Condo Media - August 2018 - 55

arduous process to create a condominium? The answer is to protect the
public, or more specifically, to protect
people who wish to purchase condominium units. The main focus of the
Act is to provide notice to prospective
unit purchasers so that they make fully
informed decisions when buying a unit.
"PHASING" DETAILS
AND TIME LIMITS
One of the most important considerations for prospective owners is the
Declarant's plan for building more
units in the future, commonly known
as "phasing." Under the Act, prospective and existing unit owners are
entitled to know how many units will
be built and whether the units will be
constructed on existing condominium
land or on land that will be added to
the condominium. The Act provides
two options to a Declarant who intends
to phase future units. The first option,
called "convertible land," allows the
Declarant to phase units on existing
condominium land. The second option,
called "expandable condominium,"
allows the Declarant to phase units on
land to be added to the condominium.
Notably, the Act provides time limits for
both options-10 years for phasing on
convertible land, and 14 years for phasing on an expandable condominium.
The Declaration and public offering
statement must specify which phasing
option is chosen by the Declarant. The
Act's time limits give certainty to prospective and existing unit owners who
understandably do not wish to live in a
construction site indefinitely and who
want autonomy from the Declarant.
In a recent court case, however, a
Declarant found a loophole in the Act
and was able to maneuver around the
phasing time limits. In Condominiums
at Lilac Lane v. Monument Garden,
LLC, the Declarant argued that it was
not subject to the Act's phasing time
limits because when it created the
condominium, the Declarant chose
neither the convertible land nor the
expandable condominium options.
Instead, in the Declaration, the Declarant identified the number of units to
be phased in the future and submitted
site plans showing where the new

buildings and units would be located.
The Declarant argued that it was not
required to choose the convertible land
or expandable condominium options,
and instead it simply chose a third option that has no label or definition and
is not expressly provided in the Act.
Under this third undefined option, the
Declarant argued it could phase units
into the future with no time limit.
In deciding the case on appeal, the
New Hampshire Supreme Court agreed
with the Declarant. The Court considered language in the Act that allows a
Declarant to describe future "improvements" as "not yet begun" or "not yet
completed." The Court reasoned that
units are improvements, and the Act allows improvements to be made outside
the convertible land and expandable
condominium options. Thus, the time
limits that restrict phasing under those
options did not apply to the Declarant's
proposed future units.

time limited options of convertible
land or expandable condominium.
In other words, the Court recognized
a loophole in the Act, and Declarants
could easily avoid the Act's phasing
time limits.
The New Hampshire legislature had
the last word on this subject. Soon after
the Lilac Lane decision was issued by
the New Hampshire Supreme Court in
June 2017, a bill dubbed the "Loophole
Closer" was introduced in the New
Hampshire House of Representatives.
The bill moved quickly through the
New Hampshire House and Senate,
and it was signed by Governor Sununu
on June 12, 2018. The new law closes
the loophole by defining the term "improvement" to mean "any addition to
condominium land, facilities, or amenities other than condominium units."
This small change to the Act has a major
impact. Now, a Declarant cannot avoid
phasing time limits merely by referring

One of the most important considerations for prospective
owners is the Declarant's plan for building more units in
the future, commonly known as "phasing."
The Court's decision in Lilac Lane
is troubling because it is not in line
with the Act's fundamental purpose
to protect the public interest. The
Court interpreted the Act to mean that
condominium units merely depicted
on the Declarant's plans (known as
"paper units" or "land only units") and
recorded with the Registry of Deeds
are actually "units." This meant that,
in theory, a Declarant could market
and sell paper units to unsuspecting
purchasers, harkening back to the days
of unscrupulous developers selling
condominium units in Florida that
were nothing more than swampland.
Moreover, the decision sent a signal to
New Hampshire condominium developers that they could avoid the phasing
time limits simply by not choosing the
convertible land or the expandable
condominium options. With the third
undefined phasing option in play, it
seemed unlikely that any New Hampshire declarant would ever choose the

to units as "improvements" that are
"not yet begun" or "not yet completed."
Declarants who wish to phase units
are required to choose either the
convertible land option or expandable
condominium option, both of which are
subject to the Act's time limits.
The new law serves to enforce the
original intent of the Act and protect the
interests of the public, including prospective and existing unit owners, by imposing clear time limits on a Declarant's
development rights to phase-in new
units. New Hampshire condominium
unit owners will no longer be subjected
to the uncertainty of a Declarant's construction and phasing of new units into
the future without a time limit. The new
law goes into effect Aug. 7, 2018.
n THOMAS W. AYLESWORTH, ESQ.,
IS AN ASSOCIATE WITH THE LAW
OFFICE OF MORIARTY TROYER AND
MALLOY LLC.

August 2018 CONDOMEDIA

Condo Media - August 2018

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