Condo Media - May 2012 - 58

LEGISLATIVE UPDATE

in) the debates over HUD’s proposed rules and other national issues, but they are also focusing on issues closer to home. In Massachusetts, the Attorneys’ Committee has been discussing the need to overhaul the state’s condominium statute. Now 20 years old, the law (Chapter 183A) is a “first-generation statute,” Gary Daddario, a partner in the Massachusetts law firm of Perkins & Anctil, and co-chair of the committee, explains. That means it is an “enabling” statute that empowers community associations to govern themselves, but doesn’t outline in great detail how they must do it. Some members of the committee think Massachusetts should follow many other states and adopt the more detailed Uniform Common Interest Ownership Act, which provides more specific guidance for boards. Others feel just as strongly that the lack of specificity is the statute’s greatest strength, Daddario says, giving industry executives and boards the freedom to innovate, and avoid “one-size-fitsall” solutions that don’t work equally well for different communities. Proponents of the “don’t fix what isn’t broken” view argue that “The courts have generally been kind to condominiums in the way they have interpreted the statute, giving us 20 years of what is generally viewed as great case law. They say we shouldn’t walk away from that,” Daddario explains.

LAC Chairman Matthew Gaines, a partner in the Massachusetts law firm Marcus, Errico, Emmer & Brooks, says it is too late for the committee to address the issue in this legislative term, but it could be on the agenda for the term beginning in January of next year.

Construction Defect Claims
Another concern raised by the Attorneys’ Committee that may get attention from the LAC this year focuses on the statute of limitations for filing construction defect claims. Under the current law, Daddario explains, claims must be filed either within three years after a defect is discovered (the statute of limitations) or within six years after construction has been substantially completed and the building has been “opened for use” (the statute of repose). That timeframe creates a severe disadvantage for condominium communities, he notes, because the developer may not turn over control to the association until well after the three-year statute of limitations has expired, or well into the six-year statute of repose. “Developers aren’t going to sue themselves,” Daddario observes, so if defects become apparent while they retain control, they aren’t going to take any action, leaving the community association with little time, if any, to pursue the claim. “Fairness,” he says, requires a time frame that recognizes this problem. The Massachusetts LAC may try to address the issue during this term, Gaines says, with legislation that would reset the construction defect clock so that the tolling for both the statutes of limitation and repose would not begin until the developer has turned over control to the association’s governing board.

A Middle Road
A third camp is forming, Daddario says, suggesting a middle course: Don’t replace the existing statute, but amend it by “cherry-picking” the most desirable features from other statutes. “It’s always nice to think you can get the best of both worlds,” Daddario says. He predicts this middle view will ultimately prevail. The attorneys’ group has asked the Massachusetts Legislative Action Committee (LAC) to consider the question of how, if at all, the condominium statute should be updated.

Foreclosure Delays
Timing is the underlying concern in another issue the Attorneys’ Committee has flagged — lender delays in filing deeds following a foreclosure. Some lenders file the foreclo-

sure deed simultaneously with the recording of the sale to a new buyer, which may come several months later, Daddario explains. Although the Massachusetts Super Lien ensures that communities will collect unpaid dues and assessments, lengthy delays can create severe financial strains for some communities. “It isn’t fair for associations to bear that burden,” Daddario says. The statute’s failure to specify a time limit for filing a deed following a foreclosure is a “loophole” the Attorneys’ Committee thinks should be closed. This isn’t exclusively a community association issue, Daddario notes. Filing delays make it impossible to identify the owners of foreclosed properties, leaving many single-family homes to sit vacant and untended for months, creating eyesores, and worse, in many neighborhoods. A few large cities in other states have enacted ordinances requiring lenders to register properties on which they have foreclosed and assume responsibility for maintaining them until they are sold. Foreclosure filing delays can have a detrimental impact on single-family neighborhoods, Daddario agrees, but they have a “disproportionate impact” on community associations, he says, not only because of their shared ownership structure (other condominium owners must fill the financial gaps until delinquent payments are collected), but also because vacant units can pose risks to the entire community — frozen pipes or leaks, for example, that could damage other units or common areas. “There are many reasons” a board or manager might need to contact the owner, or owner in possession of a unit, which isn’t possible if foreclosure deeds aren’t filed, Daddario says. The Attorneys’ Committee hasn’t suggested any specific legislative remedies. “The discussion is still in its early stages,” Daddario says. “Although community associations are particularly hard-hit by this problem,” he adds, “we think it needs to be fixed for everyone.” CM

CONDO MEDIA • MAY 2012

Condo Media - May 2012

Table of Contents for the Digital Edition of Condo Media - May 2012