Massachusetts Agencies

Phased Condominiums


G.L.c. 183A, §5(b)(1) provides that unit owners are deemed to have given their consent to future phases and the concomitant reduction in their respective percentage interests where "the master deed at the time of the recording of the unit deed . . . made possible an accurate determination of the alteration of each unit's undivided interest that would result therefrom." This language was interpreted in In re Northwood Properties, LLC, 509 F.3rd 15 (2007), where the master deed simply provided that undivided interests resulting from future phases would be determined "in conformance with Chapter 183A, upon the approximate relation which the fair market value of each Unit . . . bears to the aggregate fair market values of all Units."

The question before the court was whether the language of the statute required a "Chinese Menu" -- a print out in the master deed of the undivided interests that would result with respect to any unit when new units were added. In overruling the district court which had held that such a "Chinese Menu" was required, the appellate court said:

[T]he district court's reading [of the statue] would tie the hands of developers, making it impossible for them to respond to changing market conditions. This would seriously jeopardies developers' ability to secure financing to complete projects. * * * Thus we read the key phrase, "made possible an accurate determination," as not requiring the degree of precision the district court posited.

The court said that the formula for the initial setting of the undivided interests -- that the undivided interests shall be in the approximate relation that the fair value of the unit . . . bears to the . . . aggregate fair value of all units should be the guidepost that the developer should follow:

Terms like "approximate" and "fair value" reflect a statutory approach of allowing developers flexibility within a reasonably limited range, not an approach requiring absolute precision. We see reason why greater requirements for precision would be imposed under section 5(b)(1).