Condo developer not shielded from suit by hurdles written into bylaws
January 24, 2018
Condo developers in Cambridge tried to cut back the big risk of lawsuits coming back against them from the Condominium Unit Owner’s Association by putting into the Condo docs hurdles for bringing suit.
In the case Trustees of the Cambridge Point Condominium Trust v Cambridge Point LLC (SJC 2018), the bylaws of a 42 unit association said no suit can be brought for common area problems unless the unit owners saw the complaint, saw the legal fees and understood an assessment would come for those fees and 80% agreed in writing to go ahead with the lawsuit. The developer team held onto over 20% of the units and held the power to veto any suit proposed.
As is so often the case – unit owners complained of pervasive water infiltration through the building envelope. The Association hired an expert who pegged the repair cost at $3M. The Condo Trustees sent a complaint against the developers to all unit owners but the developer team had kept enough units to block permission to sue.
The trustees of the Unit Owners Association sued the developer for costs of repair and asked the Court to strike down the bylaw requiring 80% of condominium unit owners’ consent.
The Trustees asked the Court to declare the provision void – the court did.
Condominium law assigns unit owner associations responsibilities including the right to decide whom to sue. The developers here, with their high bar to suit provision, shielded themselves from any suit by hanging onto enough units to block an authorizing vote.
The whole idea of this super majority for bringing suit unlawfully circumscribes the ability of the Condo Trustees to perform their duties under the condominium law the SJC said.
The organization of unit owners has the exclusive right to bring litigation and the condo docs can’t trim that away entirely. While condo laws may allow some restriction on unit owner association autonomy, this provision – effectively stripping away the right to sue the developer – just went too far.
Despite the wide latitude of contracting parties, contracts against public policy, like this one, are unenforceable.
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