A recent decision by the Massachusetts Appeals Court concerning a unit owner’s right to unilaterally expand her unit into exclusive use common area previously granted by virtue of the master deed has raised some uncertainty as to how condominium boards effectuate grants of limited common area, and more specifically, what rights unit owners have to alter existing exclusive use area.
If you are a developer or represent a developer it is important to make your intention with regard to the creation of the limited common area manifest in the master deed. If the grant of exclusive use common area is to include the right to fully enclose the space, state it clearly in the master deed.
In Cavalo v. Raspallo, 92 Mass.App.Ct. 350 (2017), the Appeals Court concluded that a unit owner may not “annex” exclusive use common area to her unit without the unanimous consent of the other unit owners holding a legal interest in that common area, despite the fact the area is for the exclusive use of the expanding unit owner. Cavalo involved a two-unit condominium in Dennis, Massachusetts where most of the common area was designated in the master deed as “exclusive use” for one unit or the other. In 2011, one-unit owner, Cavalo, constructed a 111 square-foot enclosed addition to her home which was situated entirely on her exclusive use area. The Raspallos challenged her ability to construct the addition and filed suit seeking injunctive relief both on their own behalf and derivatively on behalf of the association. After affording the parties an opportunity to resolve the matter privately, the trial court ultimately determined that the addition was not properly authorized, ordered its removal and required the Raspallos to pay attorneys’ fees to the association in connection with the derivative aspect of the claim.
The Appeals Court agreed with the trial court and appears to articulate a new standard requiring consent from 100% of all condominium unit owners when a unit owner seeks to expand their unit into previously granted exclusive use common area. The reasoning for the Court’s conclusion, however, is largely pinned on two cases from the 1990’s with substantially different factual scenarios, as well as certain amendments to M.G.L. c. 183A, s. 5 which govern the grants of exclusive use areas in a manner different than what underpins the Court’s concerns.
The Court initially relies upon Strauss v. Oyster River Condominium Trust, 417 Mass. 442 (1994) which involved a similar expansion of a unit into exclusive use common area, however in that circumstance the master deed purported to allow unit owners to expand their units into common area needing only the consent of the trustees. In Strauss, the area into which the owners expanding their units was not originally exclusive use area, which resulted in the need to recalculate percentage interest in the common areas for all other owners, which constituted a deprivation of property interests in violation of the master deed and c. 183A.
In Kaplan v. Boudreaux, 410 Mass. 435 (1991), the Court was confronted with similar circumstances in which the trustees attempted to implement an amendment to the condominium’s bylaws granting a single unit owner exclusive use over a portion of common area that was not originally granted in the master deed. As a result, other unit owners lost their right to use that portion of the common property, the deprivation of which created a need to recalculate the relative interest of all unit owners in the common area, something which would have required consent of 100% of the percentage interest.
Both Kaplan and Strauss involve instances where the common area over which the unit owner expanded their unit was not exclusive use area prior to the expansion, which ultimately deprived other owners of their interest in that portion of the common areas. In Cavalo, the unit owner already possessed the exclusive use area so it presents a legitimate question as to whether the other unit owner(s) are actually deprived of any property right, as they were not previously permitted to utilize that portion of the common area in the first instance. Further, as no unit owner was deprived of such a right to enjoy that portion of the common to which they previous possessed, the need to recalculate the percentage interests of all owners was not triggered. Nevertheless, the Court relied upon the reasoning in Strauss and Kaplan in concluding Cavalo’s actions were not permitted.
The Cavalo Court expressed concern that if it adopted Raspallo’s position then “condominium trustees could unilaterally assign common area to the exclusive use of a unit owner and then allow that unit owner to take fee simple possession of that former common area by building on it.” That concern, however, is belied by the specific statutory framework regarding grants of exclusive use area, which was modified in 1994, partially in response to Kaplan and Strauss. M.G.L. c. 183A, s. 5(b)(ii) requires that when a board desires to grant limited common area to a unit owner which was not otherwise granted in the original master deed it must obtain the consent of all unit owners abutting the area which will become exclusive use as well as 51% of all first mortgagees; such a grant cannot be made by the trustees acting alone, which effectively eliminates the concerns raised by the Cavalo Court. In fact, the 1994 amendments to Section 5(b), and the assumed underlying motivation for the changes, are irrelevant to the circumstances present in Cavalo because there was no grant of limited common area by the trustees.
Raspallo has filed an Application for Further Appellate Review (FAR) asking the SJC to consider whether the expansion of a unit occurring entirely within an existing exclusive use area appurtenant to that unit materially affects the ownership interests of other unit owners. If the SJC accepts the case for further review its decision may ultimately rest on grounds other than those articulated by the Appeals Court, as the issue may in fact turn on whether certain types of expansion are permitted over existing exclusive use areas (e.g. patios, decks, etc.), versus whether the ruling addresses only those enclosed expansions that are considered annexations of the exclusive use area, which would require consent from 100% of the unit owners, despite the fact no new limited common area is being created and no recalculation of percentage interests is required.
If you are a developer or represent a developer it is important to make your intention with regard to the creation of the limited common area manifest in the master deed. If the grant of exclusive use common area is to include the right to fully enclose the space, state it clearly in the master deed. If the intention is not to allow enclosure, but to allow something more than the maintenance of unimproved open space, identify in the master deed with as much precision as possible the unilateral rights possessed by the unit owner in such regard;
If you are a condominium board or a manager advising a board that is considering granting a unit owner exclusive rights to occupy the common area, but without the addition of elements which enclose otherwise open common area land, whether it simply be to pass and re-pass through an opening in a common area wall for the purposes of joining two units or to allow unenclosed construction on a deck constructed on exclusive use common area, consider granting both an easement and creating limited common area under 183A Section 5(b)(2)(i)&(ii) and be specific in regard to what the unit owner can and cannot do with and on the exclusive use area. In such cases, the circumstances can be very different, and the board should include, with the advice of counsel, such conditions as are appropriate (including conditions identified below when advisable); and
If the intention is to allow a unit owner the right to fully enclose and effectively incorporate a portion of unimproved exclusive use common area as part of an owner's unit, the safest approach is to get 100% of the unit owners to approve along with consent from the requisite percentage of first mortgagees.
If, on the other hand, the decision is made to rely on the power granted to the organization of unit owners in the statute, without 100% of the unit owners, then the board should:
a. Review the master deed to determine if such grant is inconsistent with other provisions in the governing documents;
b. Check with its insurance agent to ensure that the elements of the structure can be, and are insured and include in the grant an obligation on the part of the unit owner to reimburse the board for any costs associated with same;
c. Include in the grant a signed acknowledgement that the board is not guaranteeing the efficacy of any such grant and that the unit owner does not rely on the board and accepts fully the risk associated with the contemplated construction and agrees to pay to remove same and restore the common area should a court determine the construction violates the law; and
d. include in the grant an acknowledgement by the unit owner of its responsibility to pay any costs incurred by the association in connection with the improvement
There are many other issues of concern associated with a unit owner performing construction on the common area including the need to ensure the construction is good and workmanlike, insuring the structure during building operations, liability and workers' compensation insurance, architectural integrity, etc. which go beyond the simple exercise of the power to grant the easement or create the limited common area-and go beyond the subject matter of this article-which should be reviewed in detail with counsel in connection with any such undertaking.