In a November article I discussed the pending Supreme Judicial Court case Trustees of Cambridge Point Condominium Trust v. Cambridge Point, LLC. You can read the full article here, but the essential issue is whether condominium bylaw provisions limiting a condominium board’s ability to initiate litigation should be void, either because such provisions violate the Massachusetts Condominium Act, or because they are against public policy. In November I said the case had the potential to either increase lawsuits initiated by condominium boards, or eliminate the possibility of lawsuits against future condominium developers.
On January 19, 2018 the Supreme Judicial Court held that a certain provision of the Cambridge Point Condominium Trust Bylaws is against public policy and void. The decision tries to avoid any outsized impact on condominium litigation in Massachusetts, but will likely open the doors to increased litigation.
The decision states that four parts of the Cambridge Point Condominium Trust Bylaws made it “extraordinarily difficult” for the Condominium Trust to initiate litigation by requiring that: (1) 80% of all unit owners consent to the proposed litigation, even while the developer continues to own close to, or in excess of, 20% of units; (2) a unit owner who fails to respond to the request for written consent to the litigation is considered to have refused consent; (3) the unit owners pay the entire budgeted cost of the litigation in a special assessment effective immediately upon consent to initiate the litigation; and (4) the trustees obtain the required written consent within sixty days. According to the decision, the offending section of the Cambridge Point Condominium Trust Bylaws is void because, in light of the totality of the circumstances, the section effectively eliminated the ability of unit owners to seek legal redress for deficiencies in the construction of their homes.
The decision does not provide additional guidance to determine in future cases whether bylaws requiring unit owner consent to pursue litigation are also against public policy. The responsibility will fall to the trial courts to determine if and when the “the totality of the circumstances” effectively eliminates the right of a condominium board to pursue litigation against the developer.
For now, condominium bylaw provisions can theoretically continue to require unit owner consent before the condominium board initiates litigation against a developer. It seems likely though that any condominium board that wants to initiate litigation but is not able to obtain the necessary consent will argue that the consent requirements in its bylaws are void as against public policy. Accordingly, this is not the last time the appellate courts will need to address this issue.