New Jersey Thanasoulis v. Winston Towers 200 Association (1988): Parking Fees and Association Power

Quick Answer

In Thanasoulis v. Winston Towers 200 Association, decided June 30, 1988, the New Jersey Supreme Court held that a condominium association exceeded its powers when it charged higher parking fees to tenants of nonresident (renting) owners than to resident owners, in order to keep the extra revenue for the association. The Court tied its ruling to the Condominium Act and the master deed, not to a general reasonableness test.

The Court also sent a second question, a one-year occupancy requirement before a new buyer could rent, back for further fact-finding. It did not rule on whether that rule was valid.

At a Glance

The Dispute

Winston Towers in Cliffside Park has 614 units and a parking garage with 903 spaces plus a yard with 100 spaces. The master deed made parking part of the common elements, said the association would operate it, and said each owner "upon application, will be entitled to rent annually at least one garage space."

Until 1981 all owners paid the same monthly rates ($25 for a single indoor space, $40 tandem, $20 outdoor). In June 1981 the board raised rates for nonresident owners to $75, $125 and $50, based on "market value," while resident owners kept the old rates. The board required that a tenant of a nonresident owner lease the parking space separately from the association at the higher rate, or the owner could not rent the unit. The association said it wanted to stop owners from profiting on parking rentals. In October 1981 it also adopted a rule that incoming owners must live in their unit one year before leasing.

Triantafyllos Thanasoulis sued to invalidate both rules. The trial court and a divided Appellate Division upheld them. He appealed to the Supreme Court as of right because of the dissent below.

What the Court Held

Parking fees: beyond the association's power

The Court reasoned from the statute and the deed rather than reviewing the board's good faith:

• A unit includes a proportionate undivided interest in the common elements, and under N.J.S.A. 46:8B-6 that interest is "inseparable" from the unit. The master deed here also gave each owner the right to rent a garage space.
• The association may "lease or license the use of common elements in a manner not inconsistent with the rights of unit owners" (46:8B-15(c)). By substituting itself as lessor of the owner's parking space, the association exceeded that power.
• The Court accepted that the association may set reasonable rules about space size, speed limits and safety, and has discretion over rental rates. But it "cannot expropriate the economic value" of an owner's parking space for its own use.
• Common expenses are charged to owners in proportion to their undivided interests (46:8B-3(e), -17). The higher fees paid by nonresident owners lowered everyone else's share, so renters bore a disproportionate share. The Court rejected the argument that this only lowered common expenses for all, because the benefit came "at the expense of one class of unit owners."
• Security is a legitimate concern, but permits and security staff could address it without encroaching on owners' rights.
• Because the board changed the leasing procedure in paragraph eighteen of the master deed without the 75 percent owner approval the deed required for amendments, the resolution was unauthorized (46:8B-11). It also amounted to a "change in a unit" without the owner's consent, which that section bars.

Residency requirement: not decided

The one-year rule was adopted nine years after Thanasoulis bought. The trial court had focused on whether he had notice. The Supreme Court said the real issue was whether the rule hurt the marketability and value of his unit enough to give him standing. The record lacked evidence on that point, so summary judgment for the association was improper and the matter was remanded. The Court did not hold the rule valid or invalid.

Standard of review: a point the Court left open

The Court noted Siller's principles (acts "properly authorized"; fraud, self-dealing or unconscionable conduct subject to relief) but said it did not need to decide the standard of review for association actions consistent with the Act and the master deed. The dissent would have applied the business judgment rule and upheld the fee schedule. Our reading: Thanasoulis is not a ruling that the business judgment rule governs, and it does not reject it either.

Why It Matters for Associations

• Authority comes first. A board action can fail because it is outside what the statute and the master deed allow, whatever the board's good intentions.
• Do not single out one class of owners. The Court rejected a charge that fell only on owners who rent.
• Rights attached to units. If the master deed gives owners a right, such as renting a parking space, the board generally cannot take the economic value of that right through a rule change.
• Amendment procedures matter. A rule that effectively changes a master deed provision needs the vote the deed requires.
• Rental limits are not resolved by this case. The Court did not rule on the one-year occupancy rule. Counsel should review any rental restriction against the current statute, the governing documents and newer authority.

Related New Jersey Law

• Siller v. Hartz Mountain Associates (1983)
• Fox v. Kings Grant Maintenance Association (2001)
• N.J.S.A. 46:8B-15: association powers and fines
• New Jersey HOA laws and regulations

Board Checklist

• Before adopting a fee or rule, identify the statute section or governing-document provision that authorizes it.
• Check whether the change applies to all owners alike, or burdens only owners who rent.
• Check the master deed for rights attached to units (parking, storage, use of common elements).
• If a rule changes a master deed provision, follow the amendment vote the deed requires.
• Use permits, access control or security staff for security goals rather than fees that shift value away from owners.
• Have counsel review any rental waiting period or occupancy rule before enforcement.
• Record the authority relied on in the board minutes.

Frequently Asked Questions

Can a condo association charge renters more for parking?

Not on the facts of Thanasoulis. The Court held the association exceeded its power by charging tenants of nonresident owners higher parking fees to keep the extra revenue.

Did the Court ban rental restrictions?

No. It did not decide whether the one-year occupancy rule was valid and remanded for evidence on the owner's standing.

Does this case establish the business judgment rule?

Our reading is no. The majority said it did not reach the standard of review for actions consistent with the Act and master deed. The partial dissent argued for the business judgment rule.

Why did the 75 percent vote matter?

The board's resolution effectively superseded a master deed paragraph without the 75 percent owner approval needed for amendments, so it was unauthorized under N.J.S.A. 46:8B-11.

Does the case still apply?

We did not run a citator check. The Supreme Court later quoted Thanasoulis in Fox (2001). Confirm current treatment with counsel.

Could an association change parking rules at all?

The Court acknowledged reasonable rules on space size, speed limits and safety, and discretion over rental rates, but not taking the economic value of an owner's right to a space.

Where This Comes From

We read the full opinion, including the partial dissent, of Thanasoulis v. Winston Towers 200 Association, 110 N.J. 650 (1988), as published at law.justia.com. We did not read the Appellate Division opinion or run a citator check, and we omit pinpoint cites.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed New Jersey attorney before acting.