CONDOMINIUM SUCCESSFULLY CHALLENGES DEVELOPER'S TRANSFER OF RESERVATION OF RIGHTS

It is not unheard of for a condominium developer to reserve the right to use a portion of the condominium property after the condominium is completed.  For example, in Commercial Wharf East Condominium Association v.  Waterfront Parking Corp., 407 Mass. 123 (1990), the Massachusetts Supreme Judicial Court upheld the right of a developer to control and manage a parking business on condominium land.  The Court ruled that the developer’s reserved rights (which had been transferred to a third-party parking management company) were stated in the condominium’s Master Deed, and therefore the unit owners were properly on notice that the developer had enforceable easement rights to manage parking on the condominium’s land.But a developer’s reserved right to use condominium property is not always fully enforceable.  In a new case brought in the Massachusetts Land Court, Commercial Wharf East Condominium Association v. CDK Realty Trust, et al., the Commercial Wharf East Condominium Association (represented by MEEB) challenged the developer’s ability to transfer its rights to use the condominium’s basement areas.   Certain provisions of the condominium Master Deed reserved the developer’s rights to use the basement areas “for storage, shop use and other purposes related thereto.”  After completion of the condominium, the developer attempted to convey its basement rights to a third-party with a written “Grant of Rights” that was recorded with the Registry of Deeds.The Land Court found in the Association’s favor and ruled that the developer’s attempt to convey its basement rights to a third-party was not legally valid.  The court considered the words used in the Master Deed, which reserved the basement rights to the developer but did not indicate such rights could pass to the developer’s successors.  The court concluded that the basement rights were likely intended merely to facilitate the developer’s creation of the condominium and other business activities on the site.  Accordingly, the court entered a judgment prohibiting the developer’s successors from using the condominium basement areas.The Land Court decision is a good reminder that a developer’s reservation of rights to use condominium land may be subject to a challenge.  In such circumstances, the condominium is well advised to consult with its attorney for a review of the condominium’s governing documents to determine whether the developer—or its successor—is acting within its rights.For a copy of the Commercial Wharf East Condominium Assoc. v. CDK Realty Trust, et al Order [click here].