By Saul J.
Feldman & Angel K. Mozina
In
this article, we are going to discuss current condominium issues:
Marijuana:
Although
legal in Massachusetts, marijuana remains illegal under federal law. Some
condominium associations have asked for us to
draft language making marijuana
illegal except for medical purposes. Other associations have asked us to draft
language making marijuana legal for recreational and medical uses. This issue
of marijuana can be covered as part of a “no smoking” prohibition. For example,
a prohibition against smoking except in an outdoor gazebo may encompass
marijuana. These regulations can apply to both common areas as well as within individual
units.
On-line
Home-Sharing Sites:
The
huge increase in Airbnb, HomeAway, and other on-line home-sharing sites has led
associations and developers to wonder about whether to modify documents
regarding short-term rentals of condominium units. The short-term rental may be
for an entire condominium unit or just for a single room within the condominium
unit. This practice may violate a town’s zoning by-laws, because a property may
not be used for a commercial enterprise in a single-family zoning district.
Notwithstanding such a zoning prohibition, in our opinion, the condominium
documents should also address this issue as it affects insurance coverage, and taxation
of these properties, similar to the taxation of hotels and motels.
Mixed-Use
Condominiums:
The
common belief is that tensions between unit owners in a mixed-use condominium
often lead to total dysfunction in the condominium. We want to demonstrate that
it is often possible to resolve the differences between differing uses. We will
do this by exploring a common fact pattern.
The tensions are between:
(1) the condominium association in a mixed-use
building with residential units in most of the building, and
(2) the owner of the restaurant unit.
In this example, there is a
restaurant operating on the first floor of the building with the next several
floors occupied by residential units.
The
restaurant wants to obtain a liquor license and convert the restaurant to a
sports bar which will, of course, generate even more noise. Under the
condominium documents, a restaurant is allowed, but a sports bar is not
allowed. The zoning allows for both a
restaurant and a sports bar.
On
the surface, this may seem like an impossible problem between the owner of the
restaurant unit and the Condominium Trustees. The Trustees could hold firm and
not allow the sports bar. If the restaurant goes ahead and converts the use to
a sports bar, the parties will end up in years of litigation. Eventually, the
Trustees may win and the restaurant may lose. However, in reality neither party
will win. The costs of litigation in
this case could be in excess of $200,000.00. This just happens to be the cost
of proper sound-proofing.
The
solution is for the two parties to come to an agreement on proper
sound-proofing of the ceiling of the restaurant unit. The cost should, of
course, be borne solely by the restaurant.
The
agreement will also be signed by as many of the Unit Owners as possible. The
Condominium Trust must indemnify the Owner of the Restaurant Unit against
claims by any of the Unit Owners who fail to sign the settlement
agreement.
This
fact pattern is quite common in Boston and other urban areas throughout the
United States. Our point is that most tensions in a mixed-use condominium can
be settled and need not lead to dysfunction and litigation.
Small Condominiums:
A
small condominium (2-4 units) is really a joint venture – a general partnership
limited to one project. The “project” is the operation of the condominium.
The
condominium documents should be made as simple as possible.
There
should also be a mechanism to settle disputes. I would recommend mediation and
arbitration. REBA is set up to do both.
Each
Unit Owner should be a Trustee. Decisions should require a 100% vote of the
Trustees/Unit Owners. Sometimes this can present a challenge.
Regarding
collections in a two (2) unit condominium, the documents should give one
Trustee the ability to sue the delinquent Unit Owner who fails to pay after
sixty (60) days’ notice from the Trustee of the other Unit.
Ideally,
the Units should be kept as separate as possible. For example, yard areas could
be exclusive-use areas if that is what the Unit Owners want.
The
rules and regulations which are on exhibit in the condominium trust should be
as simple as possible.
The
Master Insurance Policy should be an “all in” policy that covers the units as
well as the common areas. Each Owner should get his own insurance as well, just
for the contents of the unit and for liability within the unit.
Problems
such as budgets, tenants, noise, smoking, collections, and pets must be
carefully addressed in the Master Deed or Condominium Bylaws.
There
are some people who do not belong in a condominium. With a little luck, these
people will not be in the condominium. If they are Unit Owners, you should
expect trouble and we are not convinced that even the best drafted documents
will be of any help.
