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Appeals Court Holds Condominium Developer’s Lender Cannot Foreclose on Common Areas

Earlier this month, the Massachusetts Appeals Court held that a bank that loaned money to a condominium developer and gave each unit buyer a partial mortgage discharge upon purchase did not have a remaining mortgage interest in undeveloped common areas of the Condominium. Specifically, in Trustees of the Beechwood Village Condominium Trust vs. USAlliance Federal Credit Union, No. 18-P-89, the Massachusetts Appeals Court stated:

“We conclude that all of the land associated with the condominium development, including the common area, was submitted to the provisions of G.L.c. 183A, the Condominium Act (act or statute), by the master deed, and that the effect of the subsequent mortgage discharges by the relevant lenders upon the sale of each unit was to release the lenders’ mortgage interest in all of the common area . . . .The unit owners became the fee simple owners of all of the common area as tenants in common, including the undeveloped common area.”

For the full text of this important decision, please visit: https://www.mass.gov/files/documents/2019/05/15/18P0089.pdf