Summary
The Supreme Judicial Court of Massachusetts considered whether amendments to a condominium's master deed and declaration of trust violated G. L. c. 183A, §§ 5(a) and 10(a). The court held that the statutory proportionality requirement for common-area interests could be waived by agreement and that phase II purchasers with notice of the recorded amendments were bound by the waiver. It also held that the challenged provisions governing condominium board elections and amendments did not violate § 10(a), and affirmed summary judgment for the phase I owners.
Topics
Practice areas
Questions Presented
- Whether the proportionality provision in G. L. c. 183A, § 5(a), may be waived by agreement.
- Whether the phase II unit owners, who purchased with notice of the recorded amendments, were bound by the developer's waiver of the § 5(a) proportionality provision.
- Whether the recorded provisions allocating board-election control and requiring phase I owner consent for amendments adverse to phase I interests violated G. L. c. 183A, § 10(a).
- Whether the settlement agreement and resulting management provisions were unenforceable because of overreaching or fraud.
Holdings
- The statutory right to a common-area percentage interest approximately proportional to the unit's fair value may be waived by agreement because the provision protects private property rights rather than the general public and waiver does not frustrate the statute's public policy.
- Phase II purchasers were bound by the waiver because they acquired their units derivatively and with notice of the recorded amendments specifying the percentage interests, expense allocations, and management provisions.
- The provisions giving phase I owners disproportionate control over board elections and a veto over amendments adverse to their interests did not violate § 10(a).
Key quotations
“It is settled that a statutory right may be waived where the waiver "would not frustrate the public policies of the statute."” (456 Mass. at 768)
“Within this overarching purpose of the condominium statute, the proportionality provision of § 5 (a) defines the property rights of individual condominium owners vis-à-vis one another; it does not, as the phase II owners argue, protect the public by mandating uniform requirements as to the percentage interest of ownership of common areas and facilities in all condominia in the Commonwealth.” (456 Mass. at 770)
“Public policy actually favors this interpretation," and nothing in G. L. c. 183A "prohibits the unit owners from entering into valid agreements for management and control of the condominium.” (456 Mass. at 775)
“For the foregoing reasons, the master deed and declaration of trust, both as amended by the recorded amendments, are valid and enforceable in accordance with their terms.” (456 Mass. at 777)
Factual background
The Cape Codder Condominium was developed in two phases. A 1998 settlement between the phase I owners' board of trustees and the phase II developer preserved a 31.41% to 68.59% allocation of common-area interests, despite the smaller size and different configuration of the second phase, and established expense-allocation, board-election, and amendment-veto provisions favoring the phase I owners. Those provisions were incorporated into recorded amendments to the master deed and declaration of trust, and phase II purchasers bought their units with notice of the recorded terms.
Procedural history
The phase II owners filed suit in the Land Court seeking declarations that recorded amendments to the condominium's master deed and declaration of trust violated G. L. c. 183A, §§ 5(a) and 10(a), together with injunctive relief, damages, and attorney's fees. The Land Court granted summary judgment to the phase I owners, concluding that the statutory proportionality provision had been waived by settlement agreement, that the waiver bound purchasers with notice, and that the management provisions did not violate § 10(a). The Supreme Judicial Court affirmed.