Friday, March 30, 2018

Condominium Trust Cannot Be Assessed Fees for Public Utilities Based On Use by Unit Owners

The relationship between condominium unit owners and the condominium trust (or association) is often misunderstood. The
confusion can be costly when a municipality fails to appreciate the difference between unit owners and the condominium trust when it assesses water and sewer fees. In a recent court decision, the Massachusetts Superior Court made an important ruling—that a condominium trust is a separate legal entity, and it cannot be assessed with fees for public utilities based on use by unit owners.

1.      The problem – A condominium trust is assessed with sewer        fees because unit owners are tied into town sewer.
In the matter of Sturbridge Hills Condominium Trust v. Board of Selectmen of Sturbridge, the issue was whether the Town of Sturbridge had the right to assess a condominium trust with sewer fees. Like many municipalities, the Town of Sturbridge charges sewer fees to the users of town water who are also tied into the town’s sewer system. Accordingly, a homeowner who uses both town water and town sewer receives a quarterly bill that includes a fee for metered water use and an additional fee for sewer use. The sewer fee is calculated based on the volume of water used, the idea being that water use is a fair measure of sewer use. Homeowners who use town water but not town sewer—for example, homeowners who use a private septic system—are not charged an additional sewer fee.

The confusion can be costly when a municipality fails to appreciate the difference between unit owners and the condominium trust when it assesses water and sewer fees.
For years, the Town of Sturbridge assessed the Sturbridge Hills Condominium Trust with water and sewer fees. The Trust owns an automatic sprinkler system used to water lawns located throughout the condominium grounds. The sprinklers use Sturbridge water, and each sprinkler is metered. The Trust’s sprinklers have no connection to the Sturbridge sewer system. The Town issued quarterly bills to the Trust that included a water fee but also a sewer fee, based on the volume of water used by the Trust’s sprinklers. The Trust complained to the Town about the sewer fees, but the Town took the position that the sewer fees were appropriate because the Sturbridge Hills Condominium unit owners are tied into Sturbridge sewer (each unit owner receives a quarterly bill with both water and sewer charges). The sewer fees charged to the Trust were substantial and amounted to tens of thousands of dollars annually.

2. The solution – a court rules that a condominium trust is a              separate legal entity.
Ultimately, the Trust submitted a petition requesting that the Sturbridge Board of Selectmen, in its capacity as the Water and Sewer Commission, stop assessing sewer fees to the Trust. The petition was denied, and the Trust filed a lawsuit in the Massachusetts Superior Court. In the lawsuit, the Town advanced a “property-based” approach, arguing that that the condominium property is connected to the Sturbridge s sewer system, and therefore all metered water use on the property—including meters for the Trust’s sprinklers—must be assessed with both water and sewer fees. The Court disagreed and ruled in favor of the Trust. The Court noted that under the local regulations, water and sewer fees must be assessed to a “water user,” not to a property.

Furthermore, the Court noted that the state statute governing municipal sewer assessments, Massachusetts General Laws Chapter 83, Section 16, provides that fees must be “just and equitable” and “paid by every person who enter his particular sewer therein.” (Emphasis added). The Court held that the Massachusetts Condominium Act establishes a condominium trust as a legal entity that is separate and distinct from the unit owners, and thus it is a separate and distinct water user. Therefore, the fact that unit owners were tied into the Sturbridge sewer system was not a legitimate reason to assess the Trust with sewer fees.

The Sturbridge Hills Condominium Trust case is a good example of a condominium trust being proactive to overcome a municipality’s unlawful and unjust assessment of fees. Fighting city hall can be a daunting challenge, but there are circumstances where a condominium trust should take on that challenge to protect the condominium’s rights.

Originally posted March 28, 2018 on

Thom has over twenty years of experience as a practicing attorney in Massachusetts and New Hampshire. He represents condominiums, corporations, and individuals in a wide range of matters with a primary focus on complex real estate litigation. His specific areas of practice include construction defects, condominium enforcement, zoning and land use litigation, beach rights, and other property disputes. He has tried and litigated cases in the Massachusetts and New Hampshire state and federal courts and has successfully argued appeals in both states. He has also handled matters in various administrative agencies and served as an administrative law judge. Since 2008, Martindale-Hubbell has recognized Thom with an AV-Preeminent® rating, the highest such rating available to an individual attorney.

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