August 2012
In This Issue:
Private Road Isn't Public Property Solely by Public Use
Association Not Authorized to Levy Punitive Fines
Board Gets Limited Common Elements Control when Developer's Last Unit Sells
Marina Bulkhead Not Part of Condominium Common Area
Playground Doesnít Violate Zoning Regulations
Owner Not Liable for Assessments for Cable TV Service
Owner Entitled to Setoff Counterclaim Because Association Didnít Maintain Common Elements
Owner Canít Rent Condo in Excess of Established Limits
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Private Road Isn't Public Property Solely by Public Use

Dykes v. Friends of the C.C.C. Road, No. 101630, Va. Supr. Ct., Jan. 13, 2012

State and Local Legislation and Regulations: The Virginia Supreme Court ruled that the county government’s recognition of the public’s long and continuous use of a rural road located on private property did not create a public right-of-way.

David Dykes and Elizabeth Burch (property owners) own three tracts of land in Highland County, Va., that comprise more than 500 acres. A gravel road known as the C.C.C. Road runs through the property. In 2009, the owners constructed pole gates to obstruct public access to the C.C.C. Road. They provided gate keys to nearby landowners who accessed their land along the road, to the sheriff’s office and to a utility company and offered keys to the forestry service.

Friends of the C.C.C. Road (association) is an unincorporated association that represents the general public. The association sued the property owners, seeking an injunction (a court order stopping a party from doing something prior to a trial) requiring them to remove the gates and allow the general public access to the road. They alleged that the property owners “knew or should have known that the C.C.C. Road [is] a public road,” and that they had blocked access to the road where it intersected with two nearby public roads. The property owners denied that the C.C.C. Road was a public road. They claimed the road had never become public by operation of law (a right or liability has been created for a party by existing legal principles) or as a result of an express or implied dedication (a public easement formally granted by the owner (express) or created through a history of use (implied)) and acceptance.

The trial court found the association failed to prove a prescriptive easement (an easement awarded to a party through their continued use of the easement without permission of the owner for a set period of time), but it held that a public right-of-way was created through recognition (acknowledgement that something was authorized to be done) by the county because of the public’s long and continuous use of the road. The court granted injunctive relief to the association requiring the property owners to remove the gates and allow the general public to use the road. Both parties appealed.

On appeal to the Virginia Supreme Court (the state’s appellate court), the parties stipulated that there was no evidence in the record that the property owners or their predecessors in title ever made a formal offer to dedicate the road to public use or of a formal acceptance of any such offer by the government to maintain the road.

The supreme court observed that landowners in rural areas frequently allow roads running through their property to be opened without intending a dedication to the public. Moreover, the county government might not have any intention to accept the road and be responsible for its maintenance. Thus, before a rural road can be dedicated, there must be a formal acceptance by the public.

The court also found that the trial court erred in finding that a public right-of-way was established and recognized by the county through the public’s long and continuous use of the road. The court noted that, “Virginia law simply does not allow for a conversion of private property to public property solely by public use.”

Finally, the court noted that it cannot be inferred through use alone “that an individual makes a gift of his property to the public from an equivocal act, which equally proves an intention to grant a revocable license. The public is not injured by this view of the subject. It has the accommodation of the road as long as the license continues, and after the license is revoked, the road may be made public if the public convenience requires it, by making compensation to the owner.”

To acquire a right-of-way over a road by prescription, the claimant alone must assert the exclusive right to the easement. While a land owner’s use of a roadway that runs through the immediate area of his or her property is the same as the public’s use of the roadway, the essential element of exclusive rights to the roadway is lacking because use of the roadway depends on the enjoyment of similar rights by others; therefore no rights by prescription arise.

Accordingly, the supreme court held that the trial court’s ruling was in error insofar as allowing a prescriptive easement to be created in favor of the general public; however, its ruling that a prescription had not been proven was nonetheless correct in light of the supreme court’s finding that there had been no acceptance.

The supreme court reversed the trial court’s injunction requiring the property owners to remove the pole gates to allow public access to the road.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

Association Not Authorized to Levy Punitive Fines

Fairfax County Redevelopment and Housing Authority v. Shadowood Condominium Association, No. CL-2010-13282, Va. Cir. Ct., May 12, 2011

Assessments/Covenants Enforcement/Developmental Rights: A Virginia court held that a condominium association could not exceed its limited authority to levy assessments for any purpose unrelated to maintaining or operating the common elements.

Fairfax County Redevelopment and Housing Authority (authority) is a political subdivision of the Commonwealth of Virginia; the authority owns several units in Shadowood Condominiums in Fairfax, Va. that are used for public housing for low income families.

The Shadowood Condominium Association (association) is responsible for managing Shadowood, according to the master deed and the association’s bylaws. All unit owners must pay monthly assessments to cover the expenses necessary to operate, maintain, repair or improve the common elements.

The authority sued the association in 2010, alleging that the association assessed more than $20,000 in fines against the authority for failing to submit certain paperwork properly and for purported rules violations by one or more of the authority’s tenants. It also alleged that the association attempted to suspend its unit-owner’s rights and privileges because it failed to pay the fines.

The association contended that it had authority under its master deed and bylaws to levy the fines for violating the governing documents. The authority argued that under the Virginia Condominium Act (act) and the association’s governing documents, the association was not authorized to levy fines and suspend unit owners’ privileges.

The court noted that the condominium’s governing documents define the extent of the condominium association’s powers. Under the act, “[t]he power exercised by [an] [a]ssociation is contractual in nature and is the creature of the condominium documents to which all unit owners subjected themselves in purchasing their units.”

Based on the court’s review of the condominium documents, it concluded that the fines assessed against the authority were beyond the association’s authority as defined in the master deed and bylaws. The court found that the fines were not for maintaining, repairing or improving the property’s common elements and, therefore, were improperly levied.

The master deed provides that the association “shall function solely on a not-for-profit basis; no common expenses or other sums shall be assessed, collected, retained or expended other than for the maintenance, repair, replacement or improvement of the general common elements; and the Association shall undertake no activity unless it be directed to those ends . . .” The court interpreted this paragraph to mean the association could not levy assessments for any purpose unrelated to maintaining or operating the common elements.

The association’s bylaws, which also grant certain authority to the association, provide that “[t]he Board of Directors shall have such authority and responsibility as is necessary for the administration of the affairs of the Association and may do all such acts and things [as] are not by law, by the Master Deed, or by these By-Laws prohibited them.” In addition, the bylaws provide that the board of directors is responsible for the care, upkeep and improvement of the common elements; establishing the annual budget and setting the amount of assessments; collecting assessments; and interpreting and enforcing the terms of the master deed and bylaws. The court interpreted these provisions to also limit the association’s power to levy assessments only for maintenance of the common area and operation of the property.

The court found no indication in the governing documents that any assessments could be collected for purposes unrelated to the maintenance of common elements and operation of the property. It concluded that the assessments levied by the association were more consistent with punitive fines than charges necessary to operate the Shadowood property.

The act limits the association’s authority to those powers provided in the condominium’s governing documents. Therefore, the association did not have the right to assess punitive fines. Accordingly, the court granted the authority’s motion for summary judgment (a determination made by a court without a trial).

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Board Gets Limited Common Elements Control when Developer's Last Unit Sells

In re: Tarragon Corporation, No. 09-10555 (DHS), Adv. Pro. No.: 10-01618 (DHS), U.S. Bankr. Ct., Dist. N.J., March 13, 2012

Assessments/Covenants Enforcement: A New Jersey bankruptcy court held that a condominium association held the right to assign and collect fees for storage bins as condominium limited common elements subsequent to the developer’s sale of its last unit.

One Hudson Park Condominium is a 15-story residential condominium located in Edgewater, N.J. Tarragon Corporation developed the condominium, served as its sponsor, and created One Hudson Park Condominium Association, Inc. (association), which managed the condominium’s operations and maintained its facilities.

In 2007, when construction was complete, the condominium consisted of 168 residential units, one commercial unit, 258 parking spaces, and 148 storage bins. In 2009, Tarragon filed for bankruptcy. As tenant and owner of the commercial unit from May 2010 until August 2011, Tarragon was assessed condominium fees and penalties in the amount of $64,405.48. The majority of the fees were assessed prior to the bankruptcy court confirming Tarragon’s bankruptcy plan.

Tarragon sold the commercial unit in November 2011. With all units sold, the unit owners became the only class of members in the association. Leading up to the sale of the commercial unit, a dispute arose between Tarragon and the association over the ownership and assignment of certain limited common elements, including parking spaces located around the commercial unit and storage bins located on the property.

The association sued Tarragon in bankruptcy court, seeking a ruling from the court that the association had the exclusive right to manage and assign the storage bins and that Tarragon was required to pay assessments incurred on the commercial unit after the bankruptcy filing.

The association argued that the storage bins were the exclusive property of the condominium, and the association was solely responsible for managing them. The association claimed it therefore had the right to assign the storage bins to individual unit owners and to collect the accompanying fees. It stated that following Tarragon’s sale of the commercial unit, control of common elements and property transferred to the association.

The New Jersey Condominium Act (act) provides that within 60 days from the time unit owners elect a majority of board members, “the developer shall deliver to the association all property of the unit owners and of the association held or controlled by the developer. . .”

Pursuant to the association’s master deed, easements granted to the developer for access to the common elements are effective only “until after the date the last Unit is conveyed…” It further provides that the association holds a “perpetual and exclusive easement for the maintenance of any Common Elements, Limited Common Elements or Reserved Common Elements, or of any present or future improvements on the Property (other than Units), including those which may now or hereafter encroach upon a Unit . . . “

Based on the foregoing provisions of the act and the master deed, the court found that control of the association—including control of the limited common elements, i.e., exercising all rights and duties related to the storage bins (assigning and collecting fees)—should have transferred to the association either when Tarragon filed its bankruptcy petition or when it sold the last unit in the building.

The association alleged that Tarragon, as past tenants of the commercial unit, owed the assessments that accrued after Tarragon filed its bankruptcy petition. The association argued that condominium fees incurred by a condominium unit owner  after filing for bankruptcy are not dischargeable in bankruptcy. Tarragon claimed the bankruptcy statute applied only to individual debtors.

The court found that the association’s lien was not effective until it was properly recorded. The association failed to record its lien against the commercial unit while it was owned by Tarragon; and, therefore, the association was not a secured lien holder. The court noted, moreover, that the association could have filed an administrative claim before the bar date (deadline) that would have entitled it to repayment under the bankruptcy plan. Also, even as a secured creditor, it may have been possible for the association to vote against bankruptcy confirmation. Since the association failed to execute any of these actions, the court found it was not entitled to repayment of the fees assessed before the bankruptcy plan was confirmed

The association’s motion was granted in part and denied in part. The court held that the association had the right to assign and collect fees for the remaining storage bins as limited common elements, but it was not entitled to collect post bankruptcy petition fees from Tarragon.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Marina Bulkhead Not Part of Condominium Common Area

Inland Harbor Homeowners Association, Inc. v. St. Josephs Marina, LLC, No. COA11-715, N.C. App. Ct., March 6, 2012

Covenants Enforcement: A North Carolina appeals court determined that a condominium association did not own a bulkhead constructed as a border between two adjacent tracts of land.

Inland Harbor Homeowners Association, Inc. (association) and St. Josephs Marina, LLC own adjacent land in Carolina Beach, N.C., on the western side of the Myrtle Cove Sound. Part of the property lies below the average high water mark and is completely submerged.

According to the title, BWT Enterprises, Inc. owned the property before the association and St. Josephs Marina owned it. In 1983, BWT owned a 5.8 acre tract of land adjacent to Myrtle Grove Sound (parent tract). Part of the parent tract was divided into two separate tracts. Tract 1 consisted of 1.44 acres and contained submerged land, and Tract 2 consisted of 2.7 acres of dry land. Between 1984 and 1985, BWT built a bulkhead that divided Tract 1 and Tract 2. In 1984, BWT recorded a condominium plat that identified the “bulkhead line,” common areas and future development. Shortly after recording the condominium plat, BWT recorded the declaration for Inland Harbor Condominiums Phase I. The declaration allotted part of Tract 1 to condominium ownership and future development.

BWT conveyed the parent tract to Inland Harbor Yacht Club Limited Partnership, subject to the declaration. The Yacht Club sold the tract to Branch Bank & Trust (BB&T) who subdivided and conveyed it in portions. The common areas in Tract 1 were conveyed to the association, and the remaining property was subsequently sold to St. Josephs Partners, LLC (partners).

In 2004, the association and partners entered into an agreement whereby the association would exchange .28 acres for .21 acres of land owned by the partners. The partners also agreed to construct a pool with amenities and perform other property maintenance. Thereafter, the partners began commercial development of the property. It rebuilt the bulkhead and constructed docks and marina facilities on the property. It applied for, and was granted by the state, an easement over the submerged land, with the boundaries running along the bulkhead.

The association believed it owned the bulkhead and believed the state had improperly granted the partners the easement. The association sued the partners, seeking a declaration of ownership of the bulkhead and judicial reformation of the property deed. The trial court granted summary judgment (a determination made by a court without a full trial) to the partners. The association appealed.

The association argued that both the declaration and condominium plat showed that the bulkhead was part of the common areas. The declaration stated Tract 1 “is to be deemed to include the structure of the bulkhead along which some of the boundary lines recited above lie.” The court noted that although this property description, standing alone, showed an intention to include the bulkhead in Tract 1, the condominium plat showed a contrary intention.

The “bulkhead line” and “common area” were clearly defined on the plat. The bulkhead was used as a boundary line and not included in the designated common area. The plat showed a clear intention to separate the bulkhead and the common area. The court concluded that the association failed to show it was BWT’s intention to convey the bulkhead with Tract 1.

“Where a deed fails to express the true intention of the parties, and that failure is due to the mutual mistake of the parties, or to the mistake of one party induced by fraud of the other, or to the mistake of the draftsman, the deed may be reformed to express the parties’ true intent.”

While preparing its legal case about bulkhead ownership, the association discovered it had mistakenly conveyed property to the partners in 2004. In its claim of mutual mistake, however, the association failed to offer evidence of the partners’ mistake.

The association’s affidavit proved it was aware in 2004 that the deed’s property description and the surveyor’s description were different, but both descriptions purported to convey the association’s .28 acres. The association relied on the description in the deed, and, unfortunately, gave more than the .28 acres it intended. Although this was convincing evidence of the association’s mistaken belief, the affidavit failed to provide evidence that the partners’ shared the mistaken belief at the time of the exchange. Accordingly, the association’s final argument was overruled. The trial court’s ruling of summary judgment was granted to the partners.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Playground Doesnít Violate Zoning Regulations

Mountain Brook Association, Inc. v. Zoning Board of Appeals of the Town of Wallingford, No. AC31617, Conn. App. Ct., Feb. 7, 2012

State and Local Legislation and Regulations: A Connecticut appeals court ruled that children’s recreational equipment erected on limited common areas adjacent to individual condominium units did not violate the town’s zoning regulations.

In 2006, the zoning board of the City of Wallingford, Conn., issued a cease and desist order to Mountain Brook Association, Inc. (association), notifying the association that several residents of Mountain Brook were in violation of the Wallingford zoning regulations because they had placed children’s recreational equipment, sheds and fences on limited common areas attached to their property.

The property is located within an open-space, planned residential district that was created according to Wallingford zoning regulations. Permitted land uses in the district are one-family, two-family and multi-family dwellings in principal buildings.

The zoning board determined that the association was in violation of the regulations because it had allowed residents to erect children’s recreational equipment, sheds and fences. Additionally, the residents had failed to obtain the required approval from the planning and zoning commission for the items. The board maintained that it permitted the items because they were to be community facilities for the use and enjoyment of an entire development.

The association appealed. The zoning board of appeals upheld the cease and desist order, and the association appealed to the trial court.

At trial, the zoning enforcement officer acknowledged that a survey had not been conducted to determine the precise equipment, shed and fence locations. He also acknowledged that most items were not in the district’s open space. Since the record did not support the appeals board’s vote to uphold the cease and desist order, the court granted the association’s appeal. The zoning board appealed the ruling.

The zoning board claimed that the trial court failed to interpret the relevant zoning regulations properly. The association maintained that the court properly concluded the zoning board’s decision was not supported by substantial evidence.  

Section 4.3.B.2.c of the Wallingford zoning regulations specifically permits, as a related accessory use to one-family, two-family and multi-family dwellings in the district, “[r]ecreation facilities limited to the use of individuals living on the premises.”

Section 4.3.D.11 states: “Swimming pools, tennis courts, and other recreational facilities shall be as centrally located as possible, protected with a suitable and safe fence, located at least 25 feet from any dwelling unit and shall not be located within any of the required setbacks.”

The court noted that zoning regulations, because they diminish common law property rights, cannot be interpreted to include or exclude by implication what is not clearly within their express terms. The court determined that, while the term “recreational facilities” could be interpreted very broadly, the drafters of the zoning regulation could not have meant to include all possible children’s play equipment. The court observed that children’s play sets would be far less disruptive to the landscape than, and not likely in the same category as, swimming pools and tennis courts.

Because the trial record provided no details regarding the children’s recreational equipment, there was no evidence that the goal of preserving open space, as set out in the regulations, was hindered or advanced. The appeals court concluded the zoning board’s determination that the children’s recreational equipment violated the zoning regulations was not reasonably supported by the evidence. The court, therefore, determined that the trial court properly sustained the association’s appeal with respect to the children’s recreational equipment.

The zoning board argued that a special permit is required before a shed or fence may be placed in a district. Since there was no evidence that any of the association members obtained a special permit prior to installing their sheds or fences, the court concluded that the sheds and fences were in violation of the regulations.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Owner Not Liable for Assessments for Cable TV Service

River Park House Owners Association v. Crumley, No. 1105 C.D. 2011, No. 1179 C.D. 2011, Pa. Commw. Ct., 03-06295-19-1, June 4, 2012

Association Operations: A Pennsylvania appeals court determined that a condominium association exceeded its authority by entering into a contract for cable television services and levying assessments against unit owners to cover the cost.

River Park House is a 354-unit residential condominium development in Philadelphia, Pa. The condominium is managed by River Park House Owners Association (association) and governed by the declaration and bylaws, as well as the Pennsylvania Uniform Condominium Act (act). William Crumley has owned and resided in one of the units since 1987.

In 2007, to replace an expiring cable television contract, the association entered into a contract with Comcast of Southeast Pennsylvania, LLC for cable television service. The contract required all residents to purchase cable in order for the entire building to obtain discounted cable fees.

Under the contract, the association would pay $43.95 per unit per month, effective January 2008. Because Crumley opposed the contract, he refused to pay the cable television fees but continued to pay the balance of the monthly common expense maintenance fees.

The association sued Crumley for unpaid assessments, late charges and legal fees, and a judgment was entered against him in municipal court. He appealed, and the matter went to an arbitration board, which reversed the municipal court decision. The association then appealed to the trial court.

The association argued that the contract was proper because under the act, the association had the power to enter into contracts; it entered into the cable contract in good faith, and the court should not disturb what it considered to be a common expense.

Association members who negotiated the contract for cable services testified that when the previous cable contract expired, rates had nearly doubled. At a closed meeting of the association’s executive council (council) in October 2007, Comcast offered a bulk rate contract, which meant that the association would pay a flat rate for the entire building. Because of the cost savings, the council decided to enter into the contract. Another meeting was held in January 2008, which was open to all unit owners. More than 100 people attended the meeting to voice their concerns about the contract. Of all the unit owners, Crumley was the only one not paying his portion of the monthly assessment attributed to cable service. As of January 2011, he owed $2,910.47.

Crumley stated that he refused to pay the monthly assessment for cable service, which he considered a luxury, because he did not have a choice of whether to purchase it. He said he did not believe the contract made his property more valuable or benefitted him at all.

The trial court found that the association acted in good faith when it entered into the contract for cable service, but exceeded its authority when it did so. Cable television service was not the type of common expense the association could assess. However, the trial court went on to state that, if the contract should be ratified by a majority of owners, Crumley would be bound by the contract moving forward. In addition, the trial court said that if a majority of unit owners approved the contract, Crumley could be held liable for all cable fees—past, present and future. Both parties appealed.

On appeal, the association argued that the council had the power under the act to enter into the contract because it was in the best interests of the residents. The appeals court found that acting in the best interests of the residents was not the issue. The question was: did the association have the authority to decide that a luxury service that did not benefit all residents was a legitimate common expense?

The act defines “common expenses” as expenditures made or liabilities incurred by the association plus contributions to reserves. The association’s bylaws provide that the budget will include “Common Expenses . . . (including by way of illustration and not limitation) . . . services, maintenance, repairs, replacements, landscaping . . . and all other Common Expenses) as deemed necessary by the Council...”

The appeals court agreed with the association that nothing in the act’s definition of common expenses would preclude the association from entering into a contract for bulk cable television services. However, the definition in the bylaws was narrower. Common expenses as described in the bylaws are related to matters regarding the “operational, health, maintenance, and safety decisions affecting all units of the building.” Because the decision to subscribe to cable television does not affect unit owners’ use and enjoyment of their units or common areas, the appeals court agreed with the trial court that cable television was not a common expense the association could levy under its bylaws.

Accordingly, the court affirmed the trial court’s decision that the association acted in good faith, but, nonetheless, was outside its scope of authority in entering into the cable services contract. The court further determined that the bylaws could be amended by a vote of the unit owners to authorize cable service as a common expense, but no bylaws amendment will permit cable costs to be retroactively assessed against Crumley.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Owner Entitled to Setoff Counterclaim Because Association Didnít Maintain Common Elements

Spanish Court Two Condominium Association v. Carlson, No. 2-11-0473, Ill. App. Ct., June 27, 2012

Powers of the Association/Covenants Enforcement/State and Local Legislation and Regulations: An Illinois appeals court ruled that a unit owner was entitled to plead affirmative defenses in response to a condominium association’s lawsuit against the owner for failing to pay assessments because the association failed to repair and maintain the common elements.

Lisa Carlson owned a unit in Spanish Court Two Condominium, located in Buffalo Grove, Ill. The Spanish Court Two Condominium Association (association) sued Carlson under the Illinois Forcible Entry and Detainer Act (Forcible Entry Act), seeking possession of her unit and an award of unpaid general and special assessments, late fees, costs and attorney’s fees.

Carlson filed a combined answer, affirmative defense (a defense that discloses new facts which, if proved, will defeat the plantiff's case) and counterclaim. She admitted that she had not paid assessments from August 2009 through January 2010. She denied, however, that she owed assessments inasmuch as the association had failed to maintain the roof over her top-floor unit properly and the unit had sustained water damage.

Carlson’s affirmative defenses claimed that the association’s neglect constituted a breach of the declaration covenant to maintain, repair and replace the common elements using the mandatory assessments collected from unit owners. As her first defense, she asserted that the association was prohibited by law from seeking past due assessments and late fees. As her second (and alternative) defense, she requested that the estimated cost of repairing the damage to her unit, between $6,000 and $10,000, be deducted from any monetary award against her. Based on the same allegations, Carlson counterclaimed for an award of damages between $6,000 and $10,000.

The association filed a motion to strike Carlson’s affirmative defenses and sever her counterclaim, arguing that her defenses and counterclaim were not allowed under the Forcible Entry Act because they were not “germane to the distinctive purposes of the proceedings.”

The trial court granted the association’s motions, striking Carlson’s affirmative defenses and reassigning her counterclaim to another division of the circuit court. Carlson appealed.

The issue before the appeals court was whether a unit owner may claim, as a defense in an action brought under the Forcible Entry Act, that her responsibility for paying assessments was diminished or nullified by the association’s failure to maintain the condominium common areas as provided in the declaration. The court also considered which matters are “germane” (having to do with the matter at hand) under the provisions of the Forcible Entry Act.

The Forcible Entry Act provides that a person may bring an action under the act if:

When any property is subject to the provisions of the Condominium Property Act . . . the owner of the unit fails or refuses to pay when due his or her proportionate share of the common expenses lawfully agreed upon or any unpaid fine, the Board of Managers or its agent have served the demand set forth in the manner provided for in that Section and the unit owner has failed to pay the amount claimed within the time limit prescribed in the demand.

There was no dispute that the association had met the prerequisites for a suit under the Forcible Entry Act. Similarly, a condominium board of managers is not limited to seeking possession alone.

The Forcible Entry Act also provides that a defendant may, under a general denial of the allegations, offer evidence in defense of the action if they are germane to the distinctive purpose of the proceeding.

Unquestionably, the association’s assessments were intended to maintain common elements, and the condominium’s roof and the brick façade were common elements. The court concluded that Carlson’s assertion that the association did not perform its duties was as viable a defense in this case as would be a landlord’s failure to maintain a rented dwelling would be in a suit under the Forcible Entry Act against a tenant for failing to pay rent.

The association argued that a condominium’s board’s right to collect assessments is absolute, and a claim for nonpayment of assessments is not subject to any affirmative defense. However, the court held that neither the Forcible Entry Act nor the Condominium Act suggest that the board’s right to collect assessments is absolute. Moreover, the board’s power and duty to maintain the common elements, and the right of the unit owner to have the common elements maintained, are just as unequivocally affirmed in the Condominium Act. The court found that the rights arise from mutually exchanged promises: the owners promise to pay assessments in exchange for the association’s promise to maintain the common elements. Because of this, the declaration and bylaws are best seen as contracts.

The court held that, where the governing documents indicate that the unit owner’s promise to pay assessments is in exchange for the association’s promise to use those assessments to repair and maintain condominium property, the unit owner may claim, as an excuse for failing to pay assessments, that the association breached its duty of repair and maintenance.

However, even though Carlson sought compensation for water damage to her property, the damage to her unit was not relevant to whether the association could take possession of her unit because assessments are paid in exchange for common element repair and maintenance, not the units themselves.

Since Carlson’s promise to pay assessments was not relevant to any promise made regarding her unit, the damage to her unit did not in itself provide a legal justification for withholding assessments. Carlson’s counterclaim and request for setoff (a claim that the plaintiff owes the defendant money which should be subtracted from the amount of damages claimed by plaintiff), grounded in alleged damage to her unit, were not germane to the issue of possession. Since her counterclaim sought nothing but monetary relief for damage to her unit, the court determined it was properly severed by the trial court.

Accordingly, the appeals court vacated the trial court’s judgment and remanded (sent back to a lower court) the case for partial reinstatement of the affirmative defenses.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Owner Canít Rent Condo in Excess of Established Limits

Town Houses at Bonnet Shores Condominium Association v. Langlois, No. 2011-181-Appeal, R. I. Supr. Ct., June 22, 2012

Covenants Enforcement: A Rhode Island appeals court ruled that a unit owner was barred by the declaration from entering into more than two lease agreements for his unit in a single calendar year.

Michael Langlois owns a unit in the Townhouses at Bonnet Shores Condominiums, located in Narragansett, R.I. He has never resided in the unit, but has always rented it. In December 2008, he entered into a lease agreement with Severance McLaughlin. Although the lease terminated in May 2009, McLaughlin remained in the unit under a month-to-month tenancy.

In August 2009, Langlois entered into a second lease agreement with Jacqueline Steinback, which ran from September 2009 to November 2009, at which time the lease extended to a month to month tenancy. McLaughlin also remained in the unit on a month-to-month lease.

In August 2010, Langlois submitted a proposed lease agreement with Zheng Fang to the Townhouses at Bonnet Shores Condominium Association (association) for approval. The term of the lease was from September 2010 to May 2011. Both McLaughlin and Steinback remained in the unit on their individual month-to-month leases. The association notified Langlois that the lease agreement with Fang would be in violation of the condominium declaration. Section 5.2 of the declaration provides that “[n]o [u]nit may be leased or rented more than two (2) times in each calendar year.”

Despite the board’s disapproval, Fang and his wife moved into the unit. As a result, four people were residing in the unit simultaneously under three separate leases.

In September 2010, the association sued Langlois, seeking a judicial declaration that Fang’s lease agreement violated the declaration because it established a third tenancy in the unit within one year. The association explained that the rationale for the declaration’s restriction on tenancies was a desire “to avoid transient tenants” as well as avoid an overflow of cars because parking was limited at the condominium. The court ruled that Langlois’ contract with Fang violated the declaration and granted the association’s request for declaratory judgment (a court judgment determining the rights of parties without ordering anything to be done or awarding damages). Langlois appealed.

On appeal, the trial court’s opinion was rendered moot because Langlois admitted that Fang and his wife no longer resided in the unit. However, the court considered that both parties had a continuing personal stake in the controversy because Langlois still wanted to lease the unit to a third tenant, and the association still intended to deny such rental or lease agreement.

Langlois argued that the underlying intent of Section 5.2 of the declaration was to prevent multiple short-term, transient leases within a calendar year, and he asserted that because McLaughlin’s and Steinback’s lease agreements were not transient and complied with the requirements of Section 5.2, the trial court erred in its determination that a third lease agreement violated the declaration. To support his contention, he argued that Section 5.2 was ambiguous.

In reviewing the declaration, the court observed that the declaration clearly stated that a unit owner may not enter into, renew or extend a rental or lease agreement unless specific terms and conditions are met. These terms and conditions require that the lease must be in writing, that it must be for a minimum of a six-month term, that the unit cannot be leased or rented more than two times in a single calendar year, that any prospective tenant must be approved by the board, and the total number of tenants residing in the unit must not exceed two persons per the number of bedrooms within that unit. The court held that there was no ambiguity in these provisions of the declaration. The court affirmed the trial court’s judgment.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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