SUPERIOR COURT RULES THAT HOMEOWNER’S ASSOCIATION IS NOT TERMINATED BY THE RESTRICTION STATUTE

Published on: April 18, 2011

On March 30, 2011, the Essex Superior Court ruled that the One Salem Street Improvement Association, a homeowners association governing a 45 lot subdivision in Swampscott was not terminated by the Massachusetts Restriction Statute.  While homeowners associations (sometimes called HOAs) are not as popular in the Northeast as they are in other regions of the Country, here condominiums seem to be the preferred choice of developers for creating ownership of common land and shared facilities, there are still several HOAs in Massachusetts, Rhode Island and New Hampshire.  More often than not the HOA is created to own a single shared facility common to all of the subdivision lot owners such as a water treatment facility, a drainage facility or a roadway.  In this case, the HOA owned all of the internal subdivision roads, some recreational areas, a swimming pool and tennis court.  Additionally, in this instance, the HOA imposed restrictions (much like a condominium might) relative to landscaping and architectural controls (e.g. colors and shades of paint, building additions, size, etc.).  Again, similar to a condominium, the HOA had elected directors, a budget and assessed common charges to pay for maintenance of the shared facilities, insurance, etc.

One unit owner refused to pay his share of the assessment.  The HOA commenced suit for recovery of the assessment.  The unit owner counterclaimed arguing that the HOA had expired in its entirety under the so-called Massachusetts Restriction Statute, M.G.L. c. 184 §§ 23, 26-30.  The Massachusetts Restriction Statute, as its name implies, was enacted to cause “obsolete” deed restrictions (with certain exceptions) contained in deeds to expire after thirty (30) years unless properly extended.  While the Massachusetts Supreme Judicial Court in the case of Johnson v. Keith, 368 Mass. 316 (1975) held that the Restriction Statute does not apply to Condominiums, that holding has not been extended to HOAs.

In this case, the HOA argued that the holding in Johnson v. Keith should be extended to HOAs as they are functional equivalents of condominiums, just without the benefits of a condominium act.  In Massachusetts, HOAs are not governed or regulated by any act.  Other states regulate them under multiple or even combined statutes.  In any event, the HOA in this case argued that the logic that that was the basis for the Supreme Judicial Court’s holding in Johnson v. Keith should be extended to afford the same protection (from the restriction statute) to HOAs.  The HOA also argued alternatively, that the HOA Restrictions had been properly extended under the Restriction Statute.  The HOA also argued in the alternative, that even if certain restrictions (i.e. don’t paint your house yellow) had expired under the Restriction Statute, the remainder of the scheme remained intact, as the obligation to maintain the roads, pool and other common area property, including the obligation to pay HOA dues, were affirmative covenants, sometimes called “equitable servitudes”, which by their nature are not “restrictions” that could be terminated or expire under the Restriction Statute.

The Superior Court while reluctant to provide the same categorical exemption from the application of the Restriction Statute afforded to condominiums to HOAs did hold that (1) the restrictions were properly extended under the Restriction Statute, so they remained in full force and effect, and (2) that the Restriction Statute did not terminate any affirmative obligations, including the obligation to maintain and pay HOA dues.  A copy of the Decision can be obtained via the link.  The case was litigated primarily by MEEB attorneys William DeBear and Ed Allcock.

The decision on One Salem Street v. Joseph Marchese, Jr., can be found by clicking here.

If you would like further information please contact Ed Allcock at eallcock@meeb.com or at 781-843-5000 (150).