Laws, and the legal decisions that support and enforce them, are constantly evolving and can affect every facet of community life in HOAs, condominiums and co-ops. While law and legal cases can emanate from any of our three levels of government – federal, state or local – most of the developments that affect housing come from the bottom up, with local and state law often defining or redefining what co-op, condo, HOA, and even owners of rental housing may and may not do within the law.
Much of the legislation and case law pertaining to housing derives from the federal Fair Housing Act, which was signed into law by President Lyndon Johnson in 1968 around the time of the civil rights movement. The law exists primarily to protect against race-based discrimination in housing, but it has gone on to represent and promote a much broader range of principles.
Aside from non-discrimination, housing law and legislation also deal with safety, equity, and the ability of local governments to tax real estate owners. This type of legislation and specific case law more than likely originates at the local and state level. Often as a result, individual statutes and cases apply to specific localities. A decision handed down in a New York court may not affect communities in Massachusetts, though a similar case could result in a similar decision in more than one locale. Similarly, a statute may apply to a co-op or condo in one city and not in the neighboring one, resulting in different requirements literally a few miles apart.
Two Cases From New England
Howard Goldman, a partner at the law firm of Goldman & Pease in Needham, Massachusetts, points out two recent cases that demonstrate the ability of the courts to define protections and rights under current law. In the first case, Trustees of Cambridge Point vs. Cambridge Point, the Supreme Judicial Court in Massachusetts ruled against so-called ‘poison pill’ clauses in condominium governing documents that may have been placed there to prevent a condo association from successfully suing its developer. Goldman explains that in the Cambridge Point case, this particular condominium association was left with over $2,000,000 worth of construction defects, but the association’s governing documents required approval from fully 80 percent of the ownership in order to sue for damages. The developer still owned 20 percent of the units, which meant 100 percent of individual unit owners would have to approve the suit in order to move forward. In addition, the suit had to be brought within 60 days and the association board had to produce an estimate of what the legal process might cost the association to conduct. The feeling was that owners might be alarmed if the cost to bring the proceeding appeared more costly than the cost to cure the construction defects.
The court ultimately ruled that poison pill clauses were not in the public interest. “The court looked at gross negligence and warranty of habitability to make its judgment,” says Goldman. “The decision may be appropriate for the legislature to amend the condo statute to avoid these poison pill clauses.” He advises condo associations that if they have this type of clause in their documents, they should amend the documents to remove them.