something blue,” the latter (blue) describing the faces of Legislative Action Committee members, holding their breath as they assess the impact pending legislation will have on condominium associations.
MASSACHUSETTS
The approximately 30
bills affecting Massachusetts condominiums include, in addition to many
familiar ones, a new measure – the Condominium Owners’ Rights Act – that would add
a number of new provisions to the state condominium statute and make significant
changes in it, MEEB partner Matthew Gaines, who chairs CAI-New England’s
Massachusetts LAC, reports. Although the LAC doesn’t flatly oppose the bill, he
says, it finds many of its provisions problematic. These include:
· Language requiring property managers to respond to a unit owner’s request for records within five business days and imposing stiff daily fines if they fail to comply. “The concept isn’t unreasonable,” Gaines says. But while some records can be produced quickly, others require more time, so “a hard and fast deadline isn’t feasible.”
· Language expanding the information owners are entitled to review to include architectural and engineering reports, legal memoranda and legal opinion letters. Specialized reports are often prepared in anticipation of litigation and contain information that, if made public, could weaken the association’s case, Gaines says. Legal memos and opinion letters (which are protected by attorney-client privilege), should remain confidential for the same reason, Gaines says, because they discuss strategies and concepts that should not be disclosed to opposing parties in pending or anticipated litigation.
· A provision requiring that condominium documents include a dispute resolution process for managing disputes between owners and boards. It’s not clear whether this would apply only prospectively, to newly-created condominiums, or to existing condominiums as well. If the latter, Gaines says, associations would have to amend their governing documents. “What happens if owners refuse to approve the amendment?”
· A provision requiring associations to create a preventive maintenance plan, updated at least every two years. That’s a good idea, Gaines says. But language requiring associations with 50 units or more to commission a reserve study at least once every 10 years, while reasonable for larger communities, would be burdensome for smaller ones, many of which “simply won’t do it,” Gaines notes. This provision also specifies that the studies must be conducted by “a registered architect or engineer,” whicih would exclude the many professionals who specialize in reserve studies for condos, but aren’t engineers or architects.
· A provision requiring the boards of larger associations (with 50 units or more) to meet at least monthly and boards at smaller associations to meet at least quarterly. “Boards meet when they need to meet,” Gaines says. “There’s no need for a statutory requirement” mandating the meeting frequency.
· A provision authorizing remote meetings
and electronic voting for board meetings and meetings of owners. “We like this part of the bill,” Gaines says noting
that the LAC this year has refiled a measure it has filed in previous sessions creating
remote meeting and voting authority for community associations.
Although the LAC doesn’t
like some provisions or portions of them, Gaines says, “The committee isn’t taking
a sledgehammer and opposing the entire bill. We’re hoping to persuade lawmakers
to make some changes that will make the bill more workable for condos and less
burdensome for them.”
NEW
HAMPSHIRE:
The
top priority for the New Hampshire LAC in this session, as it has been for
several years, is legislation authorizing a community association to foreclose
on delinquent owners to enforce its statutory superlien. The outcome this year has been not only
disappointing (as in prior years) but also “disconcerting,” according to MEEB
partner Gary Daddario, who chairs CAI-NE’s New Hampshire LAC.
The
new and “disconcerting” twist this year developed after lawmakers indicated
that the measure would not get anywhere as long as New Hampshire banks – the
bill’s sole opponents this year – continued to oppose it.
Determined
to create language the bankers would accept; LAC members redrafted the bill to
address their concerns. Key changes:
· Required
associations to lenders notice of owner delinquencies early in the process,
long before foreclosure was ‘on the table.’
· Made
lenders “parties of interest” in foreclosure proceedings, ensuring that they
would receive service of all pleadings and motions filed throughout the
foreclosure process as the case moved through the court,
· Added
language making it clear that small delinquencies would not be subject to the
superlien foreclosure. The new language
specified that foreclosure could be initiated only if:
üCondo
fees had not been paid for at least a year;
üThe
association had obtained a court judgment against the owner; and
üThe
unit had been “abandoned” – defined as vacant and deteriorating or, if occupied
– the owner had ignored all notices and attempts at communication efforts for
several months.
“We
went back to the drawing board and changed language or inserted new language
that didn’t hurt our position, but that, we thought, addressed all of the
bankers’ legitimate concerns constructively and head-on.”
Their
response: “They thanked us for our efforts, but they said they objected
fundamentally to the concept that associations should be able to foreclose.”
“We
were stunned,” Daddario says. “We
thought having the word ‘foreclosure’ in the title of the bill made its
intention clear. It’s hard to understand
how they could have thought the bill talked about anything else. It is also hard to understand how a
professional trade association could take the position that ‘we oppose your
bill just…because.”
With
the bankers still blocking the bill, it remains stuck in committee, technically
alive, but unlikely to see any further action this year. “We haven’t given up,” Daddario emphasizes.
“This legislation is essential for condominiums and the LAC is going to keep
working on it until we get it passed.
But we’re going to have to find a different approach – possibly using
rights granted under an existing law or under an association’s governing
documents – something bankers will have no right to oppose.”
CAI-NE’s Rhode Island LAC has
submitted two bills this year and neither has encountered any opposition, the
LAC’s co-chair, MEEB’s Janet Aronson, reports. One specifies that where a
mortgagee’s consent is required to approve a change in a community association’s
governing documents, that consent will be deemed to have been given if the
mortgagee fails to respond within 60 days of receiving notice of the proposed
change.
The other major item on the LAC’s
agenda revisits an issue lawmakers addressed last year, when they approved a
measure closing a loophole that enabled some insurers to deny coverage for a
condo owner’s share of the association’s master policy deductible. That measure was passed as an amendment to
the statute covering Rhode Island condominiums created after July of 1982. The LAC wants lawmakers to add the insurance
measure to the statute covering older condominiums, created before July of
1982, Aronson explains. The measure has
won House approval and is now moving through the Senate, which is expected to
approve it, as well.
Janet Aronson, Gary Daddario and Matt
Gaines are partners in the Braintree-based law firm of Marcus Errico Emmer &
Brooks, P.C.
Janet concentrates her practice in
the representation of condominium and homeowner associations in Massachusetts,
Rhode Island and New Hampshire. Her
practice includes all facets of community association representation, ranging
from document review and interpretations, administration and facilitation of
association meetings, enforcement of covenants and restrictions and lien enforcement
matters. Janet’s email address is jaronson@meeb.com.
Gary concentrates his practice in the
field of community association law since 2003.
In addition to assisting Massachusetts clients and MEEB’s Braintree, MA
office, Attorney Daddario also assists New Hampshire clients and manages the
firm’s office in Merrimack, New Hampshire. Gary can be contacted by email at gdaddario@meeb.com.
Matt Co-chairs the REBA Legislative
Section, serving on the Association’s Board of Directors. He concentrates his practice on commercial
and residential real estate acquisitions, as well as condominium and community
association law. Matt’s commercial and
residential real estate practice entails handling all aspects of real estate
acquisition, development, and financing. Matt’s email address is mgaines@meeb.com.
