MA SUPREME JUDICIAL COURT CLARIFIES STATUTE OF REPOSE IN CONDOMINIUM CONSTRUCTION DEFECT LITIGATION

Published on: November 24, 2020

Today, the Massachusetts Supreme Judicial Court in D’Allessandro v. Lennar Hingham Holdings, LLC has ruled that in a phased condominium, the six (6) year statute of repose begins to run upon substantial completion of each building/improvement.  For the Decision [click here].  The Decision follows an earlier ruling by the Massachusetts Federal Court that the statute of repose in certain “integrated” phased condominiums does not begin to run until the entire project is substantially completed.  Ed Allcock and Norm Orban of MEEB filed an amicus brief on behalf of CAI’s New England Chapter in favor of the integrated approach.  The basis for advocacy of the integrated approach, was the potential unfairness that can result in phased projects where the developer retains control of the association for many years and the mere passage of time allows the statute of repose to run.

The Supreme Court addressed that concern with three (3) responses.  First the Court in footnote 16 of its decision pointed out that a unit owner elected board could always assert a breach of fiduciary duty claim against developer appointed trustees who allow statutes of repose to lapse during the period of declarant control.  The Court also pointed out that such a claim was asserted in this case.  Secondly and also in a footnote, the Court indicated that unit owners could get together and assert derivative claims against a developer prior to the running of the statute of repose.  While that may be true, the practicality of unit owners asserting derivative claims for construction defects at a developer controlled condominium is a difficult proposition.  The third response, was that the conflict posed by the statute of repose and extended developer control in phased projects is best remedied by the legislature.  CAI-NE has been working on that issue as well.  Specifically, CAI-NE has proposed legislation that would address this very issue in Massachusetts.   CAI-NE’s bill has passed the Massachusetts House of Representatives and is awaiting passage in the Senate.  MEEB’s Matt Gaines is co-chair of the CAI-NE’s Massachusetts Legislative Action Committee and is working tirelessly to move this legislation through and he intends to use the Court’s decision as a basis for legislative action on this particular issue.  As President of the CAI-NE Chapter, I will work with Matt Gaines to help facilitate remedial legislation on this important issue.

So, what are the takeaways from the Court’s Decision?  The first takeaway is be aware of the outside 6 year limit to bring claims for construction defects.  Second, understand that in a phased condominium, that 6 year rule is going to run building to building not at completion of the entire development.  Third, consult and experienced condominium lawyer and litigator to understand and advise on construction defect claims (as these after all are your homes and defects cost money to fix).

We cannot emphasize the importance of a legal consult enough, as there are other deadlines, like a three (3) year statute of limitations which works in tandem with the six (6) year statute of repose and relates to awareness of the condition/defect, whereas the statute of repose relates to an absolute date of substantial completion.  The Court also pointed to other possible alternatives or workarounds like derivative lawsuits and breach of fiduciary duty claims.  The law in this area is complex and defects can run millions of dollars (and after all these are people’s homes) and you can tell just from this one case and the various parties that were interested in it and filed amicus (friend of the court) briefs that the parties realize there is a lot at stake both in terms of legal certainty and dollars in terms of construction defects.  It always comes down to money with property development.  We feel the more condominium owners and trustees know and understand about the process the better they will be able to advocate for themselves and their homes when problems arise.

If you have any questions about this article, please contact Ed Allcock (eallcock@meeb.com) or Norm Orban (norban@meeb.com).

For a copy of the Decision [click here].