## Facts

- Highland Lakes Country Club & Community Association governed a private common-interest residential community through recorded deed restrictions, a master deed, and bylaws.
- Community documents required all property owners to be members and to pay fees, dues, and common assessments.
- The Association’s bylaws stated that, upon transfer, a new owner must pay all debts owed to the Association to obtain or maintain membership privileges.
- Prior owners of the lot later purchased by Robert Franzino accrued substantial unpaid dues and assessments.
- After purchasing the lot, Franzino refused to pay the prior owners’ arrears and disputed that the governing documents gave adequate notice that such obligations would bind later owners.
- Franzino also argued that a mortgage foreclosure action (to which the Association was a party) eliminated any lien or encumbrance for assessment arrears and therefore eliminated liability for the prior owners’ debt.
- The trial court granted summary judgment to the Association; the Appellate Division reversed, finding inadequate notice and ambiguity; the Supreme Court granted review.

## Issues

1. Whether recorded covenants and bylaws of a common-interest community can obligate a subsequent purchaser to pay unpaid assessments and dues incurred by prior owners.
2. Whether a mortgage foreclosure to which the association was a party extinguishes the association’s ability to collect those arrears from the subsequent owner.

## Decision

- The New Jersey Supreme Court reversed the Appellate Division and reinstated the trial court’s judgment for the Association.
- The Court held Franzino liable for arrears accrued by his predecessors in title, as well as his own unpaid assessments.
- The Court held that the foreclosure did not extinguish the Association’s covenant-based right to compel payment from the current owner, even if foreclosure affected any recorded lien.

## Legal Principles

- Recorded restrictive covenants and bylaws in a common-interest community may run with the land and bind subsequent owners.
- When governing documents condition membership and related use privileges on payment of all outstanding obligations, they may impose liability on a subsequent purchaser for predecessors’ unpaid assessments.
- A lien securing assessments is distinct from the underlying covenant-based obligation; extinguishment or impairment of a lien in foreclosure does not necessarily eliminate the purchaser’s duty imposed by recorded community covenants.
- Purchasers are charged with knowledge of recorded community governing documents and bear the risk of failing to investigate outstanding assessment arrears before purchase.

## Conclusion

A later purchaser of property in a common-interest community can be held responsible for prior owners’ unpaid association assessments when recorded governing documents provide that membership and related rights depend on paying all outstanding debts, and that obligation may persist despite foreclosure that affects any assessment lien.


Highland Lakes Country Club & Cmty. Ass’n v. Franzino, 186 N.J. 99, 892 A.2d 646 (2006)