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If you buy a condo in a project built in phases, you better pay really close attention to the master deed

The Supreme Judicial Court today ruled today that condo developments do not have to obey a state law that requires ownership of common areas to be equally split among all owners - provided the disparity is noted in the master deed and other condo documents signed by buyers.

The ruling comes in the case of 20 owners of condos in the second phase of a Falmouth project, who objected to master-deed provisions that essentially required them to pay more for maintenance of common areas than owners of the initial units and which gave the first-phase owners more of a say over major decisions affecting the entire project.

Although state law requires equitable distribution of common areas and votes, the SJC ruled that the law is only a "framework" for relations between individual property owners rather than an attempt to protect the general public. Because it relates to private parties, its requirements can be adjusted through negotiations among them, the court said. Although the second-phase owners didn't sign the initial agreement, they essentially inherited and agreed to it when they purchased their units from the developer, who had signed it, the court ruled.

Complete ruling.

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Comments

Did the second-phase owners get a copy of the agreement between the developer and the first-phase owners before they agreed to buy their units? If the developer hid this from them, then I'd say they're still wronged (albeit by the developer and not the first-phase owners).

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The decision says that not only was all this stuff recorded in the master deed and related documents, the new buyers "purchased their units with notice of the nonconformity" with the state law. Their argument seemed to be that they can't be blamed for signing an illegal document; the court argued, basically, this is one law that could be bypassed with appropriate notice.

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Interesting.

The only development in the city of Boston I can think of that fits this is the Court Square Press / Macallen Building project in South Boston. Phase I was Court Square Press, a conversion, while Phase II was Macallen Building, new from the ground up. The gym is in Phase I but all the other amenities - pool, media center, etc., are in phase II. I don't know how they split up the fees or who paid what (we left before Phase II construction began) but I'm guessing the Pappases were smart about everything and made provisions to ensure there would be no lawsuits.

When you get your deed, it shows you own a percentage of the common areas. With a two-phase project, however, they must have to reset the percentages once the second phase is built.

Sounds like a nightmare to figure out to begin with.

Thank god we have lawyers!

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The original plan for the second phase was to have 48 units instead of 20, but when the first developer went away, the initial condo owners refused to renegotiate the percentages, and the guy who ultimately built the new units agreed not to fight them on that.

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... blocked the developer from building the originally agreed number of units -- and made the developer agree to build less than half -- the agreement then saddled the second phase owners (who would own half the units) with about 2/3s of the condo association's costs -- while giving the first phase owners veto power of any condo association decisions. This is the sort of abusive condo agreement that real estate lawyers should warn their clients against.

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How many of the Phase I owners are lawyers, do you suppose?

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...and we had a wonderful attorney who got us safely through the process.

Useless trivia -- Our condo was apparently the first condo established in the state of Illinois, a day or so after the condo law first went into effect. (We weren't part of the original group of owners -- but there was one old couple there who had beeen there from the start).

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