Condo Media - April 2018 - 48

poison pill VOIDED

C

oncluding that the
provision "makes it
extraordinarily difficult
or even impossible" for
condominium boards
to sue the developer
for defects in the common areas, the
court invalidated its use for that purpose.
Condominium associations across the
commonwealth celebrated. Yet, that celebration was premature, as the decision
does nothing to prevent the use of these
provisions except in the limited circumstance of claims against the developer.
The "poison pill" remains a looming
roadblock in all other situations.
THE CASE
Cambridge Point Condominium Trust v.
Cambridge Point, LLC, arose after the
condominium's trustees received unit
owner complaints about water leakage
and mold infestation in their five-yearold, 42-unit development.
An engineering study found "myriad
design and construction defects," later
estimated to cost over $2 million to repair. Efforts to have the developer make
the repairs "proved futile." The trustees
contemplated suit.
Unfortunately for them, the condominium bylaws contained a severe
restriction on their ability to initiate liti-

48

CONDOMEDIA

gation. Before suing anyone other than a
unit owner, the trustees had to obtain the
written consent of at least 80 percent of
the owners.
To obtain that consent, the trustees
first had to circulate their proposed complaint, specify a limit on the amount to be
paid in legal fees and costs, and institute a
special assessment to collect that sum. To
ensure that the owners could not amend
these requirements out of the bylaws, the
provision also required that at least
80 percent of the owners consent to its
amendment. Adding to this burden, the
trustees had to confront the fact that
the developer still owned or controlled
enough units to block them from obtaining the 80 percent required approval.
The trustees sued without obtaining
the requisite consent. In their complaint,
they sought damages for the defects
and a court declaration that the bylaw
provision is void because it violates the
state condominium statute and because,
in contravention of public policy, it effectively shields the developer from suits for
construction defects. The trial court disagreed and dismissed the complaint after
finding that nothing in the statute prohibits the clause and that the developer's
use of it did not constitute overreaching,
especially because the owners had notice
of it when they purchased their units.

THE DECISION
The Supreme Judicial Court reversed
the trial court's decision, concluding that
under the circumstances the provision
contravenes public policy. After recognizing that the bylaw's 80 percent consent requirement "makes it effectively
impossible" for the trustees to sue the
developer where the developer retained
control of at least 20 percent of the units,
the court weighed the "well-established
public policy in favor of the safety and
habitability of homes" against the "public
interest in freedom of contract." The
court determined that rights "to obtain
legal redress when ... homes fail to meet
minimum standards ... are so vital that ...
they cannot be waived." It concluded that
the developer "overreached" by imposing
a requirement that, "for all practical purposes, makes it extraordinarily difficult
or even impossible for the trustees to
initiate any litigation" against it for common area defects. The court declared
that, "viewed in light of the totality of
the circumstances," the provision is void
because it contravenes public policy.
WHERE DOES THAT LEAVE US?
As important as the decision is, what
the court did not decide is likely to
present longer, and more far-reaching,
consequences. While striking down the



Table of Contents for the Digital Edition of Condo Media - April 2018

Contents
Condo Media - April 2018 - BB1
Condo Media - April 2018 - BB2
Condo Media - April 2018 - Cover1
Condo Media - April 2018 - Cover2
Condo Media - April 2018 - Contents
Condo Media - April 2018 - 2
Condo Media - April 2018 - 3
Condo Media - April 2018 - 4
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Condo Media - April 2018 - Cover3
Condo Media - April 2018 - Cover4
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