THE BOARD’S RIGHT NOT TO BUILD

Published on: April 15, 2016

Recently, this question was posed: what is the extent of a condominium board’s obligation to repair a defect in the common area left behind by the developer? For purposes of this discussion, let us assume there are two broad classes of “defect”: (1) a problem with the design or construction of a common area element that is causing damage to other common area or individual units; and (2) the absence of a common area element that the developer agreed to create, e.g., a walking path. At first glance, the answer seems obvious. Under section 10 of the Condominium Act, the organization of unit owners is required to maintain common areas in the manner set forth in the governing documents. So it has to fix anything the developer did wrong. Right? One out-of-state case may provide another way of looking at these scenarios.

In a Missouri case, Wescott v. Burtonwood Manor Condominium Association Board of Managers, 743 S.W.2d 555 (1987), there was flooding into certain units as a result of the developer’s installation of an undersized sewer and the city’s approval of large scale construction in the area. The owners whose units were flooded installed retaining walls and glass greenhouse covers on common area adjacent to their unit to stop the flooding and sued the board for damages. The Board counterclaimed for the removal of the flood retaining walls and glass greenhouse covers from the common areas. The Court denied the unit owners’ claims and required them to remove the retaining walls and greenhouse covers. The Court held that the Board was not obligated to protect the owners’ individual units from damage that the Board or other unit owners did not cause.

In reaching its holding, the Court focused on the duties created by the condominium by-laws, which contained a general duty to maintain common areas and collect common expenses to be used for shared costs. The Court could find nothing in the by-laws that created a duty requiring the Board to protect individual units from damage caused by the developer, or any other third party. This case suggests that there is a limit to the association’s liability for damage caused by a defect in the common area. The Court looked to what entity was truly responsible for the problem, in this instance, the developer.

In Massachusetts, unit owners likely can sue the board for common area defects, even if created by the developer. See Berish v. Bornstein, 437 Mass. 252, 265, n. 26 (2002). Thus, the board should always act promptly when it has notice of a defect in the common area, however, the obligation to act reasonably is not tantamount to being an insurer of a building.

So it seems fairly clear that an association has to take reasonable steps to address common area defects that are causing damage to units or other common area, regardless of the primary cause. Does this obligation extend to our second class of damages? Does an association “step into the developers’ shoes” with respect to any failure to create common area? This answer is less clear.

In the walking path hypothetical, a developer records plans and signs purchase and sale agreements that show there will be walking paths on the condominium common area, to be maintained by the association like all common area. Except, the developer builds the condominium and landscapes the grounds, but never creates the walking paths. Several unit owners bought their units relying on their ability to use these paths, and they want them created. The developer is either unwilling or unable to make good on its promises (keeping in mind that a unit owner always has a right to sue the developer for breach of contract, assuming one exists and that the unit owner purchased directly from the developer). There is arguably a defect, i.e., there is a portion of the common area that is not as it should be, except, unlike flooding, this defect is not causing any damage. What is the association’s obligation?

To be clear, there may be other circumstances used to compel a board to undertake certain construction (e.g., a special permit). However, assuming there are no special circumstances, the association may not have to make good on the developer’s promises. Massachusetts courts have not addressed this issue head on (and it does not seem like any other state has either). We have to take our guidance from the finite body of case law that talks about condominium common area defects generally.

In Aldrich v. ADD Inc., 437 Mass. 213 (2002), the Massachusetts Supreme Judicial Court (SJC) considered whether an association was the developer’s successor, such that it stepped into the developer’s shoes after the master deed was recorded and was bound by the developer’s agreement with the condominium architect. The SJC held that the filing of the master deed did not make the association the developer’s successor. The same logic could apply where the developer contracted with a unit owner to create a walking path. The recording of a master deed, at least according to Aldrich, does not mean the association takes on the contractual responsibilities of the developer. If the lack of a path is not harming the physical integrity of a unit or other common area, should the association be required to incur the cost of satisfying what one (or many) individuals privately contracted for?  Generally, a condominium board is required to manage and maintain the common area but not to develop or complete the common area.  Therefore, if a walking path were created, and it thereafter fails, there would be a stronger argument that a board has a duty to repair it.  However, where a declarant simply fails to construct an amenity the conclusion is less clear.  In such circumstances – and, again, assuming the condition is not causing harm to other common areas or units – there is a much higher likelihood that a reviewing court will defer to the reasonable judgment of the board as to whether to install the element.

There is no clear answer, and, like every other aspect of condominium management, it all depends on the circumstances.  However, there are no cases in Massachusetts which adopt the rationale of the Wescott case.  Cases in Massachusetts tend to support the conclusion that where the declarant fails to properly construct common area elements and that defective construction threatens to cause or does cause harm to other common areas and/or units, the Board has a right and/or duty to repair.  Absent such right, an association could have no basis to recover damages for the construction defects.

Please contact Haley Byron at hbyron@meeb.com regarding this article.