Description
This assignment will be submitted to Turnitin™.
Instructions
Contracts play an important part of all leasing, whether it be residential or commercial. It is important that the verbiage used on a contract be carefully examined in order to determine the rights and obligations of all parties. For this assignment, please carefully review the attached Residential Lease, and then answer the following questions on a Word document. For all intents and purposes, presume the contract, as well as all addendums, has been properly signed, it is valid and enforceable.
Tenant is planning on leaving her job and starting an online business on Etsy.com, making crafts at her rental home that she will sell online. Is she required to notify her landlord? Why or why not?
Tenant has recently been diagnosed with PTSD and her doctor has recommended she obtain a therapy dog to assist her. However, she already has a dog named Happy and plans to have him trained to be her therapy dog. How might this change her rental agreement?
Tenant’s dog recently chewed through her patio screen and she would like this replaced. Who is responsible for this repair?
Tenant’s brother is going through a difficult time finding a rental of his own and has decided to come stay with her for three months, until the rental he signed a contract for is ready. Does the tenant have any legal obligation to inform her landlord? Why or why not?
The tenant has been saving her money and is considering buying a home of her own. If she terminates her lease five months before the lease ends, what are her obligations to her landlord? Please be sure to address all financial, notice and legal obligations.
Be sure to clearly number each of your answers to the corresponding questions. Don’t forget to note which section of the lease your answer is based upon for each question. Also, please be sure to thoroughly answer each question in detail for full credit. Answers should be written in complete sentences, with clarity and proper grammar. If you cite to any laws to support your answers, please be sure to include a citation to your source (Bluebook for Legal Studies majors and APA for all other majors). (10pts per answer for a total of 50pts)
Unformatted Attachment Preview
6Condominiums, Cooperatives, and Commercial Property
LEARNING OBJECTIVES
After studying this chapter, you will be able to:
•Define “condominium”
•Understand how a condominium homeowners’ association works
Copyright 2019. Aspen Publishing.
All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
•Define “cooperative”
•Understand the considerations that must be addressed when the property in question is commercial property
•Apply some practical tips for guidance in dealing with cooperatives, condominiums, and commercial real
estate
CHAPTER OUTLINE
Condominiums
Condominium declaration
Homeowners’ association
Articles of incorporation
Board of directors
Cooperatives
Commercial Property
Description
Physical inspection
Estoppel letter
Proration
Practical Tips
CHAPTER OVERVIEW
At this point, it would be beneficial to briefly examine certain hybrid situations that are commonly
encountered in a real estate law practice. These special situations include condominiums, cooperatives, and
commercial property.
Condominiums and cooperatives first appeared over one hundred years ago, exclusively in urban settings.
Land had become increasingly scarce with the growth of cities brought about by the Industrial Revolution.
People who wanted to own their own homes had to share their houses with others because of escalating land
values on limited space. Landowners began to construct taller buildings to increase the number of units that
EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM
AN: 2703214 ; Jeffrey A. Helewitz.; Basic Real Estate and Property Law for Paralegals
Account: s7348467.main.ehost
166
could be rented, further reducing the availability of land for single-family homes. Eventually, the owners of
multi-story buildings decided to sell units rather than renting so that people could, in some way, own their
own homes. The result was the condominium and the cooperative. This form of ownership is now popular in
suburban and rural areas, as well as the cities in which it began.
Although its title tracks the titles of all other property, commercial property involves several additional
aspects with regard to its sale, basically because most commercial property involves leases with tenants in
possession who have certain rights and obligations that must be taken into consideration when the property is
sold.
This chapter briefly examines these three specific situations involving the sale of real property.
Condominiums
A condominium is a form of ownership of real property in which the condominium owners hold title
outright to a specifically designated unit and, at the same time, hold title as joint tenants with all other
condominium unit owners in the development for what are considered to be the “common areas.” These areas
include hallways, entryways, roofs, stairways and elevators, and recreational areas such as a common
swimming pool, tennis courts, and health center. Basically, any area that is used by all of the unit owners may
be deemed to be a common area.
EXAMPLE:
A woman wants to retire to the Sun Belt and no longer wants to worry about maintaining her own home. She
purchases a two-bedroom unit in a condominium development that has a golf course. The woman holds title
to her unit (basically an apartment or a townhouse) as a tenant in severalty, and is a joint tenant with all other
unit owners for the golf course and common walkways and areas.
The concept of a condominium did not exist under the common law, and consequently is a creature of statute.
Every state has enacted laws that provide for the creation and regulation of condominiums (and
cooperatives), and therefore each jurisdiction’s statutes must be individually analyzed to determine particular
rights and obligations. In addition to statutory regulation, the person who develops the condominium must
also prepare a condominium declaration that is recorded with the deed to the land in the county recorder’s
office. This declaration details the specific rights and obligations of the unit owners (see Exhibit 6.1 at the
end of this chapter for an example of a Sales Contract for a Condominium).
When creating a condominium, the developer must, usually by statutory mandate, establish rights and
regulations for the governance of the condominium, and furthermore must prepare a plat description that
shows the physical size and location of each of the units (see Chapter 4). Also, a homeowners’ association
must be formed to oversee the regulation of the condominium and to have authority to maintain the common
areas. Before any units in the condominium can be sold, the condominium declaration, plat description, and
homeowners’ association must be established.
The homeowners’ association, sometimes referred to as the condominium association, is formed as a
non-profit corporation, and therefore, in order to be legally organized, it must file articles of incorporation
with the state secretary of state. These articles act as the association’s creating document. The association
must also adopt bylaws that detail the day-to-day operations of the association. The condominium unit
owners elect some of the residents to act as members of the association’s board of directors who manage the
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
167
association for a stated period of time, at which point a new board will be elected by the unit owners. The
unit owners pay an assessment to cover the cost of maintaining and repairing the common areas of the
condominium.
EXAMPLE:
A condominium developer has filed all necessary papers to create a condominium, and has sold almost all the
units. The developer has also filed a certificate of incorporation for the homeowners’ association with the
secretary of state. At this point, the developer calls a meeting of the unit owners for the purpose of electing a
board of directors. Five people are elected to the board. The board then has the unit owners pay the yearly
assessment so that it can maintain the common areas.
With a condominium, each unit owner is liable for the maintenance and repair of his or her own individual
unit, and is liable for any injuries that result from the failure to maintain the requisite standard of care
associated with property ownership (see Chapter 4). The unit owner is also a joint tenant for the common
areas, and the owner is jointly liable for any injuries resulting from the failure of the homeowners’
association to maintain the common areas in good repair.
Because the condominium represents individual ownership of the unit, the unit owner is free to sell, gift,
devise, or rent his or her unit without restriction, unless there is some prohibition in the condominium
declaration, which is rare. Condominium ownership typically provides for the free transferability of the
property.
Cooperatives
A cooperative differs from a condominium. Cooperative ownership is considered to be ownership of
personal property, not real property, because the owner purchases a share in a cooperative association, and
the share entitles the holder to possess a specified unit that is owned by the cooperative. In other words,
cooperative ownership is similar to ownership of a corporation. The shareholder owns a share that represents
a percentage of corporation, and the share entitles the holder (with the cooperative) to possess, not own, a
particular unit. Cooperatives are very popular on the East Coast of the United States.
Because the cooperative owner only holds a share, the shareholder has limited rights with respect to the
transferability of that share. The cooperative is managed by a board that is responsible for the financial and
physical well-being of the property. As a consequence, the board reviews all prospective purchasers for
financial resources and personality, to determine whether the potential owner would be an appropriate tenant
in the cooperative. Therefore, if an owner wishes to sell his or her share, the prospective buyer must be
approved by the cooperative board. In the case of a stalemate, the cooperative agreement often provides that
the cooperative will repurchase the shares from the owner, but the price is usually set at a rate below market
value.
EXAMPLE:
The owner of a cooperative wants to move and has found a prospective buyer for his shares, a well-known
rock musician. Although the transaction would be financially sound, the board refuses to approve the
musician because they do not want “theatrical people” in the building. Therefore, the board may block this
potential sale.
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
168
Because the units are owned by the cooperative, not the shareholders, financing of the property is made by
and through the cooperative, and each shareholder pays an assessment to the board to cover the financing. If
a shareholder defaults, the other shareholders must make up the shortfall to maintain the property’s financing.
Cooperatives, because of their restrictions on transferability, are usually less expensive than condominiums.
See Exhibit 6.2 at the end of this chapter for an example of a Sales Contract for a Cooperative.
Condops
In the past few years, a hybrid of the cooperative and the condominium has developed, known as a “condop.”
Legally, a condop is a condominium with two units: (1) a commercial space, which, though treated as a
single unit, may be divided into multiple stores, and (2) a residential unit, which typically consists of many
apartment units and is owned by a cooperative that sells shares and gives out proprietary leases. In other
words, a condop consists of two condominiums, one of which is owned by a cooperative. Simply put, a
residential condop has a cooperative legal structure, but limited regulation and restrictions on the residential
units and virtually no board approval requirements.
EXAMPLE:
An individual buys a residential unit in a condop, purely as an investment. Although she only owns shares in
the cooperative corporation that entitle her to reside in a particular unit, she is not planning on living in the
apartment; rather, she intends to rent it on a continual basis to have income. Because the unit is in a condop,
she does not have any restrictions on renting the apartment and does not need the board to approve her tenant.
Commercial Property
The term “commercial property,” as used in the context of this book, refers to real estate that has been
developed for commercial use, such as office and apartment buildings and shopping centers, and
consequently has tenants already in situ. Certain additional considerations must be addressed with any sale of
this type of property:
•When the property is described in the contract for sale, items of personal property that are used in the
operation of the commercial venture are also usually included, such as landscaping and snow removal
equipment. If not included in the description of the property being transferred, they must be specifically
excluded if the items are not intended to be part of the sale.
•Purchasers of commercial property are entitled to a physical inspection of the property prior to the sale. This
inspection can include review of all contracts and financial documents associated with the property, and the
buyer typically has the right to withdraw from the contract at this time if there are problems with the property
that the seller refuses to remedy.
•In addition to the general covenants discussed in the previous chapter, if the sale involves commercial
property, the seller is usually required to provide certain guarantees with respect to any leases that exist on
the property, as well as all services and utilities in effect with respect to the property. The seller usually
warrants that he or she will not enter into any new lease or contract before the closing date without the
buyer’s consent.
•If the property is leased to tenants at the time of the sale, the tenants may be required to sign an estoppel
letter, a document that warrants the accuracy of the tenant’s lease that is provided for the buyer by the seller.
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
169
A copy of the purported lease is attached to the estoppel letter for this purpose.
•If the commercial property being sold is subject to a mortgage, and the buyer is taking title subject to the
mortgage, the buyer will require the mortgagee to provide an estoppel certificate that details all the terms of
the note and mortgage, indicating the amount of the outstanding balance and any amount in default as of the
date of the signing of the estoppel certificate.
•For commercial property that is leased to tenants, the contract for sale will usually require a proration of the
rent—a delineation of the amount of rent that will belong to the seller and the amount that will belong to the
buyer. Furthermore, the contract must specify the taking over of any security deposits made by the tenants to
the seller, which represent an amount that must be maintained in a trust account for the benefit of the
property owner if the tenant defaults on the rent.
•Usually the buyer will require the seller to include an indemnification clause, whereby the seller agrees to
indemnify, or reimburse, the buyer for any cause of action on the property that was occasioned by events that
occurred prior to the closing that are attributable to the seller’s breach of a legal obligation.
See Exhibit 6.3 at the end of this chapter for a Land Description of a Commercial Property.
Practical Tips
•Make sure that all requirements of the co-op or condominium board to effectuate a transfer have been met.
•For commercial property, if dealing with an artificial entity, make sure that the entity has been lawfully
formed; otherwise, the transaction may be invalid.
•For commercial sales, make sure all tenants have received and/or prepared all necessary documents.
Chapter Review
Condominiums, cooperatives, and commercial property present special problems for anyone involved in the
purchase and sale of realty.
The condominium represents a dual title to property: individual ownership for a given unit and joint tenancy
for the common areas. Condominiums are easy to transfer, but the unit owner has individual liability for his
or her own unit and is jointly liable with the other unit owners for injuries resulting from poor maintenance of
the common areas.
Cooperatives represent ownership in personal property of a share certificate that entitles the holder to
possess, not own, a given unit. Liability for the cooperative owner is joint with all the other shareholders, and
transferability of the share is difficult because alienation is restricted and subject to approval by the
cooperative board.
Both condominiums and cooperatives are managed by boards pursuant to their certificates of incorporation.
The sale and purchase of commercial real estate, although following all the other categories of realty, require
special attention for certain matters that apply only to property that is occupied by tenants who have rights
and obligations with respect to the property. These considerations must be addressed in the contract for the
sale of all commercial realty.
Ethical Concern
It is an unethical practice to represent both sides in a legal transaction unless both parties are aware of the
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
170
representation and agree to it. This means that in a real estate transaction, the same law office cannot
represent the buyer and the seller unless they both agree. Even if both sides agree, however, it still may be
wise to decline such representations to avoid even the appearance of impropriety.
Key Terms
Articles of incorporation
Assessment
Board of directors
Bylaws
Condominium
Condominium association
Condominium declaration
Condop
Cooperative
Estoppel certificate
Estoppel letter
Homeowners’ association
Indemnification
Proration
Security deposit
Exercises
1.Review your state’s statutes governing cooperatives and condominiums.
2.Briefly discuss the reasons a person might wish to purchase a cooperative rather than a condominium.
3.At the county recorder’s office, search for an estoppel letter that appears with a deed to a commercial
building.
4.Obtain from a local bank a copy of a mortgage application to purchase a cooperative and analyze its
provisions.
5.Briefly discuss the additional factors that must be addressed with the purchase of commercial property.
Situational Analysis
A group of townhouses were constructed as a condominium. After several years, the board decides that the
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
171
exteriors of some of the houses need to be repainted, and it assesses all the unit owners, claiming that this is a
common area. Your client is one of the unit owners so assessed whose house is not being painted, and she
claims this is not a common area. Argue both sides and decide the case.
Edited Cases
The first case, Lioi v. Westview Equities, involves the imposition of a “flip tax” imposed when the owner of a
cooperative sells his shares. The second case, Fore L Realty Trust v. McManus, concerns the conversion of
rental units to condominiums.
Lioi v. Westview Equities
8 Misc. 3d 719, 795 N.Y.S.2d 442 (2005)
In this small claims action, the plaintiff is seeking the return of a “flip tax” of $2,760 (2% of the $138,000
sale price) from the defendant cooperative association that he was required to pay when he sold his unit on
December 23, 2004.
The plaintiff entered into the contract of sale in October of 2004, which required a down payment of five
percent. It contained a form provision that the seller would pay the flip tax, if any. The imposition of a flip
tax arose from a resolution of the board of directors passed on October 28, 2004, which read as follows: “A
flip tax of 2% of the sale price of a unit was approved by the board, effective November 1, 2004.”
On November 30, 2004, the resolution was approved by over 75% of the voting shares required for a change
to the proprietary lease. The plaintiff contends that the flip tax should not apply to him because the contract
of sale was entered into prior to the effective date of the resolution. The defendant counters that the date of
sale which took place after the flip tax came into effect is determinative. But by the time the flip tax became
effective, the plaintiff had already entered into the contract of sale and received the down payment. The
essence of the transaction was substantially completed, except for board approval, prior to the authorization
by the shareholders of the flip tax which should not be applied retroactively. (See McIntyre v. Royal Summit
Owners, Inc., 126 Misc 2d 930, 933, 487 NYS2d 474 [App Term, 1st Dept 1984].) But the defendant argues
that, despite the above, the contract was contingent upon financing and board approval and thus did not
become effective until the purchaser, possessed of a bank commitment, was approved by the defendant.
These contingencies do not prevent the contract from being a binding obligation. The financing was obtained
before the resolution became effective. As for board approval, which took place the same day the flip tax was
ratified by the shareholders, the contract of sale could have been voided by an unfavorable board vote, but as
between buyer and seller, the contract was binding as to all terms including the purchase price and down
payment, which netted less proceeds with the deduction for the flip tax. As such, it was effective as between
them prior to board approval and ratification of the flip tax. Moreover, it would be bad public policy to put
the beneficiary of the flip tax, the cooperative association, in a position where by delaying the approval of a
candidate, it could insure application of the flip tax. Unlike the case in Holt v. 45 E. 66th St. Owners Corp.
(161 AD2d 410, 411, 555 NYS2d 340 [1st Dept 1990]), there was no specific agreement that a flip tax would
be imposed on the sale. Nor was a flip tax provision contained in the offering plan adopted prior to the date
of the contract of sale. (See 1326 Apts. Corp. v. Barbosa, 147 Misc 2d 264, 267-268, 555 NYS2d 560 [Civ Ct,
NY County 1990]; Holt v. 45 E. 66th St. Owners Corp., supra.) The defendant also urges that the plaintiff did
not reserve his rights by having the disputed flip tax held in escrow or by paying under protest. However, the
defendant’s position at the closing was that the flip tax was due and the plaintiff could reasonably have
understood that the payment was a necessary condition of the closing. His payment of it cannot be deemed
voluntary. (See Austin Instrument v. Loral Corp. 29 NY2d 124, 133, 272 NE2d 533, 324 NYS2d 22 [1971].)
For the reasons stated, the plaintiff is entitled to the return of the flip tax of $2,760.
Case Questions
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
172
1.What is your opinion of a cooperative board being able to impose a flip tax on the sale of its shares?
2.Research your jurisdiction to determine whether it permits flip taxes.
Fore L Realty Trust v. McManus
71 Mass. App. Ct. 605, 884 N.E.2d 994 (2008)
This is an appeal from a decision of the Appellate Division of the District Court that affirmed a judgment of
the District Court in favor of Joseph McManus, the tenant of rental premises being converted to a
condominium unit. The sole issue on appeal is whether the statute that abolished rent control, see St. 1994, c.
368 (rent control prohibition act), repealed a previously existing statute that afforded notice and other
protections to tenants such as McManus whose rental unit was to be converted to the condominium form of
ownership. See St. 1983, c. 527, §4(a) (condominium conversion act). We affirm the decision and order of
the Appellate Division. We conclude that the rent control prohibition act did not repeal the condominium
conversion act and abolish the protections afforded to tenants upon conversion of their rental units to
condominium units. By its very terms, the rent control prohibition act prohibits only municipal regulation of
rents. The protections afforded to all tenants in §4(a)-(e) of the condominium conversion act are not a
municipal regulation of rents, and therefore are not abrogated by the rent control prohibition act.
1. Background. The underlying facts are undisputed. Joseph McManus is an elderly resident of an apartment
on Cherry Street in Waltham managed by Fore L Realty Trust (Fore L), which is also his landlord. McManus
has lived in his apartment for approximately fifty years. In 2005, Fore L decided to convert the units in the
building where McManus maintains his apartment to condominium units. In June of 2005, Fore L sent
McManus a notice to terminate his tenancy, but it did not send him a notice informing him of its intent to
convert his unit to a condominium unit and of McManus’s rights as set forth in the condominium conversion
act. When Fore L sought to evict McManus in a summary process action in the District Court, McManus
defended against his eviction on the ground that Fore L had failed to provide the required statutory notice of
condominium conversion. Judgment entered in favor of McManus, and the Appellate Division affirmed that
judgment, concluding that the repeal of rent control laws did not effect a repeal of statutory requirements on
conversion.
Fore L concedes that it did not give McManus the notice required under the condominium conversion act,
and that if such notice survived the repeal of rent control, then the judgment in favor of McManus is proper.
Fore L argues, however, that such notice is not required, the requirement having been repealed along with
rent control. We conclude, favorably to McManus, that the rent control prohibition act did not repeal the
requirements of the condominium conversion act.
2. Discussion. In 1994, Massachusetts voters passed by initiative petition St. 1994, c. 368, inserting into the
General Laws as a chapter numbered 40O, the “Massachusetts Rent Control Prohibition Act,” prohibiting any
city or town from enacting, maintaining or enforcing rent control regulations. The voter initiative defines in
§3 of the act the “rent control” that §4 of the act prohibits a city or town from enacting, maintaining, or
enforcing. See G. L. c. 40O, §§3, 4; St. 1994, c. 368, §§3, 4. Section 3 declares that “[f]or the purposes of this
chapter, the term ‘rent control’ shall mean: (a) any regulation that in any way requires below-market rents for
residential properties; and (b) any regulation that is part of a regulatory scheme of rent control as defined in
subsection (a), including the regulation of occupancy, services, evictions, condominium conversion and the
removal of properties from such rent control scheme. . . .” G. L. c. 40O, §3.
Concerned with the consequences of an immediate cessation of rent control,1 the Legislature enacted
transition legislation, St. 1994, c. 282, to establish a uniform Statewide policy for ending rent control. By its
express terms, the transition legislation was to “apply notwithstanding the provisions of chapter forty O of the
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
173
General Laws, or any general or special law to the contrary.” St. 1994, c. 282, §1. Among its other transition
provisions, St. 1994, c. 282 excluded the condominium conversion act from the definition of rent control and
from the scope of the rent control prohibition act. See St. 1994, c. 282, §3(e).2
While St. 1994, c. 282 included a “sunset provision” that caused certain of its transitional provisions to expire
within one year (on December 31, 1996), the sunset provision did not extend to the provision that excluded
the condominium conversion act from the definition of rent control. See St. 1994, c. 282, §§3(e), 9. In
consequence, the provision excluding the condominium conversion act from the definition of rent control did
not expire with the sunset provisions of St. 1994, c. 282.
It soon became apparent that the voter initiative that provided for the codification of the rent control
prohibition act in c. 40O of the General Laws unwittingly created a numerical anomaly. There already existed
a c. 40O of the General Laws that dealt with an unrelated subject. To eliminate the confusion arising from the
duplicate numbering, the Legislature enacted corrective legislation that renumbered c. 40O as c. 40P,
retroactive to January 1, 1995. See St. 1997, c. 19, §10. However, the corrective legislation made no
reference to the transition legislation’s exclusion of the condominium conversion act from the definition of
rent control. Rather, the corrective legislation retained the provision of the original rent control prohibition
act and stated “this chapter shall preempt, supersede or nullify any inconsistent, contrary or conflicting state
or local law.” G. L. c. 40P, §5, as inserted by St. 1997, c. 19, §10. See also St. 1994, c. 368, §5.
The crux of Fore L’s contention arises from this legislative correction of the numerical anomaly created by
the voter initiative. Fore L argues that the definition of rent control in G. L. c. 40P, §3, and the omission in c.
40P of any reference to St. 1994, c. 282 (and its exclusion of the condominium conversion act from the
definition of rent control), establish that in enacting c. 40P, the Legislature intended to abolish not only rent
control but also the protections of the condominium conversion act. We disagree. Such an argument
misconstrues the scope and purpose of both the rent control prohibition act and the condominium conversion
act. Moreover, such an argument attempts, by definitional legerdemain, to transform a purely corrective
change in the numbering of a general law prohibiting a city or town from imposing rent control into a repeal
by implication of the protections that the condominium conversion act affords to tenants. See Greater Boston
Real Estate Bd. v. Boston, 428 Mass. 797, 799, 705 N.E.2d 256 & n.2 (1999); Gross v. Prudential Ins. Co. of
Am., 48 Mass. App. Ct. 115, 117 n.2, 718 N.E.2d 383 (1999) (redesignation a purely technical amendment in
recognition of fact that different c. 40O already existed).
We view the condominium conversion act as a protection of Statewide application, afforded to all tenants,
that differs materially from a municipal regulation or ordinance that regulates or requires below-market rents
for residential properties. Prior to the abolition of rent control, the condominium conversion act afforded all
tenants—those paying market rents and those paying controlled rents alike—certain rights and protections
upon conversion of the tenant’s unit to a condominium unit. We discern nothing in the rent control
prohibition act that would provide tenants of units formerly subject to rent control fewer protections upon
conversion than those who were not.
Fore L’s central argument rests on the flawed premise that the rent control prohibition act, which prohibits a
“city or town” from enacting, enforcing, or maintaining rent control of any kind (with certain immaterial
exceptions) is in conflict with the protections that the condominium conversion act affords to all tenants.
There is no such conflict. The condominium conversion act and the rent control prohibition act are part of a
delicately balanced legislative approach to addressing the shortage of affordable housing for the citizens of
the Commonwealth.3
The requirements and purposes of the condominium conversion act are related to, but distinct from, the
limitation that the rent control prohibition act imposes on a city or town controlling rent at the municipal
level. The condominium conversion act is a legislative grant of protections to all tenants of rental units being
converted to condominiums. The rent control prohibition act is a legislative restriction on the ability of
municipalities to regulate rents at the local level, a factor that may discourage new rental housing production.
EBSCOhost – printed on 3/18/2024 9:25 PM via AMERICAN PUBLIC UNIVERSITY SYSTEM. All use subject to https://www.ebsco.com/terms-of-use
174
The condominium conversion act affords tenants notice rights, pre-eviction lease extensions, first rights of
refusal, purchasing rights at market price, and relocation assistance. None of these provisions regulates rents.
To the extent that §4(e) of the condominium conversion act works a limitation on the rental increases that a
landlord may lawfully impose upon a tenant in possession at the time of conversion, such a limitation is a
legislative determination of Statewide application and not a prohibited municipal regulation of rent within the
ambit of the rent control prohibition act.4 While §§3 and 4 of the rent control prohibition act preclude a
municipality from regulating rent (including during a period of condominium conversion), no similar
prohibition prevents the Legislature itself doing so, either in that act or elsewhere. See Greater Boston Real
Estate Bd. v. Boston, 428 Mass. at 798-802 (invalidating city ordinance enacted under condominium
conversion act as beyond that statute’s enabling act and violative of rent control prohibition act).
We also find unpersuasive Fore L’s argument that the definition of rent control in G. L. c. 40P, and the
absence of any reference in that corrective statute to the transition legislation and its exclusion of the
condominium conversion act from the definition of rent control, signified the Legislature’s intention to repeal
the requirements of the condominium conversion act along with the prohibition against municipal control of
rents. There was no need to make reference to the condominium conversion act in the corrective statute. As
previously discussed, there is simply no conflict between the condominium conversion act and the rent
control prohibition act where the challenged rights are those granted by the Legislature itself and not by cities
or towns under the enabling provisions of the condominium conversion act. Contrast Greater Boston Real
Est
