The Dardanelle, #40 Ocean Pathway. Stephen Goldfinger photo. 2/17/17 ©
#30 Ocean Pathway–main section. Another building to the left. Stephen Goldfinger photo. © 2/17/17
Left side of #30 Ocean Pathway. Stephen Goldfinger photo © 2/17/17 ©
By Paul Goldfinger, Editor @Blogfinger. Sources: Jack Bredin, researcher and another ( anonymous) source as well.
Last week, Don Stine, reporter at the Coaster, reported that two condominium associations in Ocean Grove had filed a suit against the OGCMA because they believe that the land lease fee (“ground rent”) agreements are illegal and/or invalid.
The lawyer on the case is James T. Hundley of OG, and the plaintiffs are the 22 unit Pathway Condominium Association at 30 Ocean Pathway and the 6 unit Dardanelle Condominium Association at 40 Ocean Pathway. Note that there are 26 condo associations in OG.,
Those of us who own houses in the Grove have paid a stable ground rent of $10.50 per year to the CMA. Because the price is so small, we know of no formal complaints about that. Some Grovers have thought that those ground rents might be illegal or at least controversial, but they considered it a “tradition” and simply wrote the check each year. In fact some Grovers voluntarily have sent more because $10.50 is so inexpensive.
Condominiums have been around for a long time in OG, and the condo owners have been charged ground rents in a different way than the single family homes are charged. In 2004, there were 308 condo units in the Grove. Now there are quite a few more.
Under the prior agreements negotiated by developers with the CMA, the condo’s represent a different use than a regular house. The CMA considered that condominiums are a “newer type of ownership” and thus are legitimately different for ground rent purposes than the historic model of a single family home on a single lot.
These leasehold agreements have nothing to do with property taxes between the condo owner and the Township. In that public model, the homeowner gets to look at the budget and even to comment on it, but with ground rents, we have a private agreement between developers and CMA, and the CMA does not have to defend any fee increases. The condo owners have simply paid the fees each year, despite some changes in the agreements and sometimes fee increases.
The CMA viewed condo’s as a sort of commercial venture, and each condo that came along would be considered on a case by case basis in terms of the leaseholds. Because the condos were different than traditional houses, the CMA felt justified in charging more, to change the charges whenever they wanted, and to do it with a sliding scale. The same holds true for commercial enterprises which are handled differently than residences.
Most of the earlier condominiums have had stable ground rent charges which, although higher than a regular house, have generally been quite reasonable, for example $50.00 or $100.00. That is why no condo owners have complained until now. Note that condo fees vary from unit to unit because each agreement is decided individually.
If we look back in history, the story of the leaseholds is murky, at least as I discovered when researching Ocean Grove history in the past. In 1870, the town, a planned community, was divided into 30 x 60 lots. There were tents and then the early construction of cottages. Rev. Stokes held a “sale” of lots, and James Bradley “bought” the first for $85.00. Every historical account I could find referred to these lots as having been purchased by individuals, with a deed being issued.
But somewhere along the line, the CMA came to once again own all the lots and lease the land to the homeowners. I can find no clear explanation as to what happened. In fact, is there any documentation that the CMA actually owns all the land in town?
Ted Bell, OG historian and author, told us that the leasing arrangement was the truth from the beginning, so for purposes of this discussion, we will consider that the CMA owns the land and is justified to charge lease fees.
So what happened that led up to this suit? We can speculate that the leasehold amounts charged for new condos in the last 4 or 5 years have gone up considerably, perhaps to $1,000 per year, on a sliding scale according to the Township assessments (recently raised substantially) on the condos and tied to the CPI.
The financial pressures on condo owners lately have become significant including higher property taxes, condominium association fees, common area charges, maintenance, and assessments for improvements. There also has been talk of shoddy workmanship in some of the new buildings and high turnover of the units because residents find that they are poor investments.
This lawsuit is quite fascinating and could have major implications (see below) in town if the CMA loses, and then others join a class action suit. It is possible that the CMA might have to make retroactive payments if they lose, although we are told that such an outcome would be unlikely.
The CMA is already in a precarious financial situation, so this is potentially an explosive and dangerous suit for them and for the financial stability of the town.
Below is the last statement made by the CMA regarding this matter, but we don’t know if the COO considers condominiums to be “residences.” In a post to follow, we will discuss the ramifications of all this. Please comment here or on the next post.
THE CZECH PHILHARMONIC from the film soundtrack The Secret Garden.
Reblogged this on and commented:
This article is worth repeating. We don’t know if there are any changes since we wrote this 3 years ago. Please comment if you have anything to add. I don’t know what happened to those suits –PG
The HOA hired a lawyer, but then backed off last year when the OGCMA, Ocean Grove Counting Money Association, said that they would not raise ground rents.
The HOA are cowards and should have proceeded with the lawsuit on behalf of all OG homeowners. The former president of HOA bought one of those houses near Joe and, like others in that Jack Green project, was paying $400/year with no complaints. The HOA feared that if they raised objections, the Counting Money Association might jack up everyone’s land rent.
OG has been part of Neptune since 1980. We pay taxes to Neptune for “land” and “improvement” (house). If you do not pay taxes to Neptune there will be consequences.
I do not pay land rent and I know two other homeowners who do not pay. There is no repercussion because OGCMA knows that they have no authority. We should all refuse to pay. If we all hang together, we will not hang separately (Ben Franklin).
Jesse: I must admit that your issues are beyond me. I always hope that some experts would help us out, but as you know from my complaints, we rarely get such expert help on Blogfinger.
I must repeat the complaint voiced by several readers that the HOA hired a lawyer for an expert opinion on ground rents, but the HOA has not made public the attorney’s conclusions. Members’ money was used to hire that consultant,so why hasn’t the opinion been released? The HOA members should petition the Board to place that legal opinion on their web site.
Also, do you recall that there were signs posted at the two lots on Main Ave. which eventually became the site of Mary’s Place. I believe the sign said “For Sale.” So does Mary’s Place own that land, and do they pay property taxes (or are they tax exempt) and do they pay ground rent?
We have questions but no answers so far.
Paul
I too want to commend Blogfinger on this very informative article. However, I must say that we should look for a legal historical review examining the vagaries of the leasing history in Ocean Grove.
Given that Jack Green bought property from the CMA and then he built the houses, and they charged the new owners ground rent. So did Jack Green buy the property from CMA or did he lease the property as undeveloped lots, to be developed at a later date. If there was no improvement on that land before, then it sounds as if Jack Green bought the property and had a right to build on it according to code, and the owners of those houses might not have been obliged to pay any ground rent. The deeds will tell the story.
So who owns the property, and who should be leasing and who should have lease free property needs to be examined? This is all very murky. .
In another piece, the question of taxes was raised, and I find it rather odd that in a multiple dwelling house that all owners of their property are levied the same land value for tax purposes. So, if, for example,, there six or seven units in a condo, why is each unit owner assessed the same amount for land value when all of these condo units sit on the same parcel.
So what the Town has is a multiplier effect for each unit. The property improvement assessment is tagged to the value of the particular unit – view, no view, one block or four blocks from the ocean, which makes more sense when assessing the value of a house or of a condo unit.
But why the Township has to assess the land value for each of those apartments standing on the same piece of land is still a mystery to me. I am sure there is an explanation for this. The ground rent reflected in this article for some condos is right in the the ball park for several condos in Ocean Grove. But learning that single houses have these changing rates as well does not bode well for the OGCMA. Thanks again for this piece.
Thank you for this well-researched and thought-out summary of the latest news on this topic. An exciting time!
Paul,
I am the original owner, and the ground rent was $400/year to start. I cannot tell you how they arrived at that number.
Joe
We purchased our single family home which is a small cottage in 2006. The ground rent we are charged is $25 per year. The single family cottage next door to ours was purchased by a couple in 2012 with a ground rent of $50. In 2015, when the husband passed away, the house ownership and mortgage was transferred to the wife. The CMA would not honor her ownership and charged her a ground rent of $100.
Joe lives in one of the 20x homes built about 10x years ago by Jack Green . This is block where Epworth Manor & Clara Swain Facility were . Clark , Cookman, Pilgrim Pathway, & NY Ave . are the 4x boundaries .
CMA sold these lots to Jack Green. So if these lots/land were sold then how can CMA (who since they sold lots to Green & therefore do not own) still charge an annual land lease fee ?? Interesting.
Joe: This is the first time we have been told of a single family home with a ground rent of other than $10.50. Can you tell us if you have been in this home since it was built and how was that $400 ground rent justified by the CMA? —Paul @Blogfinger
FYI. I live in a ” new” single family home on Clark Ave. (2008) My ground rent is over $400 per year. And there are 19 other homes here.
Know that the $10.50 is slowly being replaced.
Joe