Judge allows putative class action to proceed against condo association for imposing ‘resale fees’ against unit sellers
A Massachusetts Superior Court judge sitting in the Business Litigation Session denied a condominium association’s request to dismiss a putative class action seeking a declaration that “resale fees” imposed against unit sellers for future common expenses is unlawful.
Whether condominium associations can impose such fees against only selling unit owners but not all unit owners for the purpose of building up cash reserves to defray future common expenses is previously untested in Massachusetts.
David Rich, Matt Furman, and Widmaier Charles of the firm represent the plaintiffs in the case.
The judge observed that if evidence in the case proves that the condominium association intended to use the resale fees to defray future common expenses as the unit sellers allege, such a purpose would violate the Massachusetts Condominium Act “because it is, in practice, a one-time additional payment for ‘common expenses’ that is assessed not against all unit owners but only against those who sell their units.”
The judge’s ruling potentially impacts other Massachusetts condominium associations who have imposed similar “transfer fees” upon the sale of condominium units designed to build up reserves instead of simply defraying costs associated with the transfers.
The putative class of former condominium unit owners were forced to pay a “resale fee” equal to six months of condominium dues as a condition of the sale of their units. The two named plaintiffs had to pay $30,000 and $10,000, respectively, and it is believed dozens of other former unit owners were forced to make similar payments over last decade.
The judge determined that the case should proceed because the controlling condominium document does not by its terms alone impose an improper common expense on unit sellers.
However, the plaintiffs expect discovery in the case to demonstrate that the resale fee imposed against only selling unit owners is in fact unlawfully intended to defray future assessments for expenses common to all unit owners.