Albertine v. Churchview Estates, LLC

Albertine et al. v. Churchview Estates, LLC, No. 591-5-14 Cncv (Mello, J., Sept. 28, 2016).
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
VERMONT SUPERIOR COURT
CHITTENDEN UNIT
CIVIL DIVISION
│
CHRISTOPHER ALBERTINE, et al., │
Plaintiffs │
│
v. │ Docket No. 591-5-14 Cncv
│
CHURCHVIEW ESTATES, LLC., │
Defendant │
│
RULING ON MOTIONS TO RECONSIDER
This is a dispute between homeowners in a development and the developer. The complaint
alleges violations of the Common Interest Ownership Act, 27A V.S.A. § 1-101, et seq. (Count I).
Specifically, homeowners allege that while it controlled the homeowners’ association, the
developer failed to call for elections for unit owner representation on the executive board, hold
annual meetings of unit owners and submit budgets for ratification, and provide unit owners with
notice of executive board meetings. Homeowners also allege failure by the developer to pay
assessments on unsold units. In ruling on the parties’ motions for summary judgment, the court
held that the Common Interest Ownership Act claim was moot to the extent it asserted violations
regarding elections, meetings and budgets, and notice of board meetings, because the developer
had already ceded control of the association to the unit owners, and the only practical relief
requested was injunctive in nature. As to liability for the assessments, the court granted summary
judgment for plaintiffs, concluding that the developer must pay assessments on developer-owned
vacant lots after the first unit was sold and assessed. Both parties have moved to reconsider the
summary judgment ruling in part. Plaintiffs contend the violations which the court held to be moot
are not moot because they are seeking attorney’s fees. The developer argues that it is not required
to pay assessments on raw, undeveloped lots that it owns. Carl H. Lisman, Esq. and Christina A.
Jensen, Esq. represent Plaintiff homeowners. Stefan Ricci, Esq. represents Defendant developer
(also referred to as “Declarant”). The court addresses each motion separately below.
STANDARD
The standard for granting a motion to reconsider “is strict, and reconsideration will
generally be denied unless the moving party can point to controlling decisions or data that the court
overlooked—matters, in other words, that might reasonably be expected to alter the conclusion
reached by the court.” Latouche v. N. Country Union High Sch. Dist., 131 F. Supp. 2d 568, 569
(D. Vt. 2001) (citing Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995)). “[A] motion
to reconsider should not be granted where the moving party seeks solely to relitigate an issue
already decided.” Id. (quoting Shrader, 70 F.3d at 257). At the same time, however, it is well
established that “[u]ntil final decree the court always retains jurisdiction to modify or rescind a
prior interlocutory order.” Kelly v. Town of Barnard, 155 Vt. 296, 307 (1990) (quoting Lindsey v.
Dayton–Hudson Corp., 592 F.2d 1118, 1121 (10th Cir.1979)). Such modification is appropriate to
prevent the perpetuation of error or a miscarriage of justice, and to allow prompt corrective action.
See id.; State Highway Bd. v. Jamac Corp., 131 Vt. 510, 515 (1973).
PLAINTIFF’S MOTION TO RECONSIDER
Plaintiffs move to reconsider the Court’s rulings on mootness in its August 12, 2016 order.
Declarant has not responded to that motion.
Upon review of the pleadings, it is apparent that Plaintiffs requested attorney’s fees and
costs in bringing this action. The Act provides that “[a] declarant, association, unit owner, or any
other person subject to this title may bring an action to enforce a right granted or obligation
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imposed by this title, the declaration, or the bylaws,” and that “[t]he court may award reasonable
attorney fees and costs.” 27A V.S.A. § 4-117(a). A claim for attorney’s fees presents a live
controversy even where an action would otherwise be moot. See Merriam v. AIG Claims Servs.,
Inc., 2008 VT 8, ¶ 10, 183 Vt. 568 (“Defendant argues, as a threshold matter, that a claim for
attorney’s fees is insufficient to create a justiciable case or controversy if none exists on the merits
of the underlying claim. We decline to adopt that rule today, and agree with plaintiff that the
attorney’s fees still present a live controversy.”); Felis v. Downs Rachlin Martin PLLC, 2015 VT
129, ¶ 28. Accordingly, the court will reconsider the three claimed violations it ruled moot, with
the understanding that the violations could have occurred only prior to the June 21, 2016 voluntary
surrender of control over the Association, and that the only available relief for these claims is
attorney’s fees and costs.
(1) Election of Unit Owners to Executive Board
Plaintiffs allege that Declarant violated the Act and the Declaration by failing to call for
elections for unit owner representation on the executive board. Under the Act and the Declaration,
each owner of a unit in Churchview Estates is a mandatory member of the Churchview Estates
Homeowners Association, Inc. (the “Association”). The affairs of the Association are managed by
the Association’s Executive Board.1 The Act permits the declaration to “provide for a period of
declarant control of the association during which a declarant . . . may appoint and remove the
officers and members of the executive board.” 27A V.S.A. § 3-103(d)(1).2 The Declaration here
does, in fact, provide for such a period of Declarant control. See Pl.’s Ex. 1, § 7.9(a). That period
of Declarant control continues until:
1
This fact is not supported by the statute Plaintiffs cite, see 27A V.S.A. § 3-103(e), but Defendant admitted it in its
Answer. See Answer ¶ 12.
2
That statutory subsection is, however, “[s]ubject to subsection (e),” which the court addresses below.
3
(i) Sixty (60) days after conveyance of all the Units that may be created
to Unit Owners other than the Declarant;
(ii) Two (2) years after the Declarant has ceased to offer Units for sale
in the ordinary course of business; [or]
(iii) The day the Declarant, after giving written notice to the Unit
Owners, records an instrument voluntarily surrendering all rights to
control the activities of the Association.
Id. § 7.9(a); see also 27A V.S.A. § 3-103(d)(1). Plaintiffs assert that as of the date their motion for
summary judgment was filed, none of those three events had occurred, but that Declarant
disclaimed all responsibility for governance of the Association, such as election of directors. The
Act and the Declaration require that at least one director be elected by the members of the
Association within 60 days after the sale of one-fourth of the units. 27A V.S.A. § 3-103(e) (“At
least one-fourth of the members of the executive board shall be elected by unit owners who are not
declarants within 60 days after one-fourth of the created units is conveyed to owners other than a
declarant.”).3
One-fourth of the units had been conveyed upon the fifth sale, on August 31, 2011.
Plaintiffs assert that no election of Board members at an Association meeting has ever taken place,
that all directors have been appointed by the Declarant, and that the president of the Association
has not presided over and is not aware of any election of directors. Plaintiffs further assert that no
unit owners have been elected to the Executive Board, and the Declarant has never called a meeting
of unit owners for that purpose. Plaintiffs cite admissible evidence supporting their assertions. See
Herr aff. (Ex. 3), ¶ 7; Lee aff. (Ex. 7), ¶ 4.
3
The Declaration provides similarly:
Not later than sixty (60) days after conveyance of twenty-five present (25%) of
the Units that may be created to Unit Owners other than the Declarant, at least one
member and not less than twenty-five percent (25%) of the members of the
Executive Board shall be elected by Unit Owners other than the Declarant . . . .
Ex. 1, § 7.9(b).
4
In response, Declarant asserts that it ceded control of the Association to the unit owners
back in 2013. Rene Thibault, “the member and operator” of the Declarant and the former president
of the Association, Ex. 5 at 3, 26, 35, testified that in 2013 he turned the Association over to the
unit owners, including the bank account, and that he is not aware whether they have since voted
or elected anybody. They have apparently hired a property management company to run the
Association. Therefore, Declarant contends, the unit owners have effectively run the Association
since June 2013. See Hr’g Tr. (Ex. 5) at 34–38.
Even taking Declarant’s assertions as true, they do not demonstrate a disputed fact.
Declarant’s asserted facts completely ignore the almost two-year period between August 2011 and
June 2013 when Declarant undoubtedly retained control of the Association and when no elections
were held. Based on the evidence presented, a reasonable jury would have to find that Declarant
violated the Act and the Declaration by failing to hold executive board elections prior to June 2013.
Consequently, Plaintiffs are entitled to summary judgment as to that claim.
(2) Budgets and Annual Meetings
Plaintiffs next argue that Declarant violated the Act, Declaration, and Bylaws by failing to
hold annual meetings of unit owners and to submit budgets for ratification. They assert first that,
while in sole control of the Association, Declarant has never noticed or held any meeting of the
unit owners. “An association shall hold a meeting of unit owners annually at a time, date, and place
stated in or fixed in accordance with the bylaws.” 27A V.S.A. § 3-108(a)(1). The association must
“notify unit owners of the time, date, and place of each . . . meeting” as well as “the items on the
agenda . . . .” Id. § 3-108(a)(3). The Bylaws provide that the annual meeting
shall be held in the month of June of each year, beginning with the
year 2010, unless a different time is specifically set forth in the
notice of meeting with the change in time being duly noted. . . . At
the annual meeting: (a) The President and Chief Financial Officer
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shall report on the activities and financial condition of the
Corporation; (b) the Members shall consider such other matters as
were properly noticed, if required; and (c) Members who have
acquired voting rights in accordance with the provisions of section
7.5, shall elect directors.
Bylaws (Ex. 2), § 7.6.
Plaintiffs’ assertion that Declarant has never held an annual meeting of the unit owners is
supported by record evidence. See Herr aff. (Ex. 3), ¶¶ 7–8; Lee aff. (Ex. 7), ¶ 5; Thibault Depo.
(Ex. 6) at 18 (admitting that, as president of the association, he never presided over a meeting of
the association). Declarant points to Thibault’s later (and contradictory) testimony that the
association had one annual meeting, which he thought was in June 2012. See Hr’g Tr. (Ex. 5) at
34. Declarant also raises the same argument it raised above regarding executive board elections—
that it had turned over control of the association to the unit owners in June 2013.
Even assuming that Declarant did hold an annual meeting in 2012 and that it transferred
control of the association in 2013, Declarant has not demonstrated a disputed material fact. The
Bylaws require an annual meeting in June of each year, “beginning with the year 2010 . . . .”
Declarant’s purportedly disputed facts offer no explanation for the failure to hold an annual
meeting of unit owners in 2010 and 2011. Thus, the undisputed facts establish a patent violation
of the Act and the Bylaws due to the failure to hold annual meetings.
Plaintiffs also assert that Declarant has never presented a budget to the unit owners for
ratification, or for any purpose. The Declaration requires:
Within thirty . . . days after the adoption of any proposed budget for
the Common Interest Community, the Executive Board shall
provide a summary of the budget to all Unit Owners. The Board
shall set a date, not less than fourteen . . . or more than thirty . . .
days after the date the budget summary is sent to the Unit Owners,
for meeting of the unit owners to ratify the budget.
6
Ex. 1 at 17.5. The Act similarly requires that unit owners be permitted to vote on matters including
budget ratification. 27A V.S.A. § 3-123(a). While Plaintiffs have offered admissible evidence
supporting their assertion that Declarant has never presented a budget for ratification, see, e.g.,
Lee aff. (Ex. 7), ¶ 6; Herr suppl. aff. (Ex. 4), ¶ 7–8, Declarant responded by stating: “Deny that no
budget have [sic] been proposed or approved. Admit the rest.” Def.’s Statement of Disputed Facts,
¶ 20. Declarant’s response includes no citation to evidence. Thus, the court deems Plaintiffs’
asserted facts to be admitted. See V.R.C.P. 56(c), (e). Because no reasonable jury could find that
Declarant did not violate the Act, Declaration, or Bylaws by failing to hold annual meetings and
present budgets for ratification based on the undisputed facts, Plaintiffs are entitled to summary
judgment on those claims.
(3) Notice of Executive Board Meetings
Finally, Plaintiffs contend that Declarant has violated the Act by failing to provide unit
owners with notice of executive board meetings. “During the period of declarant control, the
executive board shall meet at least four times a year.” 27A V.S.A. § 3-108(b)(3). Unit owners must
be given notice of such meetings. Id. § 3-108(b)(5) (“Unless the meeting is included in a schedule
given to the unit owners or the meeting is called to deal with an emergency, the secretary or other
officer specified in the bylaws shall give notice of each executive board meeting to each board
member and to the unit owners.”). Executive board meetings “must be open to the unit owners
except during executive sessions.” Id. § 3-108(b)(1). At such meetings, the board must provide a
“reasonable opportunity for unit owners to comment regarding any matter affecting the common
interest community and the association.” Id. § 3-108(b)(4).
As the court determined in its prior ruling, it is undisputed that Declarant has never given
unit owners notice of any executive board meeting, much less an opportunity to comment at one.
7
Pls.’ Ex. 3 (Herr. aff.) ¶ 9. Declarant has further failed to hold quarterly board meetings. Pls.’ Ex.
6 (Thibault depo.) at 18–19. Declarant’s “disputed” statement of fact denying these facts is
unresponsive and offers to citation to any supporting materials. See V.R.C.P. 56(c), (e). As no jury
could reasonably find in favor of Declarant, summary judgment is granted for Plaintiffs on the
issue of notice of executive board meetings.
DEFENDANT’S MOTION TO RECONSIDER
Declarant moves the court to reconsider its decision granting Plaintiffs’ motion for
summary judgment on the issue of Declarant’s liability for assessments on Declarant-owned
property. Declarant contends that the Act does not unambiguously define a “unit” as an improved
or unimproved lot, and does not require the “illogical” result where a developer pays assessments
for vacant lots for which no services are being used. Declarant claims the Declaration’s definition
of “unit” is ambiguous, presenting a jury question. If the court still concludes it is unambiguous,
Declarant requests an equitable reformation of the Declaration to clarify that “unit” does not
include vacant, unimproved lots. Alternatively, Declarant argues, the Act permits assessing
undeveloped lots, if at all, only for common expenses that benefit those lots. Plaintiffs,
unsurprisingly, insist that the court’s initial construction of “unit” was correct.
As the court stated in its previous ruling, the issue turns on the definition of “unit.”
Declarant does not argue that Declarant-owned units in general cannot be assessed; indeed, that
argument would be patently foreclosed by the plain language of the Act. Instead, Declarant argues
that the term “unit” as used in the Act and the Declaration includes only lots with completed
physical structures, as opposed to raw, undeveloped lots. Thus, Declarant contends, it is not liable
for assessments on its units that have not yet been developed.
8
Under the Act, “[u]nit” means “a physical portion of the common interest community
designated for separate ownership or occupancy.” 27A V.S.A. § 1-103(30). As the court held in
its prior decision, that statutory definition unambiguously refers to lots regardless of whether they
contain physical structures or are vacant and undeveloped. As Plaintiffs point out, the definition
references not only portions of the community designated for separate occupancy, but also those
portions designated for separate ownership. If “unit” meant only completed structures, the
language distinguishing ownership from occupancy would be mere surplusage. Moreover, the term
“designated” necessarily refers, at least in part, to some future interest. See American Heritage
Dictionary (5th ed. 2016) (defining “designate” as “To indicate or specify; point out” or “To select
and set aside for a duty, office, or purpose . . . . Appointed but not yet installed in office . . . .”).
This clearly contemplates lots that are intended for future ownership or occupancy, but are
currently undeveloped. Consequently, pursuant to the Act, all units are to be assessed, and that
includes units which consist of raw, vacant land.
There is persuasive authority from other courts, interpreting their jurisdictions’ respective
statutes, holding that undeveloped units are subject to assessments. See, e.g., High Point at
Lakewood Condo. Ass’n, Inc. v. Twp. of Lakewood, 442 N.J. Super. 123, 143, 121 A.3d 413,
425–26 (App. Div. 2015) (holding that “phantom” units are subject to assessments, but remanding
for consideration of New Jersey statute that specifically provided for lower assessment amounts
on unfinished units); Mountain View Condo. Homeowners Ass’n v. Scott, 883 P.2d 453, 457
(Ariz. Ct. App. 1994) (recognizing view that Uniform Condominium Act does not “distinguish
between completed and uncompleted units in . . . levying assessments for maintenance, repair and
administrative expenses attributable to the common elements”); Hatfield v. La Charmant Home
Owners Ass’n, 469 N.E.2d 1218, 1221–22 (Ind. Ct. App. 1984) (rejecting argument that
9
“habitability” must precede assessment); Pilgrim Place Condo. Ass’n v. KRE Props., Inc., 666
A.2d 500, 502 (Me. 1995) (stating “[n]o provision of the Act requires any distinction between built
and unbuilt units in the assessment for common expenses”); Bradley v. Mullenix, 763 S.W.2d 272,
275–77 (Mo. Ct. App. 1988) (stating that neither the statute nor the condominium’s declaration
distinguished between completed and unfinished units, and holding that developer was liable for
proportionate share of expenses attributable to unfinished units); Centennial Station Condo. Ass’n
v. Schaefer Co. Builders, Inc., 800 A.2d 379, 384 (Pa. Cmwlth. Ct. 2002) (following Mountain
View and Pilgrim Place, and holding that developer was liable for fees for units that were declared
but nonexistent); cf. Rafalowski v. Old Cnty. Rd., Inc., 719 A.2d 84, 87–88 (Conn. Super. Ct.
1997) (permitting a lesser assessment fee for unfinished units), aff’d, 714 A.2d 675, 675–77 (Conn.
1998); but see Meghan Coves Ass’n v. Meghan Coves Prop., Inc., 50 P.3d 226, 230–31 (Okla.
Civ. App. 2002) (finding that under Oklahoma statutory law, the establishment of a unit requires
construction of a unit “rather than an idea expressed on paper”).
An Arizona appellate court in Mountain View dealt with a statutory definition of “unit”
very similar to that provided in the Vermont Act. 883 P.2d at 457 (“A unit is ‘a portion of the
condominium designed for separate ownership or occupancy . . . .”) (quoting Ariz. Rev. Stat. § 33-
1202(22)). The court held there was nothing in the Arizona Uniform Condominium Act or the
declaration at issue in that case that distinguished between completed and unfinished units for
common expense assessment purposes. Id. “A ‘unit’ is described in terms of physical boundaries
to distinguish between that area which is for the exclusive use of the unit owner and that which is
part of the Common Area. . . . The physical description of a unit’s boundaries does not contemplate
. . . the existence of a physical structure before one becomes a ‘unit’ owner obligated to pay
assessments.” Id. at 456.
10
Similarly, the statutory definition of “unit” in the Maine Condominium Act applicable in
Pilgrim Place is identical to our own. See Pilgrim Place, 666 A.2d at 502 (citing Me. Rev. Stat. tit.
33, § 1601-103(26)). There, the Maine Supreme Court rejected the developer’s reliance on the
definition of “unit” as “a physical portion of a condominium” as unpersuasive. That court clarified
that “[t]he definition is of a physical portion ‘designated,’ i.e., intended in the future, ‘for separate
ownership or occupancy.’” Id.
The definition of “unit” in the Declaration also unambiguously includes both improved and
unimproved lots. Under the Declaration, a “unit” is “[a] physical portion of the Common Interest
Community designated for separate ownership or occupancy, the boundaries of which are
described in the Section 4.3 of this declaration. In Churchview Estates, each Unit consists of a Lot
as shown on the Plan and any improvement on that Lot.” Ex. 1, § 1.26. Like the statutory definition,
this definition also refers to a “physical portion . . . designated for separate ownership or occupancy
. . . .” Thus, as with the statutory definition, “designated” implies some future intention, while
“ownership” must refer to ownership without occupancy. This definition clearly contemplates that
a vacant lot may be considered a unit for assessment purposes.
Declarant points to the last sentence of the Declaration’s definition, which states that each
unit consists of a lot “and any improvement on that Lot.” Urging the court to read the word “and”
as conjunctive, Declarant contends that a “unit” should be understood to mean “a lot and
improvements” rather than “a vacant, unimproved lot or a lot with improvements.” Def.’s Mot. to
Reconsider at 3 (Aug. 26, 2016) (emphasis in original). However, as Plaintiffs observe, Declarant’s
argument is directly thwarted by the Declaration’s definition of “Improvements”: “Any
construction or facilities existing or to be constructed on the land included in the Common Interest
Community, including but not limited to, buildings, trees and shrubbery planted by the Declarant
11
or the Association, paving, utility wires, pipes and light poles.” Decl. § 1.16 (emphasis added).
The phrase “or to be constructed” patently means that planned yet currently nonexistent buildings
are “improvements” under the Declaration.
Even assuming the definition of “unit” in the Declaration was ambiguous as to whether it
included unimproved lots, the statute would not allow such a result. As explained in the court’s
August 12th decision, while terms defined in the Act may be defined differently in the Declaration
and the Bylaws, terms have an “unvarying meaning in the Act, and any restricted practice which
depends on the definition of a term is not affected by a changed term in the documents.” 27A
V.S.A. § 1-103, Uniform Law Cmt. 1. Thus, “[t]he drafter of a declaration or bylaws is always
entitled to use whatever words in lieu of defined terms as the drafter chooses, but this Act will
override such a usage when a substantive requirement in this Act is avoided in a declaration or in
bylaws.” Unif. Common Interest Ownership Act (2008), § 1-103, Cmt. 1. The effective result of a
narrower definition of “unit” in the Declaration than in the Act would be to avoid the Act’s
substantive requirement that all units be assessed once one unit is assessed. See Hatfield, 469
N.E.2d at 1222 (“The Indiana Horizontal Property Law requires ‘co-owners’ to pay their
proportionate share of the common expenses. A private agreement, in the nature of a contract,
could not relieve the developers of this statutorily imposed obligation. Thus, as long as the
developers remain ‘co-owners,’ their units are subject to assessment for common expenses
irregardless of the terms of the declaration and bylaws.”).
Declarant requests an equitable reformation of the definition of “unit” in the Declaration
to prevent “the manifest justice that otherwise results.” Def.’s Mot. to Reconsider at 4. “The
purpose of reformation is to ‘correct mutual mistakes of the parties that have created a result neither
party intended.’” Arapaho Owners Ass’n, Inc. v. Alpert, 2015 VT 93, ¶ 22 (quoting Cassani v.
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Northfield Sav. Bank, 2005 VT 127, ¶ 15, 179 Vt. 204) (trial court acted within its equitable
authority in reforming declaration of condominium and its schedule to correct mutual mistake as
to number of units in existence and reassigning unit owner’s percentage of undivided interest in
community). Declarant has not asserted a mutual mistake that has created a result neither party
intended. This is not the type of situation where equitable reformation applies. Moreover,
reforming the Declaration would serve no practical purpose. The Act would still define “unit” to
include vacant lots, and reformation of the statute is a matter solely for the legislature.
Lastly, and alternatively, Declarant contends that pursuant to 27A V.S.A. § 3-115(c)(2),
Declarant-owned unimproved lots may be assessed, if at all, only for common expenses that
benefited or benefit them. Def.’s Mot. to Reconsider at 4. The cited statutory section provides that:
“To the extent required by the declaration: . . . a common expense benefiting fewer than all of the
units or their owners may be assessed exclusively against the units or unit owners benefited . . . .”
27A V.S.A. §3-115(c)(2) (emphasis added). Declarant points to no provision in the Declaration
that requires such an alternative assessment method.
The court observed in two prior rulings in this case that it does seem illogical to charge
assessments for undeveloped units which do not benefit from common services to the same extent
as finished and occupied units. As one court has stated in response to a developer’s similar
argument that such an assessment was unreasonable:
Defendant argues that the conclusion of the trial court, that a “unit”
is not a “unit” until completed and capable of occupancy, is proper
as it would be unreasonable to assess maintenance, repair and
administrative expenses against units which were under
construction. We reject this conclusion and defendant’s reasoning.
Whether a building contains one complete and occupied unit and
nine incomplete units or vice versa the grass on the lawn grows to
the same length, the snow on the sidewalk accumulates to the same
depth, the roof and exterior paint deteriorate at the same rate.
Defendant inferentially concedes this issue by recognizing his
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responsibility to pay a proportionate share of the cost of building
insurance as soon as one unit in each building was sold and
occupied.
Bradley v. Mullenix, 763 S.W.2d 272, 275–76 (Mo. Ct. App. 1988). Admittedly, the reasoning in
Bradley applies with more force to a traditional condominium complex with multiple units within
one building. However, the same principle nonetheless applies here, albeit to a lesser degree.
Whether some of the buildings were constructed or not, certain services are required to maintain
common areas of the community, including property taxes, lawn maintenance, and snow plowing.
When the first unit in such a community is sold, that one person’s assessment cannot possibly
cover all the common expenses incurred by the community; nor can that one person be expected
to pay an increased assessment until other units are sold.
The Common Interest Ownership Act is a uniform law which applies to various types of
common interest communities, including condominium communities, as well as communities like
Churchview Estates. It must be applied consistently, regardless of whether certain requirements
appear to “fit” better with only certain types of communities. For example, imagine applying
Declarant’s argument to a condominium development, consisting of one building with one finished
and occupied unit and 16 unfinished and unoccupied units. Or imagine a common interest
community with a common recreation building that is finished, but with only one residential unit
finished and occupied. If the annual heating bill for the entire building in either case is $50,000,
the one unit owner’s assessment of $200 per month would not cover that amount. Insurance
premiums are another example. Assessments of the other unfinished units are required to cover
those common expenses. While this might lead to a seemingly “illogical” result in certain cases,
uniform laws must be applied uniformly. See Centennial Station Condo. Ass’n v. Schaefer Co.
Builders, 800 A.2d 379, 383–84 (Pa. Commw. Ct. 2002) (rejecting developer’s “assert[ion] that it
14
is not logical to require owners of unbuilt units to pay expenses from which they derive no benefit”
and noting that “[u]niform statutes are to be interpreted and construed to effect their general
purpose to make uniform the laws of the states that enact them”).
More specifically, Declarant claims the result is illogical because it would apparently result
in a “windfall” to the association in this particular case, where the actual common expenses for the
first few years were less than the amount that would have been collected in assessments from all
17 units. However, it is it not unexpected that a community’s expenses will go under-budget from
year to year, resulting in excess money in the community’s common expense account. Developers
should consider this before assessments begin, as the Act itself gives a developer flexibility as to
when to start assessing units. See 27A V.S.A. § 3-115, Uniform Law Cmt. 1.4 Although all the
common expenses early on might not have benefited the Declarant-owned, nonexistent units, some
expenses, including property taxes on common property, remain virtually consistent whether a unit
is completed or not. It is certainly equitable to require all unit owners to share in such expenses.
Furthermore, as the court specified in its August 12th ruling, summary judgment was granted only
on the issue of Declarant’s liability for assessments. The total amount due was left for trial to
determine how much to deduct from the alleged total amount on account of Declarant’s asserted
past out-of-pocket expenses for plowing and property maintenance.
4
Comment 1 to 27A V.S.A. § 3-115 provides:
This section contemplates that a declarant might find it advantageous, particularly
in the early stages of project development, to pay all of the expenses of the
common interest community himself rather than assessing each unit individually.
Such a situation might arise, for example, where a declarant owns most of the
units in the project and wishes to avoid building the costs of each unit separately
and crediting payment to each unit. It might also arise in the case of a declarant
who, although willing to assume all expenses of the common interest community,
is unwilling to make payments for replacement reserves or for other expenses
which he expects will ultimately be part of the association's budget. Subsection
(a) grants the declarant such flexibility while at the same time providing that once
an assessment is made against any unit, all units, including those owned by the
declarant, must be assessed for their full portion of the common expense liability.
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Order
Plaintiffs’ motion to reconsider is granted, and their motion for summary judgment is
consequently granted as to the issues of: (1) election of unit owners to executive board; (2) budgets
and annual meetings; and (3) notice of executive board meetings.
Defendant’s motion to reconsider is denied.
Dated at Burlington this 28th day of September, 2016.
_____________________________
Robert A. Mello
Superior Court Judge
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