SUPERIOR COURT DECISION CONFIRMS ATTORNEY-CLIENT PRIVILEGE EXTENDS TO COMMUNICATIONS INCLUDING A CONDOMINIUM BOARD’S PROPERTY MANAGER

Thomas O. Moriarty

Earlier this month, the Superior Court issued a noteworthy decision providing that the attorney-client privilege protects communications

with property managers – as “necessary agents” of the board – in connection with litigation involving the condominium.  Furthermore, the Court ruled, that communications with the Board’s engineering expert – which included the property manager – were not discoverable under the Rules of Civil Procedure. 

The case – Board of Trustees of The 488 DOT Condominium Trust v. R&B Investments, LLC, et al., Suffolk Superior Court (Civil Action No. 2084 CV 2009) – involves the 488 DOT Condominium, a thirty-three unit residential condominium located in South Boston.  The condominium trust (the “Board”) initiated the lawsuit against the condominium’s developer and related parties (collectively the “Defendants”) seeking to recover damages related to certain alleged widespread deficiencies in the design and construction of the common areas and facilities of the condominium.   The alleged construction deficiencies included claims of deficient roofing and window flashing that led to water infiltration throughout the building.  Criterium Engineers (“Criterium”) is serving as the board’s expert in connection with the pending lawsuit.  The Dartmouth Group (“TDG”) is the board’s property manager. 

The Defendants served a subpoena on TDG and – after TDG asserted an objection – filed a motion to compel the production of communications between the Board and its counsel, which included TDG, as well as any communications with Criterium.  The Defendants argued that the Board waived the attorney-client privilege by including TDG on communications with counsel.  They further argued that the communications with Criterium did not constitute protected work product.

The Board contended that TDG is its “necessary agent” and accordingly, all such communications – insofar as they reflect legal advice or otherwise relate to the prosecution of the lawsuit – are privileged.  Indeed, the Supreme Judicial Court had previously stated that “[t]he attorney-client privilege not only protects statements made by the client to the attorney in confidence for the purpose of obtaining legal advice in a particular matter, but also protects such statements made to or shared with necessary agents of the attorney or the client”.  Hanover Ins. Co. v. Rapo & Jepsen Ins. Services, Inc.,(2007).  However, there had never been a reported decision in the Commonwealth that found that a condominium’s property manager qualified as such a “necessary agent.”  In general, the disclosure of attorney-client communication to a third party serves to undermine the privilege.  The Defendants argued that – where TDG was retained by the Board to perform property management services regardless of whether litigation was contemplated  – the inclusion of TDG on any communications between the Board and its counsel resulted in a waiver of privilege.

Judge Squires-Lee disagreed, concluding “that Dartmouth was acting as a necessary agent for the Board to facilitate the needed factual investigation of the conditions at the Condominium and the scope of necessary repairs for the purpose of obtaining legal advice regarding the legal claims that have been asserted in this case.  Put elsewise, the Board needed Dartmouth to assist counsel to conduct the factual investigation necessary to obtain and implement counsel’s advice.”

The Court similarly denied the Defendants’ attempt to obtain TDG’s communications with Criterium, providing that “communications between the Board, Dartmouth, Criterium and counsel related to the litigation and Criterium’s role as an expert consultant and witness are protected by the work-product doctrine.”

 

The Court’s decision recognized the critical role that property managers play in assisting their boards with the prosecution of lawsuits.  Individuals serving on condominium boards are volunteer laypeople who are otherwise occupied by their professional obligations on a daily basis.  Property managers are employed by condominium boards to manage the community’s daily operations and to carry out policies set by the board.  With respect to litigation, a board typically relies on its property manager to interact with its counsel in connection with the advancement of a lawsuit.  The Court’s decision in the 488 DOT case finally provides supporting authority for the position that the inclusion of property managers on communications between the board and its counsel does not serve to destroy the attorney-client privilege.

It is important to note that the Court’s decision does not provide blanket protections for any email involving a board and its property manager where a lawyer is copied on the communication.  Only communications that were actually made for the purpose of obtaining or providing legal advice related to anticipated or actual litigation with R&B were withheld as privileged. 

Similarly, not every communication involving a board’s retained engineering expert would be beyond the scope of allowable discovery permitted under the applicable Rules of Civil Procedure.  Indeed, to the extent that emails concerned an extensive remedial project that was performed to address the building’s widespread water infiltration problems, TDG’s communications with Criterium were produced. 

The distinctions noted in the previous two paragraphs can be difficult for laypeople board members – or even an experienced property manager – to navigate.  A failure to properly manage these communications can result in a waiver of the privilege all together.  As such, it is critical to have competent counsel with experience handling these types of lawsuits in order to ensure that strategic communications with counsel and key expert work product are protected from discovery.

A former president of REBA, Tom is a founding member of the Boston and Quincy-based firm of Moriarty Troyer & Malloy, LLC and is widely regarded as one of the premier real estate litigators in the Commonwealth. Tom has extensive experience in the areas of condominium construction defect and phasing litigation, both in the trial court and at the appellate court levels, and has litigated and argued several of the seminal appellate decisions in that arena. Tom can be contacted by email at tmoriarty@lawmtm.com.

Surfside Collapse and Condominium Borrowing

 Angel K. Mozina

The collapse of Champlain Towers South, a 12-floor condominium in Surfside, Florida last June, has renewed focus and scrutiny on condominiums and their safety. In October 2021, in response to the

Champlain Towers Collapse, Fannie Mae issued a directive known as Lender Letter LL-2021-14, (Fannie Mae PDF) which took effect on January 1, 2022. Among many of its requirements, the directive requires lenders to review whether a condominium or co-op project 1) has significant deferred maintenance; 2) has received a directive from a regulatory authority or inspection agency to make repairs due to unsafe conditions; and 3) whether it has the ability to fund repairs.

 

Borrowing by a condominium association, while always an important necessity, has become ever more urgent and vital. As such, more lenders should consider making loans to associations.  Institutional loans to a condominium association can be a safe and profitable credit facility with the proper underwriting, due diligence and documentation.

 

In Massachusetts, condominium associations possess a rolling, super priority lien over their income streams.  In 1992, the condominium statute known as Chapter 183A was amended to create a six-month priority or super lien which made it easier for an association to collect condominium charges. The case of Drummer Boy Homes Association, Inc. v. Britton (2016) went further and upheld the use of the rolling lien i.e. the ability of condominium associations to file a series of successive multiple, contemporaneous “super priority” liens for unpaid condominium fees.

 

The possession of rolling, superiority liens has made lenders more comfortable about accepting a security interest in the condominium’s income stream.

The structure of loans to a condominium association is almost uniform. The lender requires a note to be signed only by the association, which is usually a trust but it can also be a corporation, a limited liability company, or an unincorporated association. The unit owners do not sign or guaranty the note, which is ideal for the unit owners as the debt does not appear on their individual balance sheets.

 

The lender does not get a mortgage as security.  Instead, the condominium pledges as security rights to its income stream, which are the condominium fees paid by the unit owners. The debt is collateralized by a security agreement, a conditional assignment of revenue stream or income, and a UCC financing statement. The income stream is, in turn, protected by the rolling, superiority lien and will always be there unless the condominium association gets into major financial difficulties.  This rarely happens. 

 

The Condominium cannot grant a mortgage on the common areas and facilities of the Condominium because they are owned by the unit owners as tenants in common.  But the Condominium can grant a mortgage on real or personal property actually owned by the Condominium such as a swimming pool, a parking garage, a golf clubhouse, a utility facility or even a residential apartment.

 

The role of lender’s counsel is to ensure that the association has the power to borrow money and to pledge the income stream of monthly payments as collateral.  While most condominium documents authorize borrowing through the broad authority of the organization of unit owners, this cannot be taken for granted.  It is safest to ensure there is specific borrowing authority outlined in the condominium documents. In the event it is not clearly stated in the condominium documents, the documents must be amended. Additionally, the lawyer for the condominium association must issue an opinion letter as to the authority of the association to borrow, and the enforceability of the loan documents. 

 

As part of lender’s due diligence, the following condominium organization documents should be reviewed: consent minutes and the vote of the condominium board, the master deed and all amendments, the declaration of trust and all amendments, by-laws and rules and regulations, the annual budget, board meeting minutes, a certificate of incumbency, and certificate of the board.

 

If Lenders are more willing to lend to condominium associations, more associations should recognize that maintenance and repairs loans may be more preferable to a special assessment, especially while interest rates remain historically low.

 

A member of the REBA Condominium Law and Practice Section, Angel Mozina is a partner at Hackett Feinberg, P.C., where she concentrates her practice on development, financing and title insurance. She can be reached at akm@bostonbusinesslaw.com.

 

 

Expiring Permits, Licenses and Other Approvals Issued Before or During the Covid Emergency: 462 Extra Days?

Nathaniel Stevens, Esq.

Soon after Governor Baker declared the State of Emergency in March of 2020 due to COVD-19, he issued two successive COVID-19 Orders related to deadlines for state environmental and
development approvals. Each of them tolled the expiration dates of state permits, determinations, and similar licenses for land development which were in effect as of March 10, 2020. They also extended the deadlines to record them if required, like under the Subdivision Control Act, the Wetlands Protection Act, and the Zoning Act.

This meant the ordinary pre-State-of-Emergency permit expiration and recording deadlines were extended. Interestingly, the Governor did not provide for similar extensions for permissions that were issued DURING the State of Emergency.

In June 2021, Governor Baker rescinded the State of Emergency. This ending triggered the expiration of a number of COVID-19 measures, some in statutes, executive orders, guidelines, and regulations, affecting environmental, land use, and real estate permits, licenses and other approvals.  This included the remaining of his two COVID-19 Orders related to state permitting authorities. 

Las June, the Executive Office of Energy and Environmental Affairs (EOEEA) and the Executive Office of Housing and Economic Development (EOHED) issued joint guidance related to the calculation of state permit deadlines and expiration dates tolled during the State of Emergency and discussed in the Governor’s second COVID-19 Order.

For example, for a permit that was issued before and in effect as of March 10, 2020 which has an expiration date of July 1, 2021, the expiration date would be extended by 462 days (the number of days the State of Emergency was in effect). 

Legislation enacted in 2020 during the Governor’s State of Emergency provided extensions for permits issued by conservation commissions, zoning boards of appeals, and planning boards similar to those under the Governor’s orders on state permits.  Because the wording in the Legislation is virtually identical to that in the Governor’s orders, many have applied the joint EOEEA and EOHED guidance to permits issued by these municipal boards which were in effect as of March 10, 2020.  

This is the source of the legal interpretation that many municipal land use approvals, such as an order of condition issued by a conservation commission before March 10, 2020, are automatically extended 462 days beyond their ordinary expiration dates. Likewise, the deadline to record them. Note this is NOT a new expiration of 462 days beyond the end of the State of Emergency!

The Massachusetts Association of Municipal Conservation Professionals (MSMCP), many of whose members work for town and city conservation commissions is a great resource. MSMCP has issued a simple calculator to help determine the new expiration dates for tolled permits: www.tinyurl.com/MSMCPTollingTool (Google Document)

In summary, the COVID-19 tolling provisions, which extended the life of permits, licenses and other approvals 462 days, do not apply to permits that were issued AFTER March 10, 2020 and DURING the State of Emergency, just to BEFORE.  The Order does not state why this is the case, but it’s a fact of life. Note to real estate lawyers: flag your pre-March 10 permissions, check the stated expiration dates, and (in many cases) add 462 days. Revise your master calendars!

Nathaniel is a Partner of McGregor Legere & Stevens PC. Since being admitted to the Massachusetts Bar in 1996, he has handled a broad range of environmental and land use matters, from administrative law to litigation. He has helped clients with environmental issues including permitting, development, contamination, transactions, conservation, real estate restrictions, underground tanks, water supply, water pollution, subdivision control, tidelands licensing, Boston and state zoning, coastal and inland wetlands, stormwater, air pollution, and energy facility siting. Nathaniel can be contacted at nstevens@mcgregorlaw.com.

Handicapped Accessible Parking Spaces: Lessons in Reasonable Parking Accommodation for Condominium Associations

 Ryan R. Severance

With the COVID-19 pandemic putting a new emphasis on driving and having a personal vehicle, combined with the rise in the cost of

parking in Boston and throughout the Commonwealth, the importance of parking rights is at an all-time high in condominium associations. As a result, many condominium boards are especially interested in their obligations with regard to handicapped accessible parking areas. We have received many questions on handicapped parking recently, and we want to share our findings and point out issues that boards should be prepared to face with regard to handicapped accessible parking spaces. 

Generally, condominiums are not subject to the Americans with Disabilities Act (“ADA”), which requires reasonable modifications to facilities, policies and procedures for the accommodation of disabled individuals in order to comply with federal law, as most condominiums do not have space that may be used by and open to the public. If a condominium has space available to be used by the public, the ADA, among its other requirements, mandates that handicapped parking spaces be provided for public use. In the event that a condominium has public use space contained within it, boards should consult with counsel as they approach addressing accommodation requests.

Regardless of whether the ADA is applicable, the architectural requirements for parking spaces and parking lots when condominiums are built are circulated by the Massachusetts Architectural Access Board (“AAB”) and described in the Code of Massachusetts Regulations, Title 521 (“521 CMR”) Section 10, “Public Use and Common Use Spaces in Multiple Dwellings.” 521 CMR, Subsection 10.3 describes the requirements for handicapped parking spaces in condominiums, referred to as “accessible spaces” and described by the AAB as “multiple dwellings,” in pertinent part as follows:

The number of accessible spaces shall not be limited in number by 521 CMR 23.2.1, [entitled] Number but shall be provided in sufficient numbers to meet the needs of the dwelling unit occupants. If parking spaces are assigned to individual units, those spaces designated for accessible units shall have signage reserving said space. An international symbol of accessibility need not be used.

As described therein, there is no specific AAB requirement for the number of parking spaces that must be designated for the use of disabled condominium residents. Instead, 521 CMR, Subsection 10.3 requires that accessible spaces must be provided in “sufficient numbers” to meet the needs of the residents. “Sufficient numbers” is obviously a vague phrase, and a standard that may change over the lifetime of a condominium, which may make this a challenging measure for boards to comply with.

For example, a new owner with a disability may purchase a unit and may require a space that is wider to accommodate a wheelchair, or a space that is located closer to the main entrance of the building to reduce the distance he or she must travel to enter the building. Suddenly, what constitutes a “sufficient number” of accessible spaces that are necessary to meet the needs of the condominium residents has changed. 

As with any reasonable accommodation request, an accessible parking space request should be evaluated to confirm that it meets the requirements of the Federal Fair Housing Act for reasonable accommodation requests. Assuming that it does, the response of the association should be to agree to reasonably accommodate the needs of a resident requiring a handicapped accessible parking space. 

The process of making an accommodation by providing an accessible space for a resident will vary depending on the nature of the parking rights that exist in the condominium and the way the rights are described and provided to the owners in the condominium documents. It is important to have a solid understanding of the parking rights in dealing with any reasonable accommodation request related to parking and consultation with counsel is prudent.

By way of example, some condominiums are built and designed with guest or visitor spaces that meet handicapped accessibility requirements. Those spaces can then be provided as a reasonable accommodation to an owner or resident who requires one. Some associations maintain the ability, through language in their condominium documents, to relocate resident parking spaces at the board’s discretion. Those boards can therefore make an accommodation by requiring a resident with an accessible or more accessible space to exchange their space with a resident who needs one. These situations show straightforward methods to make a reasonable accommodation and meet the sufficient number requirement.

However, there are some associations, when faced with an otherwise reasonable accommodation request, that do not have a way to easily provide an accessible parking space. Depending on the situation, if the accommodation meets the requirements of the Fair Housing Act, an association should make every attempt possible to make the accommodation. This could include requesting a resident who has a more accessible space to exchange their space with the resident needing an accommodation.

In the event that an association cannot make an accommodation for a parking space and that reasonable accommodation has been reasonably requested, it can face stiff penalties from the AAB or the Massachusetts Commission Against Discrimination.

Parking, and issues related thereto, will always be important to condominium associations. In order to properly navigate issues related to accessible parking spaces, associations should always rely upon the advice of experienced condominium counsel.

An associate in the Boston and Quincy based law firm, Moriarty Troyer & Malloy LLC, Ryan possesses significant condominium and real estate transactional experience. His practice has included a focus on the general representation of condominium associations, including condominium document interpretation, drafting, enforcement, and collections.  A member of REBA’s condominium law and practice section, Ryan can be contacted at rseverance@lawmtm.com.