Tuesday, November 9, 2010

I Do Declare! And the Declaration Controls.


Madowitz and Kohl v. The Woods at Killington Owners’ Association, 2010 VT 37.

Condo developers in Killington began constructing and selling units in the 1980s.  Under the law at the time, purchasers were entitled to an equal share of the common area in accord with the number of owners.  Since future development was anticipated, the developers needed permission from the homeowners, so they slapped it into the declaration of condominium language that promised the developers a power of attorney.  Unfortunately for the developers, they also stuck language into the buyers’ individual deeds indicating that power of attorney was limited and would expire at the end of ten years.


Ten years go by and there is no new development.  Older developers sell to new developers.  New developers work on a plan and launch an expansion in 2005.  Not so fast cry members of the Condo Owners’ Association.  The Association effectively blocks developers in Act 250 and seek a ruling of their rights. 

On appeal, the sole issue is whether the condominium declaration language indicating that the residents have given the Developers a limited power of attorney to adjust everyone’s common property shares controls, or whether the 10-year limited POAs in the individual deeds control. 

For the majority, the case is simple.  The declaration controls.  Community rights, community document.  The deeds are a strange and troubling anomaly, but they are not enough to give the Court pause.  Community Order must be kept and individual deed rights are not the forum.  Whatever gibberish they contain is irrelevant.

In a strong and lengthy dissent, Justice Dooley, joined by Judge Joseph, writes that the majority gets the issue wrong.  For the dissent, this is an either–or situation that the majority abandons.  For the dissent, the key question is contract based.  Developer held the drafting power in the documents, and the fact that the declaration and the deeds conflict is only a problem for the developer who must stand behind them as the author. 

On the other hand, if the declaration controls, the Association owners have a case for consumer fraud since they were promised one thing, and led through the deeds to believe it.  By denying them this right to contest, developer had committed consumer fraud. 

The dissent notes that the Condominium Act at issue is very much a consumer fraud type of act and is intended to help protect condo owners.  Blocking development opposed almost unanimously by the homeowners is exactly what the act was designed to facilitate. 

Although the dissent’s point is fair, it is hard to imagine what type of development abutting landowners would support.  

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