Viola v. Millbank II Associates , 44 Mass. App. Ct. 82 ( 1997 )

Gillerman, J.

The plaintiffs are individual unit owners of the Millbank II Condominium in Northampton, planned by its developers as a so-called “phased” condominium project. The plaintiffs brought this action in 1990. With the passage of years, and several mesne conveyances of the development rights, the present developers, in 1993, intervened in the original lawsuit³ and filed a counterclaim seeking a declaration that under the terms of the master condominium deed they are entitled to develop phases II and m of the condominium as condominium units. It was not until March, 1994, that the plaintiffs asserted, in answer to the developers’ counterclaim, that the developers have no right to develop phases II and m as condominium units without the consent of all phase I unit owners, as required by G. L. c. 183A, § 5(b).⁴

The judge allowed the plaintiffs’ motion for summary judgment on the developers’ counterclaims. Final judgment for the plaintiffs was entered declaring that the developers may not construct phases II and III of the condominium without the unanimous consent of the individual unit owners as required by G. L. c. 183, § 5(6). The developers appeal from this judgment.

Background facts; the master deed.

The initial developer was the declarant of the condominium, creating Millbank n condominium in November, 1988, by recording a master deed in the appropriate registry of deeds. The declarant submitted to the condominium certain parcels of land described in Exhibit 1 to the master deed, as well as, among other things, certain existing buildings and improvements denominated phase I, consisting of two buildings containing eighteen units.

The first paragraph of the master deed states that it was the declarant’s intention, by amendments to the master deed, to develop the condominium in three phases as shown on a plan recorded with the master deed.⁵

Paragraph (5)(B) of the master deed provides that the “proportionate interest [of each unit owner] in the Common Elements of the Condominium are set forth in Exhibit 3 and Exhibit 3A annexed hereto and incorporated herein” (emphasis added). Exhibit 3 merely provides a description of each unit. Exhibit 3A is critical to the issue before us; it provides a schedule entitled “Percentage interest in Common Areas and Facilities of Units in Phase 1 initially and upon the completion of subsequent phases of the Condominium” (emphasis added). The schedule consists of four columns, the first of which is the unit number, the second of which is captioned “PHASE ONE,” the third of which is captioned “PHASE TWO,” and the fourth of which is captioned “PHASE THREE.” In this fashion Exhibit 3A records and discloses the initial percentage ownership of the common areas, and the decreasing percentage ownership of each unit as phases II and DI are introduced. For example, unit 3-1 owns a percentage interest of 6.223 per cent at the completion of phase I, 3.559 per cent at the completion of phase II, and 2.492 per cent at the completion of phase HI.

Consistent with the foregoing, paragraph (6), which describes the condominium “common elements,” i.e., common areas and facilities, provides, in part, “Each Unit Owner shall be entitled to an undivided beneficial interest in the Common Elements in the percentages shown on Exhibit #3A . . . attached to this Master Deed and incorporated herein by reference . . .” (emphasis added).

In paragraph (11), captioned “Amendments,” the master deed provides, in part, as follows:

“This Master Deed may be amended by an instrument in writing: (a) signed by one or more Unit Owners entitled to eighty (80%) percent or more of the Beneficial Interest in the Common Elements, (b) signed and acknowledged by a majority of the Trustees of the Condominium Trust, and (c) duly recorded with the Registry of Deeds, PROVIDED, HOWEVER, that:

“(C) No instrument of amendment which alters the percentage of the Beneficial Interest to which any Unit is entitled in the Common Elements shall be of any force or effect unless the same has been signed by all Unit Owners, and recorded as an Amendment to the Master Deed [emphasis added];

“(D) Notwithstanding paragraphs 11(A) — 11(C), without the consent of any Unit Owners, (a) the Grantor, or its successors or assigns may at any time prior to December 31, 1998 amend this Master Deed so as to create Phase II, which shall consist of a twelve (12) unit building . . . and (b) if said Phase II is so created the Grantor or its successors or assigns may at any time prior to December 31, 1999 amend this Master Deed so as to create Phase III which shall consist of a twelve (12) unit building .... [F]rom and after the recording of such amendment or amendments, the Condominium shall include the Units and Common Elements included in Phases II and m as applicable, . . . but no such amendment or change shall effect [sic] the aggregate percentage interest of any Phase created of record by this Master Deed or on any amendment thereto [emphasis added].”

Discussion.

The judge concluded that the master deed violated § 5(b) by failing to require unanimous unit owner consent to the alteration of common area percentages as phases II and III are introduced. The unit owners make the same argument in their brief: “The fatal flaw in the Millbank II master deed is the lack of any provision by which the unit owners are deemed to consent to a reconveyance back to the defendant developer of land which has already become part of the condominium common area.”⁶

The plaintiffs misconceive the provisions of the master deed. By the express terms of paragraph (6) of the master deed, each phase I unit owner “shall be entitled to an undivided beneficial interest in the Common Elements in the percentages shown on Exhibit #3A . . . attached to this master deed. . .” (emphasis added). Paragraph 5(B) (captioned “Description of Units”) is to the same effect; it provides that each unit’s proportionate interest in the common elements of the condominium are set forth in Exhibit 3A. Exhibit 3A sets forth the “[percentage interest in Common Areas and Facilities of Units in Phase I initially and upon the completion of subsequent phases of the Condominium” (emphasis added). Paragraph 11(D) makes it clear that amendments to the master deed required by the phasing plan do not affect the percentage interest, as created by Exhibit 3A, in the common areas.

The only reasonable construction that may be put upon Exhibit 3A and the related paragraphs (6), 5(B), and 11(D) is that a unit owner’s initial entitlement to a percentage ownership in the common elements under the master deed is for phase I only, upon the completion of phase II his percentage entitlement is reduced and remains fixed until the completion of phase HI, at which point his percentage entitlement is reduced again to a new fixed number which thereafter will remain unchanged, absent unanimous consent of all unit owners to a different schedule of percentage ownerships.

With the master deed so construed, it may be seen that the percentage interest of each unit owner in the common elements, “as expressed in the master deed [is] not . . . altered” (emphasis added), G. L. c. 183A, § 5(b), by the construction of phases II and HI. Each unit owner is informed from the outset that his percentage entitlement to an undivided interest in the common elements varies with each development stage of the condominium; since those variations are all originally “expressed in the master deed” by reason of Exhibit 3A, the construction of phases II and III do not work any forbidden alteration in percentage interests as expressed in the master deed in violation of c. 183A, § 5(b).

That being so, the plaintiffs, as individual unit owners, are bound by the provisions in the master deed. See Johnson v. Keith, 368 Mass. 316, 321 (1975); Tosney v. Chelmsford Village Condominium Assn., 397 Mass. 683, 687-688 (1986). Strauss v. Oyster River Condominium Trust, 417 Mass. 442 (1994), upon which the plaintiffs rely, has no bearing on this case. Strauss involved an “unlawful master deed,” id. at 447; there is no such deed in this case.

The judgment is reversed. The case is remanded to the Superior Court for the entry of a new judgment on the developers’ counterclaim declaring the right of the developers to proceed with the construction of phases II and III without the consent of the unit owners of phase I.

So ordered.

3 The brief of the Commonwealth of Massachusetts informs us that the suit as originally filed sought a declaratory judgment that the construction of phases II and III of the condominium could be undertaken only as condominium units, and not as a limited equity cooperative. The issue of the legality of the development of phases II and III as condominium units was first raised by plaintiffs’ counsel in February, 1993, in a letter to counsel for the developers.

4 Section 5(b), as in effect at all relevant times, provides, in part, that “[t]he percentage of the undivided interest of each unit owner in the common areas and facilities as expressed in the master deed shall not be altered without the consent of all unit owners whose percentage of the undivided interest is affected, expressed in an amended master deed duly recorded.”

5 The master deed states, in part, in the opening paragraph, “It is the intention of Grantor to develop said Condominium in three (3) phases designated as Phase I through Phase III as shown on the plan recorded herewith, by amendment of the Master Deed as set forth herein.”

6 No party questions the availability of phased developments under G. L. c. 183A, and rightly so. See Podell v. Lahn, 38 Mass. App. Ct. 688, 689 n.3 (1996); Suprenant v. First Trade Union Sav. Bank, FSB, 40 Mass. App. Ct. 637 & n.2 (1996) (plan for phased development assumed valid). See also Barclay v. DeVeau, 384 Mass. 676, 682 (1981) (“This statute provides planning flexibility to developers and unit owners [citation omitted]. Unless expressly prohibited by clear legislative mandate, unit owners and developers may validly contract as to the details of management”).