MA Legal Questions & Answers by Boston Attorneys

Unit Owner Voting

Question:  

For the annual meeting, there are seven people running for five positions. The management company sent a proxy to all owners and requested that it either be mailed to them or dropped in the mailbox in the building lobby. This mailbox is accessed by current board members and items reviewed. Is this ethical to have those members who are on the ballot, receiving them and reviewing them before the meeting?

Answer:

ballot-box           Unit owner voting at annual or specially held meetings is subject to various rules and regulations.  Chief among the regulations is that a quorum, being a majority of all unit owners, must participate in order to have a binding resolution. Obtaining the quorum is difficult due to unit owner apathy, and to overcome this, the condo documents permit voting by proxy.  But the proxy documentation should be authenticated by either signature of an attesting witness and/or by notarization.  Such proxies should be of a limited duration and may authorize voting on the unit owner’s behalf for any and all matters (i.e. vote on all matters presented) or be restricted to vote on a specific matter only (i.e. vote for candidate X).

The question posited does not disclose whether the completed proxies are general or specific in nature, whether a specific person is designated to vote on behalf of the unit owner, or whether such proxies have been authorized by a unit owner or by a notary public.  Regardless, Associations are active, functioning governing bodies that must be flexible for requirements of its unit owner members to facilitate decision making, such as “dropping off the proxy at the mail box.”   Such drop-off process would be aided by adding ‘Confidential/For Management Only” and delivered in a sealed envelope.  Board elections can be contentious and personal, so Associations would be well advised to designate the management company to act as the independent party to directly oversee election results.

Occupancy Restrictions in Condominiums

familyWhen my wife and I bought our condominium a few years ago we had only one child. Now we have three kids and our condo board says that the bylaws limit the number of people in a unit to two per bedroom. While this is not the ideal situation for our family, we cannot afford to move to a bigger home at this time. My kids are small and they don’t cause any problems. Can the board enforce this bylaw and make us sell our home?

Answer:

You are right to explore all of your rights as a condominium owner with respect to these enforcement issues. This is a complicated question without a clear cut answer.

The condominium board does have the authority to enforce any rules set forth in the condominium documents (ie the Master Deed, Declaration of Trust, Bylaws and Rules and Regulations). Therefore, if the condominium documents include an “occupancy restriction” or a limit on the number of occupants allowed to reside in each bedroom, the board has the authority to enforce it. Legitimate reasons for enacting and enforcing such a restriction are to ensure that the building septic system can handle the needs of all of its residents, and to ensure the building is in compliance with city and state building and sanitary codes. In Massachusetts, for example, 105 MCR 410:400, the state sanitary code, requires 150 square feet of living space for the first occupant and at least 100 square feet for additional occupants. [Read more…]

How is a condominium organized by a developer?

The person creating the condominium is known as the “declarant,” but is more commonly referred to as the “developer.” The developer can record a Master Deed before, during, or after the actual construction of the building, and the developer does not actually convey any property through the recording. Typically, the by-laws of the Declaration of Trust authorize the developer to appoint the initial trustees, allowing the developer to control the operation and management of the condominium during the developmental phases. These by-laws will also generally regulate the transition from a developer-controlled association to a unit-owner controlled association.

How does Massachusetts govern the transition from developer control to unit owner control?

Answer:

Unlike many other states, Massachusetts does not regulate the timing of the transition from developer to unit owner control. Usually, however, the by-laws will provide for a “triggering event” that sets the time limit on the transition of control to a unit owner-controlled association. Quite often, the triggering event will be some combination of the amount of units sold and a specified period of time.

Because Massachusetts does not set a specific limitation on the nature of a triggering, or turnover, event, developers will often insert provisions in the Declaration of Trust that allow them to maintain control as long as possible. The courts have held that “[a]bsent overreaching or fraud by a developer,” there is “no strong public policy against interpreting [the Massachusetts Condominium Act] to permit the developer and unit owners to agree on the details of administration and management of the condominium . . . .”[i] The courts have also held that when no specific period of time for termination of developer control is provided in the condominium documents, the transitional time period is to be a “reasonable” one.

[i] Id at 326-28.

What documents does the unit owner-controlled association need to obtain during the transition?

Answer:

By no means an exhaustive list, here are some particularly important documents:

  1. Operational Books and Records
    • Declaration of Trust and Master Deed
    • Bylaws and Rules and Regulations
    • Accounting of association funds and financial statements
    • Audits performed during the developer control period
    • Documents relating to any past or pending claims
    • Past and present budget information
    • Current statement of account balances and invoices from developer control
    • Association bank accounts, checking accounts, certificates of deposit, etc.
    • All association insurance policies
    • Complete roster of unit owners and their addresses, as well as mortgagees by unit
    • Any and all contracts in which the association is a contracting party.
  1. Physical Facilities Records
  • Plans showing roads and parking areas, measurements and dimensions of structures, landscaping, recreational facilities, and storm and sewer systems
  • Information on products and processes used in regular maintenance and repair of common areas
  • Written warranties of the contractors, subcontractors, suppliers, and manufacturers involved in the construction and/or maintenance of the association’s facilities.
    • Copies of any bonds or letters of credit posted with any state or local agency
  • Confirmation of compliance with the local authorities as well copies of any bonds or letters of credit posted with state or local agencies

Should the new unit owner-controlled association review the developer’s control?

Answer:

Absolutely. First, it is crucially important for trustees of the new association, as well as all the owners, to determine whether all income and expenses were properly accounted for while the developer was in control. To this end it is recommended that an association hire an accounting professional to audit the financials during the developer’s control. A certified public accountant or building engineer can also perform a reserve study, which helps the association understand how much money should be allocated to the reserve fund annually in light of the expected life and cost of replacement for major capital items, including as roofs, furnaces, and driveways.

Second, the association should determine if there are any construction defects for which the developer might be responsible. As with the financial audit, it is recommended that the association hire a licensed inspector or engineer to examine the property and determine the state of its condition. A professional engineer’s study will also produce a punch-list of steps that need to be taken, from more involved structural work to the build-out of amenities and landscaping. It is important to have a transition study performed as soon as possible so as to avoid potential claims being barred by a statute of limitations or statute of repose or specific warranties.

If the association feels that the developer might be liable, either for mishandling of condominium finances or construction defects, and the developer is unwilling to cooperate in resolving the problems out of court, the association should consider whether it is worth litigating the issues. This decision will turn on a balance of several factors, including the monetary value of the damages, whether the developer has assets and/or insurance, the costs of litigation, and the likelihood of proving liability at trial. Consultation with an attorney will help clarify these considerations, particularly the likelihood of success.

Should our new condo association hire a property manager and/or attorney?

Answer:

A good management company can aid the association by recommending vendors, helping plan the annual budget, attracting and interacting with new owners, and handling numerous day-to-day tasks. The following represents some of these tasks, which, if not delegated to a property manager, the association will have to tackle:

  • Maintain security of the condominium
  • Collect monthly fees and maintain records
  • Prepare and maintain all association correspondence, minutes, and records
  • Enforce rules and regulations as direct by the association
  • Manage any rentals of condominium common areas
  • Provide escrow information when homes are sold
  • Identify, coordinate, and record maintenance work

Obtaining legal representation also has many benefits for an association. An attorney with experience in condominium law can review contracts with vendors; evaluate potential breaches of the association’s governing documents by owners; take collection actions, as needed, against owners failing to pay condominium fees; and help review the developer’s work to determine whether there might be liability. Early coordination with professional management as well as legal counsel will help the unit owner-controlled association ensure a smooth transition and set its more long-term plans and goals.

Security Cameras vs. Right of Privacy

I own a unit and live in a medium sized condominium in the Boston area.  Recently, a few strangers have been found lurking the hallways of the building.  One of my neighbors who lives across the hall from me is very nervous about the possibility of a break-in and wants to install a security camera inside his unit, facing the hall.  The camera would capture the space between my door and the elevator down the hall, and it would be impossible for me to leave my unit without crossing through the frame of this security camera.  The Management Company tells me my neighbor has complete control over the camera’s footage.  I believe it is a violation of my privacy rights because it would show all information of my family’s whereabouts and activity.  Do I have any privacy rights over this door camera?

Answer:

You are smart to evaluate your legal rights in light of your neighbor’s installation of a security camera.  The Massachusetts Privacy Act, MGL c. 214, sec. 1B provides that individuals have a “right against unreasonable, substantial or serious interference with his privacy” and the widespread use of camera phones has spurred another look at the legality of video surveillance.  In general, a person has a reasonable expectation of privacy within their residence, but individuals living in condominium units can only assert their privacy rights within their units and not in common areas within the condominium building, such as the hallways.  [Read more…]

How can our condo association get a neighbor to pay her condo fees?

Additional Information:  I live in a 5 unit condominium building in Boston, MA.  The owner of the unit next to mine stopped paying her condominium fees months ago. The condominium association asked her several times to pay the fees, and she said she would pay, but she has yet to do so.  For the past several weeks, I have not seen her in the building, she no longer picks up her mail from her mailbox and the utility company placed a notice on her door informing us she is behind on her payments. I think her unit may be in the process of being foreclosed upon. Her condominium is physically attached to my unit, and I am afraid that her lack of maintenance or care for the unit will cause damage to my property. Will the condominium be able to recoup the money she owes us?  Is there any way I can compel her to maintain her unit, or at least winterize it ahead of the upcoming cold season?  How can I protect myself, the condominium association and my unit in this situation?  The condominium does not have a significant reserve fund, and cannot afford to pay much to an attorney.

Answer:

Good neighbors are hard to find, and in small condominiums (under seven (7) units), having a strong relationship with the neighbors is especially beneficial.  More than any other living arrangement, owners of small condominiums constantly rely on their neighbors to make good decisions relating to the care, maintenance and continued prosperity of their condominium.  When one unit owner of a small condominium does not comply with the rules set forth in the condominium documents, for example, not paying their monthly condominium fees or not maintaining their unit, it can be very detrimental to the entire condominium.

To put the condominium in the best position to avoid internal conflict, it is important for the condominium to comply with the rules of the condominium documents and elect trustees who can manage the property and the financials.  The condominium should try to meet regularly, and address any conflicts or problems as they arise.

[Read more…]

What are my rights as a tenant of a commercial lease agreement?

Additional Information: I’ve recently exited a commercial lease in Brookline in good standing, however, the landlord has sent a letter indicating there are deficiency repairs that I deem unreasonable in the amount of about $10,000.00 for a one year lease with monthly rent of $2,300.00. I find that unreasonable and would like to know what consequences I would face if I decide not to comply. Would I need to hire an attorney to represent me?

Answer:

You are smart to evaluate your legal rights in light of the landlord’s request for money after the expiration of the lease term.

The first thing to evaluate is whether a signed written lease was in place for the property, and whether you provided the landlord with a security deposit at the time the lease was signed.  Most commercial landlords require a security deposit of 2-3 month’s rent at the beginning of the lease. You did not indicate whether or not the landlord is holding a security deposit, and, if so, the amount of money being held in escrow.    [Read more…]

Issues to Consider When Buying Commercial Property

The Impact Of Acquiring A Tenant

By Howard Goldman and Cameron Pease

Question:
Can a new owner of a commercial property break the lease with an existing tenant once the sale is final? We are looking into purchasing a building in Newton that is zoned commercial to use for our business. The current owner just signed a 3-year lease with the lessee that is currently occupying the building. Can we make an offer of the property contingent upon negotiating to have the current tenants vacate? Or do the current tenants have legal rights to stay through their lease term?

Answer:
It is good business practice that you are weighing these issues before making an offer to purchase a commercial property. First, it is essential that you identify whether the pre-existing tenants are commercial or residential. Massachusetts law will be applied differently to residential leases because the law regards commercial leases as business transactions between parties of comparable sophistication and bargaining power and consequently imposes fewer restrictions on the nature and terms of commercial leases than it does on residential leases. Consequently, landlords generally have few opportunities to change the terms of a residential lease after it is signed. [Read more…]

What Is Doing Business In Massachusetts?

By Howard Goldman and Cameron Pease

Question:

My company offers chiropractic services and is registered as an LLC in Massachusetts.  I plan to move my company to Florida this year.  I will be licensed to practice in both states.  If I am only in Massachusetts on a limited basis where I am seeing a handful of patients or running an occasional seminar. Considering the fact that I will be providing these temporary services, do I need to register as a foreign LLC?  It seems that it may not be worth it to provide services here if I do.

Answer:

It is good business practice that you are weighing these issues before you move your company out of state.  Under Massachusetts General Laws  c. 156C, Sec. 48, a foreign limited liability company (LLC) transacting business in Massachusetts must register with the Secretary of State Corporation’s Division within ten days after it commences doing business in the Commonwealth.

The following activities in Massachusetts constitute “transacting business”:

A)    The ownership or leasing of real estate in Massachusetts;

B)    Engaging in the construction, alteration or repair of any structure, railway or road; or

C)    Engaging in any other activity requiring the performance of labor.

[Read more…]

How is land divided for condo conversion?

Additional Information:

The property and lot in Westwood doesn’t isn’t easy to “split”.  It is an odd size lot, the duplex is not centered on the lot, the right side has wider driveway and there is a small yard in the back.  We are two owners of the duplex and can’t agree on how to divide the lot to convert to condos.

ATTORNEY ANSWER:

You will have an architect or civil engineer prepare an “as built” floor plan and “site plan”. You will also have the Master Deed which will specify the boundaries of each unit and layout and what is considered common area. With regard to the driveway, you could make the right side common area which you share and could share the cost of plowing. Also, with regard to the yard, you could divide it up so that you each have your own yard area which is common area, but designated as exclusive use common area. You can only do this by agreement with your co-owner. As you and your co-owner can’t seem to agree on some issues, it would be smart to put an arbitration/mediation provision in your condominium documents. Mediation/Arbitration is a less costly way for you to resolve future conflict as opposed to using the judicial process. [Read more…]

Converting a 4 unit apartment building into condos.

Additional Information:

I currently live in a 4-unit apartment building in Dedham.  My grandmother owns the building and is considering converting the units to condos. What are the steps she would need to take? Can she convert one at a time or do you have to convert the property in its entirety?

ATTORNEY ANSWER:

First, let me say that your grandmother seems like a shrewd business woman. Often times the conversion of a multi-family apartment building into a condominium can result in a lot more profit for the property owner. Before converting the units into condominiums, your grandmother should make sure that she assesses the current market and looks at recent comparable sales to confirm that the condominium conversion makes economic sense.

You will also need a team of several professionals to assist you in the project which will include an attorney, an architect, a civil engineer or land surveyor and possibly a contractor.

Often times, renovations will be needed to convert the apartments into a condominium. For example, the individual condominium units may need to have separate utilities (i.e. heating systems, electrical, water, etc.) or changes may be needed to comply with building codes or fire regulations.  You will need a contractor to assist your grandmother with any renovations need. [Read more…]

Our Newton condo was damaged by fire in neighbor’s unit.

Additional Information:

I live in a 3 unit condo building in Newton and my unit has been damaged as a result of a fire in our neighbor’s unit. I’ve had some contractors give estimates so I know that the estimate settlement from the Association’s Insurance company won’t cover the repairs.  How do I dispute the amount with the Association’s insurance? Do I need to get a condo lawyer involved?

ATTORNEY ANSWER:

First, based upon your question, it appears that your claim is being made under the Association’s Master Insurance Policy. I always recommend condominium unit owners, for their own protection, to buy an individual HO-6 policy covering the interior and contents of the unit because the master policy does not cover such damage. If you have an HO-6 policy, you should also consider making a claim under this policy. In addition, you may consider hiring a “public adjuster”.  A public adjuster is an insurance claims adjuster who advocates for the policyholder in appraising and negotiating a claimant’s insurance claim.  A public adjuster may be beneficial in this case as it is clear that the insurance company will pay the claim and the only issue is the valuation of the loss. Most public adjusters charge a percentage of the settlement which is usually on average around 10%. Another option would be to hire an attorney and file a lawsuit. In filing the lawsuit, you would use the contractor’s estimates which you have to demonstrate value. Before doing so, you should be confident that the contractor is reputable and can justify his bill because the insurance company will likely have an expert who will testify that the job can be done for much less.  [Read more…]