Opinion ID: 2336258
Heading Depth: 2
Heading Rank: 2

Heading: All other claims.

Text: Burgess' remaining claims all stem from the Board's decisions from 1981 to 1983 to amend its bylaws and house rules. Burgess contends that in amending the bylaws to require a higher unit occupancy rate by shareholders, the Board breached the terms of his proprietary lease because the new bylaws prevented him from subletting his condominium unit, a right which he originally enjoyed when he purchased his share in the cooperative. Although Burgess does not challenge the procedures followed by the Board in enacting the amendments, he relies on language in Sections 50 and 51 of the bylaws which provide collectively that no house rules or regulations nor bylaws shall be made retroactive. [7] Accordingly, Burgess contends that the Board should not have refused to permit him to sublet his apartment or, once it did so, that it was required by pre-amendment Section 47(2) to make reasonable efforts to rent the apartment out on his behalf. In declining to do either, Burgess argues that the Board was in breach of contract. [8] Under Hampshire Gardens' interpretation of the meaning of the term retroactive, however, the changes in the rules and bylaws did not violate either Section 50 or 51 of the bylaws because existing subtenants were not asked to vacate their apartments until their subleases had expired, and hence, the amendments were applied prospectively to future efforts to sublease, with notice of the restriction. We agree with Hampshire Gardens' interpretation and reject appellant's argument. The cooperative instruments, which include the bylaws and sales agreement, constitute a contract governing the legal relationship between the cooperative association and the unit owners. See Johnson v. Fairfax Village Condo. IV Unit Owners Ass'n, 548 A.2d 87, 91 (D.C.1988); 15A AM. JUR. 2D Condominium and Co-Operative Apartments § 79 (1976). A purchaser of a unit in a condominium [9] voluntarily submits himself to the condominium form of property ownership, which requires each owner to give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization. Worthinglen Condominium Unit Owners' Ass'n v. Brown, 57 Ohio App.3d 73, 566 N.E.2d 1275, 1277 (1989) (quoting Hidden Harbour Estates, Inc. v. Norman, 309 So.2d 180, 181-82 (Fla.Dist.Ct.App.1975)); see also Johnson v. Hobson, 505 A.2d 1313, 1317 (D.C.1986). Potential purchasers of condominium units should thus realize that the regime in existence at the time of purchase may not continue indefinitely and that changes in the declaration may take the form of restrictions on the unit owner's use of his property. Worthinglen Condominium Unit Owners' Ass'n, 566 N.E.2d at 1277. As the cooperative form of ownership is more restrictive than that of a condominium, [10] it follows that a stockholder in a cooperative is no less subject to the private regime established by the association. Although neither the courts in the District of Columbia nor Delaware, Hampshire Gardens' place of incorporation, [11] have ruled on whether an amendment to a cooperative or condominium instrument that restricts the occupancy or leasing of units in the cooperative or condominium complex can be applied to owners who bought their shares or units before the amendment was adopted, most courts deciding the issue have held that such amendments, once properly adopted, are indeed binding upon earlier buyers. See Ritchey v. Villa Nueva Condominium Ass'n, 81 Cal.App.3d 688, 146 Cal.Rptr. 695, 699 (1978); Flagler Fed. Sav. and Loan Ass'n v. Crestview Towers Condominium Ass'n, 595 So.2d 198, 200 (Fla. Dist.Ct.App.1992) (amendment to recorded Declaration of Condominium); Breezy Point Holiday Harbor LodgeBeachside Apartment Owners' Ass'n v. B.P. Partnership, 531 N.W.2d 917, 920 (Minn.Ct.App. 1995); McElveen-Hunter v. Fountain Manor Ass'n, 96 N.C.App. 627, 386 S.E.2d 435, 436 (1989); Worthinglen Condominium Unit Owners' Ass'n, 566 N.E.2d at 1279; Bd. of Dir. of By the Sea Council of Co-Owners, Inc. v. Sondock, 644 S.W.2d 774, 781 (Tex.App.1982); Shorewood West Condominium Ass'n v. Sadri, 92 Wash. App. 752, 966 P.2d 372, 376 (1998). But see Winston Towers 200 Ass'n, v. Saverio, 360 So.2d 470, 470-71 (Fla.Dist.Ct.App. 1978) (amendment to condominium association bylaws); Breene v. Plaza Tower Ass'n, 310 N.W.2d 730, 735 (N.D.1981). [12] We adopt this view. To hold otherwise would negate uniformity, a principal purpose of cooperative and condominium living arrangements, by creating disparity among units subjected to differing regulatory regimes. See Worthinglen Condominium Unit Owners' Ass'n, 566 N.E.2d at 1279 (noting that a principal purpose of condominium rules and regulations is to create uniform living conditions for unit owners). The potential for gross disparity in regulatory regimes over an extended period of time is underscored in this case where Burgess originally signed a proprietary lease which entitled him to the right of occupancy of his unit until December 31, 2029. Thus, under Burgess' interpretation of the term retroactive, Hampshire Gardens would not be able to apply any amendments adopted subsequent to his entry into the cooperative until his lease expired in 2029. Such a result would create an undesirable Balkanization of regulatory regimes among the different units within the same cooperative community. We emphasize again that the amendments adopted limited only the right to sublease in the future and did not affect existing subleases. We also are satisfied that Burgess had sufficient notice before he bought his stock in the cooperative that he would be bound by subsequent changes to the cooperative instruments. See McElveen-Hunter, 386 S.E.2d at 436. Burgess' original application at the time he purchased his cooperative share provided in paragraph 8 that Burgess agreed to abide by and conform with the By-Laws, House rules and regulations in force during the occupancy.  (Emphasis added). In addition, paragraph 26 of the proprietary lease stated that the lease was subject to: the provisions of the certificate of incorporation, the by-laws ( now existing or hereafter adopted ) and the rules and regulations ( now existing or hereafter established ) of the Lessor Corporation. (Emphasis added.) Finally, Article 11(E) of the Certificate of Incorporation provides that all certificates of stock issued by Hampshire Gardens would be subject to the Certificate's provisions as well as any bylaws now existing and hereafter adopted by the cooperative. See also Del. Code Ann. tit. 25, § 2209, supra note 11. It is therefore clear that Burgess was on notice at the time of purchase of the possibility that his rights in the cooperative could be affected by subsequent changes in the cooperative's bylaws and house rules. Thus, provided that the amended bylaws were enacted according to proper procedures, the grant of summary judgment by the trial court is appropriate so long as the rules come within the authority of the Board as provided in the cooperative's governing instruments. See Kelley, 676 A.2d at 459; [13] Johnson, 505 A.2d at 1317. Burgess does not challenge the procedures pursuant to which the amendments were adopted, nor does he generally contend that, in adopting the requirement of owner occupancy, the Board acted without authority. Rather, Burgess' complaint is that the requirement should not have applied in his case. In its motion for summary judgment, Hampshire Gardens provided an affidavit from Mr. Raymond Pelkey, the Chairman of the Board of Directors of Hampshire Gardens, explaining the purposes of the stricter unit occupancy bylaws: First and foremost, it was the Board's judgment that the mutual and cooperative objects of the corporation were best served if the apartments were occupied by shareholders of the corporation rather than by subtenants. This was deemed to be in the best interests of the shareholders. Further, in order to qualify for advantageous property tax credits, a bare minimum of at least 50% of the apartments were required under D.C. law to be occupied by shareholders. Even this bare minimum was too low, however, to satisfy the lending criteria of financial institutions who placed loans for both the cooperative and the purchase of individual units. These lenders will not extend financing if less than 70% to 80% of the units are owner-occupied. Burgess has not presented any affidavits or Board minutes either rebutting Pelkey's representation or substantiating Burgess' own broad allegations of losses and damages from lost rents, repair costs, reduced property value from a forced sale, ... and charges improperly deducted from his sale proceeds at settlement. See Kelley, 676 A.2d at 461. Under analogous circumstances in Kelley, we concluded that similar justifications proffered by the president of the cooperative's housing association provided a basis for a rental surcharge which the appellant failed to rebut with evidence of any particularized losses which she claimed to have suffered from the subjective and discriminatory imposition of the surcharge. See id. In this case, Burgess has not made an adequate showing that the cooperative's rules have an unfair or disproportionate impact on only certain unit owners. Johnson, 505 A.2d at 1318. Although he did present minutes from an April 16, 1984, board meeting showing that Pelkey had asked for and received permission to sublet a second apartment for as long as Pelkey continued to live in the complex, Burgess has not shown that he was unfairly treated because he never requested a waiver of the rule on his own behalf, and he never occupied a unit at Hampshire Gardens. Nor did Burgess ever raise any objections or express his concerns to the Board when it adopted the limitations on subletting. On the record before us, we cannot say that the Board's amendments to the bylaws and house rules changing the owner-occupancy requirement are unreasonable, subjective or discriminatory. [14] Therefore, as there are no material issues of fact in dispute and, as a matter of law, Hampshire Gardens is entitled to summary judgment on the issues presented, [15] we affirm the judgment of the trial court. Affirmed.