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Agreement Entered Into When Developer Controlled the Board Is Enforceable Against Massachusetts Condo Association

Property developers sometimes enter into agreements for the benefit of the development. Both the Uniform Common Interest Ownership Act (UCIOA) and the Restatement (Third) of Property: Servitudes allow the condominium board to terminate certain agreements made by the developer, but Massachusetts has not adopted either. Therefore, in the recent case of Sewall-Marshal Condominium Association v. 131 Sewall Avenue Condominium Association, the appeals court considered a contract entered into by the developer in light of the Massachusetts Condominium Act.

In this case, one condominium association sued a neighboring condominium association for a declaratory judgment regarding the parties' rights under a parking agreement. The parties shared common developers. A contract was executed that provided for the sharing of parking spaces between the parties. The agreement allowed the plaintiff, which had fewer units, 20% of the parking spaces and the defendants 80%. The agreement continued for 28 years before the defendant notified the plaintiff it would not continue to follow the agreement. The plaintiff filed suit.

The defendant argued that the contract was unenforceable under the Condominium Act. The defendant further argued that the contract was unconscionable. The Land Court judge entered a declaratory judgment for the plaintiff, and an appeal followed.

The agreement stated that it was effective as long as both condominiums were condominiums subject to the Condominium Act. The agreement also provided for the parties to meet each year if necessary to reach an agreement under which particular spaces would be assigned to each condominium for the following year. The agreement was not registered, but some unit owners received copies. The plaintiff amended its copy to indicate that each unit owner would be allowed the use of one parking space, but the defendant's by-laws were not amended.

The defendant had notified the plaintiff that it would designate spaces to its unit owners and that, upon a certain date, it would tow any vehicle that was on its property without a written agreement it could be there.

The defendant argued that the agreement was unenforceable because it violated the Condominium Act. The defendant argued that it altered the unit owners' undivided interests without obtaining their consent. The Appeals Court determined, however, that it did not alter the owners' percentage interest in the common areas in a way that required unanimous consent under the statute. The statute has been applied when unit owners lost their right to common property in favor of another unit owner. The Appeals Court held that no owner's interest in the common area was diminished.

The defendant also argued that the agreement was an unrecorded easement, but the Appeals Court held that it was not an easement at all. The court found that the agreement "did not create a property interest appurtenant to land." The agreement did not create a benefit or burden for any specific property. Specific parking spots were not assigned to eitherthe condominium or any particular unit owner.

The court found that the agreement was a valid contract. The defendant argued it was unconscionable, but the court noted that it was difficult to argue unconscionability when the boards of each association were made up of the same three people when the agreement was executed. The agreement could not result in an unfair surprise to either party under these circumstances. Additionally, the agreement had been in place for many years without any issues. The Appeals Court found that the agreement was not unconscionable.

The court declined to adopt the UCIOA or the Third Restatement of Property: Servitudes, but it found that even if they did apply, they would not lead to a different result. The Appeals Court affirmed the judgment, holding that the agreement was valid and enforceable.

Condominium law is a very complex field. If you have a legal issue involving a condominium association, Richard Mucci is a skilled Massachusetts real estate attorney with experience as a trustee of a large condominium association. Call the Law Offices of Richard Mucci at (781) 729-3999 to schedule your appointment.

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