In an August 3, 2023, opinion, the New Hampshire Supreme Court (the “Court”), affirmed a superior court order dismissing a lawsuit filed by AZNH Revocable Trust and John and Susan Sullivan (“Plaintiffs”) against the Spinnaker Cove Yacht Club Association (the “Association”), concerning the Association’s ability to purchase additional land.
The underlying controversy arose in April 2021, when the Association’s Board of Directors began taking steps to purchase land outside the condominium property for additional guest parking spaces. Plaintiffs filed a complaint against the Association seeking declaratory judgment and injunctive relief, contesting the Association’s ability to do so. The presiding trial court ruled in favor of the Association, dismissing the Plaintiffs’ lawsuit, and an appeal to the Supreme Court followed.
The Court began its analysis by addressing the Condominium Act, which provides that the unit owners’ association shall have the power to acquire, hold, convey, and encumber title to real property, subject to any restrictions contained in the condominium instruments. RSA 356-B:42, I. The Plaintiffs’ central argument on appeal centered on the restrictions and limitations provision of the foregoing provision. The Plaintiffs asserted that the condominium instruments did not allow the Association to use assessment monies to purchase real property outside the existing condominium, and therefore, it was improper for the lower court to grant dismissal of their case against the Association.
The crux of the issue centers on each parties’ definition of the word “assessment”. The condominium declaration defined “assessment” to mean “that portion of the cost of maintenance, repairing, and managing the property which is to be paid by such unit owner.” The Plaintiffs interpreted this definition to include only those maintenance, repair, and management costs related to the existing condominium property, while the Association argued that the term “existing condominium property” did not occur in the actual definition, and was therefore being improperly inserted by the Plaintiffs. Further, since the actual definition provided for the cost of managing the property and the Association is the entity that manages the condominium, the Association argued that an assessment necessarily includes the expenses incurred by the Association.
The Court agreed with the Association, finding that its interpretation provided harmony and gave effect to all of differing provisions. In support of this conclusion, the Court pointed to an additional section in the declaration which provided a mechanism upon which the Association may purchase condominium units. Specifically, the provision stated that if approved, the Association may levy an assessment against each unit owner for the cost of the acquired unit. The Court viewed this as evidence refuting the Plaintiffs’ argument that assessment monies can only be used for maintenance, repair, and management costs.
The next argument the Court addressed was the Plaintiffs’ contention that the condominium’s status as “non-expandable” prohibited the Association from purchasing additional property. The Condominium Act defines an “expandable condominium” as “a condominium to which additional land may be added in accordance with the provisions of the declaration…” RSA 356-B:3, XV. If a condominium is expandable, then the declaration must contain an explicit reservation of the option to add land to the property and a legal description of said additional land. RSA 356-B:16, III. The Plaintiffs point to RSA 356-B:25, which provides that “[n]o condominium shall be expanded except in accordance with the provisions of the declaration and of this chapter” and assert that such provides the only means by which land can be added to a condominium property. The Court disagreed, concluding that, when viewed in light of the Condominium Act as a whole, the provisions of RSA 356-B:25 refer to and govern only a specific mechanism by which a declarant may reserve the right to add land to a condominium, and the provisions regarding expandable condominiums neither apply to nor preclude the addition of land by another method consistent with the Condominium Act and declarations.
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