LAND COURT RULES IN FAVOR OF CONDOMINIUM ASSOCIATION IN PERCENTAGE CHALLENGE BY AFFORDABLE UNIT OWNERS
On October 7, 2010, Judge Trombly of the Massachusetts Land Court issued a much anticipated decision in a case involving the interplay between setting of percentage interest under the Condominium Act and affordable housing. In this case, certain owners, who had affordable restrictions on their units because they bought into the condominium via a Boston Redevelopment Authority Affordable Housing Program in 1988, sued the condominium board and all of the other unit owners, nearly 20 years later, contending that their percentages were too high, and that as a result they overpaid condominium fees for the last 20 years. The affordable unit owners contended that their percentages (and hence their condominium fees) should have been lower because the Condominium Act mandates that percentage interests be established according to relative fair values at the time of the creation of the Condominium (the Condominium Act was amended to provide more flexibility on this particular issue while the decision was pending and was not a factor in the Court's Decision).
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SUPERIOR COURT RULES THAT MECHANICS LIENS CANNOT ATTACH TO COMMON AREAS
On September 24, 2010, the Norfolk Superior Court ruled in three separate (but consolidated) cases brought by three separate contractors against a condominium trust, that mechanics liens imposed by contractors are inapplicable in the condominium context and cannot be utilized to attach common areas and/or secure contractor claims for non-payment. The case involved 3 subcontractors who were not paid by a general contractor hired by the condominium trust to perform work at a condominium. The general contractor went bankrupt towards the end of the project and did not fully pay the subcontractors. With no chance of a recovery in bankruptcy, the subcontractors filed statutory mechanics liens against the condominium building and then filed lawsuits to enforce the liens against the condominium trust. The subcontractors also asserted claims for unjust enrichment against the Condominium Trust (i.e. that the Condominium Trust should pay the subcontractors since the Condominium Trust received the benefit of the work performed on the building).
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SECURITY CONCERNS ARE UNDERSTANDABLE BUT A COMMUNITY ASSOCIATION'S OBLIGATIONS ARE LIMITED
Community association boards and managers spend a lot of time worrying about legal liability, and with good reason. Multi-million-dollar awards to residents who sue their associations for failing to provide adequate security are hard to ignore. So are statistics such as these: The cost of settling a negligent security claim averages between $500,000 and $600,000, according to some industry estimates; the average jury award to plaintiffs who allege security breaches by property owners is more than $1 million; and the cost of just defending these claims is $100,000.
Those are scary numbers, to be sure. But they shouldn't scare boards into doing more than they are required to do to provide security in their communities.
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