FREE MEEB SEMINAR
Condominium Insurance is the least understood issue about condominiums for all but the one with the greatest chance of a catastrophic loss. Managers and boards must learn how to effectively use the insurance professionals and condominium attorneys to participate in the selection of a superior policy both in terms of types of insurance and amounts of insurance.
Not all condominium master insurance programs or agents are created equal. Learn the key components of a professional master insurance program and how to coordinate the master policy with the unit owner policy.
This free seminar will be conducted by MEEB’s Stephen Marcus and Robert Masse of WTPhelan Insurance Agency.
This 90-minute Free Seminar is being held on
50 Braintree Hill Office Park
Refreshments will be served.
CALL TO ACTION: RHODE ISLAND LEGISLATION
Dear CAI members:
The Rhode Island House will consider a bill next week that may lead to significant increases in your assessments, weaken your association’s ability to enforce its rules, all while possibly gratifying those in your community that fail to abide by your governing documents. HB 5097 will have no positive effect on Rhode Island condominium associations. The CAI Rhode Island LAC and New England Chapter respectfully ask that you contact your Representative and ask them to VOTE NO on HB 5097.
CAI supports of effective, efficient and economical ways of resolving disputes within condominiums. Unfortunately, HB 5097 will force ALL associations and unit owners to use arbitration to decide disputes. Further, as drafted the legislation allows the losing party to opt out of the arbitration following a decision by filing a jury claim with the court.
While many associations chose to adopt arbitration provisions. This legislation will unconstitutionally (state and possibly U.S.) deny owners and associations the fundamental right to the Court system and force your association to rewrite private contracts.
The bottom line is:
Please email or call your local Representative and tell them you are opposed to HB 5097.
CAI Rhode Island Legislation Action Committee
As some of you may have heard, Tom Moriarty and Doug Troyer, two of our litigation partners, colleagues and friends, are leaving MEEB to start their own firm. We are excited for them and wish them and their firm great success.
Ed Allcock, who has been with MEEB for sixteen years will now head MEEB’s Litigation Department. Ed’s extensive condominium litigation experience includes cases involving condominium development rights, enforcement of condominium covenants and rules, construction defects, land use and zoning issues, and insurance disputes. Ed is licensed in New Hampshire and Rhode Island as well as Massachusetts and has the unique distinction of having appeared before the Supreme Courts in all three states on condominium issues. He is a member of the prestigious Community Association College of Community Association Lawyers (“CCAL”), has served several terms as co-chair of the Community Associations Institute of New England’s Rhode Island Legislative Action Committee, and currently serves on the Board of Directors for CAI-NE and the National Board of Directors for CCAL. He has been named a Massachusetts and New England Superlawyer for five consecutive years.
Ed is part of an experienced MEEB team that includes 19 attorneys and 18 support staff, who specialize in all aspects of condominium law, representing condominium and homeowner associations, condominium developers and condominium lenders. MEEB’s practice also includes commercial and residential real estate development, commercial lending, zoning, insurance and affordable housing.
Although many of our attorneys have developed specialized practices, all consider themselves condominium attorneys first — a key factor in the growth of our firm, which now represents 4,000 condominium communities in Massachusetts, New Hampshire and Rhode Island.
Our partners continue to play an active role in the condominium industry. Stephen Marcus and Richard Brooks, two founding partners, are past presidents of CAI-New England. Richard, who is probably best known for his role in securing municipal services for condominiums in many New England communities, continues to dole out advice on all aspects of condominium law and lectures frequently on condominium lien enforcement issues.
Stephen, who played a key role in developing the Massachusetts Superlien Law, has been active in CAI nationally as well. He recently chaired CAI’s National Amicus Team, which participates in litigation affecting condominiums all over the county and is a long-time member and past president of CAI’s College of Community Association Lawyers, which recently presented him with the Gurdon “Don” Buck lifetime achievement award – an honor the College has bestowed on only four other attorneys in the United States. In addition to handling specialized transactional work for condominiums (including document interpretation, drafting of amendments and enforcement of document requirements), Stephen represents condominium developers and lenders, advising both on a range of condominium legal issues.
Janet Aronson, co-chair of MEEB’s Lien Enforcement Department, is also a past president of CAI-New England and has served on the its Board and on various committees. Her work on CAI-NE’s Rhode Island and New Hampshire Legislative Action Committees helped to win approval of Superlien statutes in both states. Licensed in Massachusetts, New Hampshire and her home state of Rhode Island, Janet advises condominium associations in these three states on lien enforcement and a variety of complex, nitty-gritty legal issues.
Mark Einhorn, a member of the firm’s Transactional and Condominium Practice, serves on the Legislative Action Committees of both CAI-New England and the Boston Chapter of the Institute of Real Estate Management. He is also currently serving as co-chair of CAI-NE’s Seminar and Conference Committee, which is responsible for developing and presenting educational programs for community association board members and managers throughout New England. Mark spends his days advising condominium boards, drafting condominium documents and amendments and putting together complex deals for condominium associations and developers alike.
All of MEEB’s attorneys participate actively in CAI-NE, lecturing, contribute articles, and serve on various committees. Their involvement in CAI-NE underscores the commitment to the condominium community that has been a hallmark of MEEB since its founding, 24 years ago. Our commitment to condominium law and to providing the highest quality services to our clients has guided the firm throughout its history, and will continue to guide it in the future.
Relations between the developers who produce condominiums and the owners who purchase them are not always harmonious, to say the least. They clash over many issues, but disputes over retained developers’ rights and construction defects are among the most common. These disputes are also complex and often result in litigation.
One condominium community – Commercial Wharf in Cambridge – has actually spurred two seemingly contradictory court decisions on the retained rights issue.
In the first (Commercial Wharf East Condominium Association v. Waterfront Parking Corp.) the developer had retained the right to control and manage the association’s parking garage. The declaration specified that the developer had the right “to control and collect” parking fees, and that the association was responsible for “maintaining and managing” the facility. The association argued that this was unfair – the developer got all the revenue and the association incurred all the costs while receiving none of the income. But the Supreme Judicial Court (SJC) agreed with the Land Court: Fair or not, the details of the arrangement were fully disclosed in the Master Deed; owners who objected could have negotiated different terms or refused to buy.
In the more recent case, Commercial Wharf East Condominium Assoc. v. CDK Realty Trust, our firm represented an association that objected when the developer transferred to others the right he had retained to use common area in the basement.
No Right to Transfer
Relevant provisions in the Master Deed reserved the developer’s rights to use those areas ‘for storage, shop use and other purposes related thereto.” The association argued that the developer could not transfer the rights because he had not specifically reserved that right. The Land Court agreed. The developer had retained the right to use the areas, the court said, but had not reserved the right to transfer the use.
The two Commercial Wharf decisions convey two clear messages:
While buyers should certainly review the documents before they buy, in this case, I think, the SJC focused too much on the disclosure of the parking arrangement and not enough on its equity.
The Developer’s View
There are at least two sides to every issue, however. And our firm, which represents both developers and condominium associations (though, obviously, not in the same disputes) has a good understanding of both perspectives. There is no question that buyers sometimes have good reason to complain about what developers do and don’t do.
But developers incur sizable risks – financial and otherwise – and so have good reason to maintain control over a project as long as necessary to ensure its completion. They also have good reason to reserve future development and other rights – again to protect their investment. And when it comes to litigation risks, developers should use all the reasonable measures available to them to protect themselves, just as condominium associations and buyers should use all reasonable measures to protect their interests. The obvious problem: Developers and associations with which they are at odds will not necessarily define “reasonable” in the same way.
The first Commercial Wharf decision restated a principle the Supreme Judicial Court articulated clearly in a 2011 decision (Scully v. Tilley) – developers and boards have great flexibility to create requirements and restrictions in condominium communities, and those terms are enforceable as long as owners are aware of them.
In Commercial Wharf, the court noted correctly, owners could have discovered the parking arrangement and objected to it had they read the condominium documents before buying. There is no question that most buyers fail to perform that basic due diligence and that is certainly cause for concern. But it shouldn’t undermine the ability of developers to protect their interests by reserving rights, maintaining control, or creating financial arrangements that benefit them.
Dealing with Defects
When it comes to construction defects ― a common source of friction between developers and associations ─ it is obviously in the interests of both to avoid litigation. Toward that end, we advise developers to retain, possibly at their expense, an engineer acceptable to the board to evaluate the defects the association has identified and assess whether the developer’s proposed fixes are adequate.
We also suggest that developers include a mandatory arbitration requirement in the governing documents ― arbitration, in our view, providing a faster and far less expensive resolution than litigation. To ensure fairness, our provision specifies that:
The most effective anti-litigation strategy for developers, of course, is to avoid the construction defects that might trigger litigation. Most developers do not intentionally create defective buildings; defects typically result from errors, oversights, or shoddy construction work of which the developer is unaware.
To avoid these problems, or at least to discover them before they are baked into a finished structure, we advise developer clients to hire one of the engineering firms condo associations typically hire to produce a transition conditions report to oversee the construction.
The engineer doesn’t have to be on site every day, but can review the ongoing work often enough and closely enough to ensure that it is consistent with the project’s plans and specifications, and to spot problems when they can be corrected easily and inexpensively, without tearing apart a completed structure.
We also advise developers to bring in a professional condominium manager to prepare the initial budget for the condominium association. This will demonstrate a good faith effort to prepare a realistic budget based on projected operating costs. It may not avoid allegations that the developer has intentionally low-balled the condominium fees to facilitate sales, but it will provide a good defense against them.
For any questions regarding this article, please contact Stephen Marcus at email@example.com.
UPDATE ON MARIJUANA LAW: WHAT IS THE 6 MONTH DELAY? SHOULD CONDOMINIUMS AT LEAST BAN GROWING? DOES GROWING MARIJUANA POSE AN INSURANCE RISK?