Condominium Issues in the 21st Century

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.

Recreational and Medical Marijuana in Massachusetts Condominiums

By Christopher S. Malloy

While the recent decriminalization of marijuana in Massachusetts has no doubt pleased a segment of the population, condominium associations and their boards are left facing difficult decisions whether to attempt to regulate, or outright ban, recreational use in the common areas and units of their condominiums, as well as harvesting marijuana within individual units.

The smoking and/or growing of marijuana creates a host of potential consequences for individuals and families living in the close confines of a condominium community beyond those of bothersome odors, which can be enough in and of itself to warrant prohibition of marijuana smoking.

Harvesting marijuana requires a substantial amount of water, heat and light, some of which are common area expenses for certain communities. If a single unit owner begins growing marijuana in their unit, the increased utility costs caused by that operation could be funded in part by other unit owners’ common area fees. More significant than the financial burdens created, the health and safety of neighboring unit owners can be compromised by the increased risk of fire from the intense light and heat required or flood from the increased water usage. For those associations with commercial units, additional factors to consider are the potential for increased retail activity, along with a possible heightened risk of robbery given the contents of the unit.

Another consideration for associations is whether condominium master insurance policies will cover losses related to marijuana usage. Complicating the issue of whether the growing and harvesting of marijuana would be considered an uncovered act by insurance carriers is that the possession, consumption, harvesting, etc. of marijuana remains illegal under federal law. While the United States Justice Department has generally advised its attorneys general to refrain from prosecution of smaller scale marijuana-related offenses in states that have legalized its possession, insurance companies are not likely to be as lenient when claims arise from the growing or other misuse of a federally banned substance, especially if that insurance carrier was not advised of the use in the first instance.

A condominium board can restrict or otherwise regulate the use of marijuana in the common areas by simply updating its rules and regulations by a majority vote of the board. Banning or regulating marijuana use within individual units must be done through an amendment to either the Master Deed or the association’s declaration of trust/by-laws, which typically require at least a two-thirds vote of the beneficial interest of unit owners. If there is an existing ban on smoking, passing such an amendment will no doubt be easier, however some condominiums have a population of smokers large enough to defeat an attack on smoking and related uses. In those instances, boards can soften the blow by limiting the restriction to the growth and harvesting of marijuana.

If boards are faced with communities which for one reason or another are opposed to banning the growing and harvesting of marijuana, less intrusive restrictions can be presented, including banning certain harvesting techniques, requiring separate utility meters for those units who elect to grow and imposing additional insurance obligations for any unit engaged in a growing operation. In circumstances where boards cannot obtain the votes to ban marijuana or smoking in general, most associations can always rely on existing nuisance provisions contained in their governing documents if smoke or other odors permeate from a unit into the common area or another unit. This may become an easier task for boards to accomplish as the Massachusetts House of Representatives is currently hearing a proposed bill which would establish secondhand smoke, including that from cigarettes, marijuana and the like, as a condition deemed to endanger the health or safety of those in the surrounding units. If the bill becomes law the local board of health will be vested with the authority to fine the offending unit owner and may order the unit owner to seal the unit to the satisfaction of other residents. In addition, the bill contemplates new language to be added to M.G.L. c. 183A prohibiting smoking (including marijuana) in all common areas and, if smoking is permitted in units under the governing documents, such activity shall only be permitted if the unit is sealed to the satisfaction of other residents “so that smoke, fumes or vapors are unable to enter into any other common areas or other units.”

While boards seeking to restrict recreational marijuana use and growing operations within units (provided they obtain the requisite vote of the unit owners) will rest on firm footing, attempts to prohibit or otherwise regulate marijuana use for medical purposes may be slightly more precarious.

Massachusetts law prohibits organizations of unit owners in a condominium or housing cooperative from discriminating against any person because of that person’s handicap status. M.G.L. c. 151B, §1(17) defines a handicap as “(a) physical or mental impairment which substantially limits one or more major life activities.” In the event a unit owner provides evidence of such a handicap and a confirmation from a physician or other medical professional that marijuana has been prescribed to treat the condition, an accommodation under c. 151B will likely be required.

In such circumstances, boards can continue to enforce an existing restriction on the transfer of marijuana smoke from one unit to another by requiring, among other things, the unit owner to whom the accommodation was granted to, among other options, implement a smoke filtration system or other similar mechanism to ensure other unit owners are not affected. The board could also explore with the affected unit owner whether there are other less invasive ways in which marijuana can be consumed inside the unit such as ingestion through edible form.

Boards are wise to take stock of whether the inevitable increase in recreational marijuana use is having or is likely to have an impact on their associations and take proactive measures to address such conduct before it becomes more difficult to regulate or restrict.

Originally posted July 26, 2017 on tlawmtm.com:

http://lawmtm.com/recreational-medical-marijuana-massachusetts-condominiums.html

Chris is a founding member of Moriarty Troyer & Malloy LLC and brings nearly fifteen years of litigation and trial experience in the areas of community association, real estate and complex construction law. Chris’s practice also focuses on condominium construction defect and transitional litigation at the trial and appellate level of the state and federal courts as well as in various alternative dispute resolution forums.

In his condominium and real estate practice Chris represents residential and mixed-use condominiums, homeowner associations and property management companies in a broad range of matters and provides advice on operational and governance issues, interpretation and amendment of governing documents, rules and bylaw enforcement, developer transition issues and common area disputes. Chris also manages the firm’s common area lien enforcement practice.

Chris represents a wide variety of clients including condominium and homeowner associations, building owners, developers, general contractors, construction managers, subcontractors and suppliers in all aspects of construction transactions, disputes and litigation including defective work claims, breach of contract, and violations of M.G.L. c. 93A. Chris has expertise with disputes involving both public and private construction projects and has extensive experience with complex multi-party construction defect litigation.

Medical Marijuana in Apartments

By Kenneth A. Krems

Issues regarding medical marijuana are beginning to confront landlords in Massachusetts.  This is because in 2012, voters overwhelmingly approved a referendum allowing for the use of medical marijuana.  Implementation of this has been very slow, but it is now picking up steam and a number of dispensaries have opened.  Also, here in Massachusetts, recreational marijuana is on the ballot this November.

Residents in both completely smoke-free buildings and buildings which are not smoke-free often complain more about the odor of marijuana wafting into their apartments than they do about cigarette smoke coming into their units.  Smoke free or not, leases should provide that the illegal possession or use of marijuana is prohibited.  Since 2009, the possession of one ounce or less of marijuana has no longer been a criminal offense here.  However, possession of marijuana is still a federal crime.  In addition to the violation of federal law, marijuana smoke entering other units or being in the hallways interferes with the quiet enjoyment of other residents.  If a resident continues to smoke marijuana in violation of the lease, he should be given several oral and written warnings, and if the behavior continues he can be evicted.

But what about medical marijuana?  A resident who wants to use medical marijuana will need a medical marijuana card, and to get that she will need a doctor’s authorization that she has a qualifying disability.  Since the resident will have a disability, do we have to allow her to smoke medical marijuana as a reasonable accommodation?

Under Massachusetts and federal law it is unlawful for a landlord to refuse to make a reasonable accommodation in rules, policies, practices or services when the accommodation is necessary to afford a disabled person an equal opportunity to use and enjoy the apartment.

The Massachusetts medical marijuana statute doesn’t cover the use of medical marijuana in housing, but it does provide that “nothing in this law requires the violation of federal law or purports to give immunity under federal law.”

A 2011 memorandum from the U.S. Department of Housing and Urban Development dealing with the use of medical marijuana in multifamily assisted properties provides that owners of federally assisted housing are required to deny admission to any household with a member who is using medical marijuana; that owners cannot have lease provisions that permit occupancy by a household member who is using medical marijuana; and that owners can terminate the tenancy of current households with a member who is using medical marijuana if the owner wishes to do so.  HUD concluded that owners “may not grant reasonable accommodations that would allow tenants to grow, use, otherwise possess, or distribute medical marijuana, even if in doing so such tenants are complying with state laws authorizing medical marijuana-related conduct.”

There are no Massachusetts cases on the issue of the use of medical marijuana in apartments or condos.  However, in December, 2014 a federal court in Michigan in Forest City Residential Management, Inc. v. Beasley, 71 F.Supp.3d 715 (E.D. Mich. 2014) was faced with this question.  In that case a tenant possessed a medical marijuana card and asked the landlord for a reasonable accommodation to allow him to smoke marijuana in his apartment.

The court stated that federal law making the use of marijuana a crime supersedes state medical marijuana laws allowing marijuana use, so to require a landlord to grant this accommodation would not be reasonable because it would require the landlord to violate federal law.  The court stated:  “Such a requirement would fundamentally alter the nature of [the landlord’s] operation by thwarting Congress’s mission to provide drug-free federally assisted housing.”  The court held that a landlord is not required to grant a reasonable accommodation to allow a tenant to use medical marijuana.

So as of now, a landlord does not have to allow a tenant to use medical marijuana inside the building.  If a tenant wants to smoke marijuana for medical purposes, he can go outside to a location off the property where the smoke won’t bother other residents.  If the tenant is going to use medical marijuana inside the apartment, the tenant should have to ingest it in some other form, such as a pill or a brownie, or use a topical oil.

There is no question that in the next few years there will be cases in Massachusetts dealing with whether a landlord has to allow medical marijuana to be smoked in its building.  We’ll look forward to those decisions, but until a court rules otherwise landlords don’t have to allow this.

Co-chair of REBA’s residential landlord/tenant section, Ken Krems is a partner in the Boston office of Shaevel & Krems, LLP, where he focuses his practice on real estate management. Ken represents large residential management companies and is responsible for more than 11,000 units of housing in Massachusetts; he also represents landlords and tenants regarding commercial leasing issues, condominium associations and a buyers and sellers of real estate.  Ken can be reached at kkrems@shaevelkrems.com.