these arguments and affirm.
The Declaration, executed by the initial developer of the community, was filed in the Cape May County Clerk's office in 1995. The community is small and exclusive, consisting of twenty-four single-family homes, common areas, and a marina.
There are forty boat slips, some of which are owned by homeowners, and others by the Association. During this litigation, the homes were assessed for local real estate property tax purposes at between $1,181,900 and $1,705,700. At the time judgment was entered, three homes were listed for sale at prices ranging from $2,545,000 to $2,699,000.
Appellant and her husband purchased a vacant lot in the community in June 2000. A home was constructed on the lot in 2005. Because of a divorce, the property was placed solely in appellant's name in May 2007. Throughout this time, appellant's intention was to occupy the home as a personal residence.
In its original form, the Declaration contemplated the leasing of homes and boat slips. These were the applicable provisions:
(n) Leases. (i) No Owner may lease less than the entire Lot except that any boat slip appurtenant to a Lot may be leased apart from the Lot.
(ii) Any lease on any Dwelling or boat slip shall be in writing and shall be subject to the provisions of this Declaration (whether or not such documents have been provided to the tenant); and any failure of the tenant to fully comply with the provisions of this Declaration shall constitute a material default under the lease and be grounds for termination and eviction. If any tenant is in violation of any of the provisions of this Declaration, the Association may bring an action in its own name or in the name of the Owner, or both, to have the tenant evicted or to recover damages, or both. If the court finds that the tenant has violated any of the provisions of this Declaration, the court may find the tenant guilty of violating the lease and order summary dispossession of the tenant despite the fact that the Owner is not a party to the action and/or that the tenant is not otherwise in violation of tenant's lease or other rental agreements with Owner. For purposes of granting the summary dispossession action against the tenant, the court may consider the Owner a person in whose name a contract (the lease or rental agreement) was made for the benefit of another (the Association). The remedy provided by this subsection is not exclusive and is in addition to any other remedy or remedies available to the Association. The Association may recover all of its costs incurred in pursuing such action, including court costs and reasonable fees for legal counsel, and such costs shall be an Assessment against the Dwelling and the Owner. The Association shall give the tenant and the Owner written notice of the nature of the alleged violation and fourteen (14) days from the mailing of the notice in which to cure the violation before the Association may file for eviction. By becoming a tenant, each tenant agrees to be bound by this Declaration and recognizes and accepts the right and the power of the Association to evict the tenant for any violation by the tenant of this Declaration.
(iv) The Owner shall promptly furnish to the Board a clear and complete copy of any lease, either for a Dwelling or boat slip, along with the name and telephone number of the tenant/lessee.
By its terms, the Declaration could be amended only by a vote*fn3 of at least 67% of all members of the Association.*fn4 By the summer of 2009, apparently in the aftermath of her divorce and for financial reasons, appellant decided to put her home up for sale. Because of the depressed real estate market, obtaining a favorable sale price would have been difficult. Accordingly, appellant decided she would like to lease the property while she was trying to sell it in order to bring in some revenue. She could optimize such revenue by making weekly rentals during the summer season.
In June 2009, appellant approached George Via, the President of the Association, to clarify whether she was permitted to lease her home. In his deposition testimony, Via confirmed that none of the property owners had ever leased their homes during the history of the community. Indeed, Via said he was unaware that the Declaration allowed for leasing of homes and was of the belief that such activity was prohibited. After appellant approached him about her intention to lease her home, Via discussed the matter with other Association members, and Via testified that they were also unaware of any such authorization. These events provided the motivation for considering the amendment.
At the Association's annual meeting of August 28, 2009, a proposed amendment was presented to the membership that would prohibit leasing of homes. After a discussion, the amendment was approved by a vote of twenty in favor and three opposed. The leasing of boat slips was unaffected by the amendment.
The recorded meeting minutes reflected that members discussed concerns involving problems of living in a homeowner community where rentals were permitted, the negative impact on home values, anticipated problems with renters using the common area and dock, parking problems, and the lack of responsibility for noise and policing of infractions of the Association's rules and regulations.
In his deposition, Via, a long-time member of the Association Board of Trustees, testified that it had never been brought to his attention that a social gathering at a home caused unruly behavior. The Board had never taken formal action due to any unruly behavior at a social ...