Opinion ID: 1988985
Heading Depth: 1
Heading Rank: 3

Heading: The Third, Fourth and Fifth Amendments

Text: The defendants appeal the hearing justice's determination that the Third, Fourth and Fifth Amendments were void ab initio. These amendments purportedly extended IDC's deadline to develop the South and West Development Units and to exercise its rights to the Reserved Area from December 31, 1994, to December 31, 1999. The defendants maintain that the amendments were approved validly through unanimous votes by the six master condominium unit owners in accordance with the act, and that the hearing justice erred in finding that statute required the unanimous consent of the sub-condominium unit owners. We disagree. Section 34-36.1-2.17(d) provides: Except to the extent expressly permitted or required by other provisions of this chapter, no amendment may create or increase special declarant rights, increase the number of units, change the boundaries of any unit, the allocated interests of a unit, or the uses to which any unit is restricted, in the absence of unanimous consent of the unit owners. [15] Section, 34-36.1-2.05(a)(8) provides that condominium declarations must contain: A description of any development rights and other special declarant rights    reserved by the declarant, together with a legally sufficient description of the real estate to which each of those rights applies, and a time limit within which each of those rights must be exercised [.] (Emphasis added). Special declarant rights are defined as: rights reserved for the benefit of a declarant to:    (ii) To exercise any development right (§ 34-36.1-2.10),    (vi) To make the condominium subject to a master association, (§ 34-36.1-2.20)   . Section 34-36.1-1.03(26). The reserved right to develop both the South and West Development Units therefore constituted special declarant rights under the act. Consequently, any amendment to increase these special declarant rights, such as an extension of the time limit to exercise declarant's development rights, was subject to the unanimity requirements mandated by § 34-36.1-2.17(d). According to the master declaration, the successor declarant (IDC Properties), retained development rights in the South and West Development Units, as well as its rights in the Reserved Area, until December 31, 1994. Since development rights are special declarant rights, it follows that any attempt to extend development rights was subject to the statutory requirement that unanimous consent of the owners be obtained pursuant to § 34-36.1-2.17(d). [16] The defendants maintain that this unanimous consent requirement was fulfilled when the amendments were passed by a unanimous vote of the master condominium unit owners. They argue that the sub-condominium unit owners were represented at the relevant meetings by their sub-condominium board members. As previously noted, the master declaration defines a unit owner as the Declarant or other person or persons owning a Unit of a Sub-Condominium   . Unlike the master declaration, however, the act makes no distinction between master condominium unit owners and sub-condominium unit owners. Instead, a unit owner is defined in the act as: a declarant or other person who owns a unit, or a lessee of a unit in a leasehold condominium whose lease expires simultaneously with any lease, the expiration or termination of which will remove the unit from the condominium, but does not include a person having an interest in a unit solely as security for an obligation. Section 34-36.1-1.03(29). It is clear from the foregoing language that the owner of a sub-condominium unit constitutes a unit owner for purposes of the act. Under the act, unit owners are given the right to vote upon any amendments to special declarant rights; however, under the master declaration's definition of owners and unit owners, owners of a sub-condominium unit are prohibited from casting such votes except through the declarant-controlled master association. Considering the clear and unequivocal language of § 34-36.1-2.17(d) requiring unanimous consent to any increase of special declarant rights, coupled with the strong consumer protection aspect of that section, there is no doubt that the Legislature intended to protect plaintiffs, as unit owners, from amendments favoring the declarant made without their consent. Thus, we hold that the master declaration prohibition on voting is precisely the type of artifice or device that the statute proscribes and that the voting scheme at issue is inconsistent with the act. The record reveals that even the master declaration itself contravened § 34-36.1-2.17(d) by permitting amendments to the special declarant rights through a vote of only 67 percent of the master condominium unit owners and sub-association board members rather than through the unanimous consent of the individual unit owners required by the statute. More importantly, however, the Third, Fourth and Fifth Amendments were passed without any votes from the individual unit owners because only the master condominium unit owners and the sub-association board members were permitted to vote to extend IDC Properties' special declarant rights. Furthermore, the record reveals that the individual unit owners did not even receive notice of the special meetings for purposes of discussing and voting upon the Third and Fourth Amendments. Thus, we conclude that the voting procedure employed at the special meetings improperly deprived the individual unit owners of their statutory right to give consent. Consequently, the hearing justice did not err in declaring that the Third, Fourth and Fifth Amendments were void ab initio and that the declarant's development rights had expired after December 31, 1994. [17]