Land Court Rules in Favor of Condominium Association in percentage Interest Challenge by Affordable Unit Owners

Published on: October 15, 2010

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).

The case created much controversy and some believe that it was the impetus for the new legislation. The controversy has been created by developer inconsistency in setting percentages at condominiums containing affordable units. Nearly every new condominium project in Boston and surrounding areas have some affordable units. Some developers take the affordability restrictions into account and lower the percentages. Others do not, reasoning that the restrictions are limited in time or are artificial value limitations, or that it is unfair to allow certain unit owners to pay less to maintain the common areas, simply because of an affordability or 40B designation on their units.

In this case, the Land Court, while applying a 20 year statute of limitations to the claims (the unit owners made it in just under the 20 year time period) rejected the affordable unit owners claims to reduce their percentages and get back 20 years in condominium fees, primarily on the grounds of equitable estoppel. The Land Court reasoned that these unit owners all knowingly signed a disclosure statement setting forth what their percentage interest was going to be in light of the affordability restriction that was going to expire in 30 years. The Land Court held that the affordable unit owners received and availed themselves of the benefits of the higher percentage (i.e. voting rights, etc.) during the past twenty years, and were now only trying to shed themselves of the concomitant payment burden after the fact, and ultimately that such a result would be inequitable and unfair to all of the unit owners, especially where the affordability restrictions were going to expire in 8 years.

The Court also reasoned that the Affordable Unit Owners had not even submitted necessary expert testimony on the issue of value, so the Court could not possibly rule in their favor in any event.

A copy of the Land Courts Decision can be accessed via the following link. The Association and some of its unit owners in this case were represented by MEEB Attorneys Edmund A. Allcock and Jennifer Barnett.