Daily Development for
Friday, October 4, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

CONDOMINIUMS; USE RESTRICTIONS: Without unanimous consent, association cannot alter existing access rights of some unit owners across common areas, although association could adopt reasonable rules that applied equally to all unit owners.

Ridgely Condominium Assoc., Inc. V. Smyrnioudis, 1996 Md. LEXIS 86 (8/27/96).

The condominium consisted of a multistory residential building with seven commercial units on the ground floor. Each of the commercial units had access to the outside of the building directly from the unit, but also had access through the central lobby of the building. The association recently had made a substantial investment in renovating the lobby, spending assessment money from both commercial and residential unit owners.

The residential unit owners had expressed some concern about security in the building, and in response the Board of Directors determined to develop a limited access system for the building, and to require that the commercial unit owners require their business invitees to access the commercial units through the direct entrances, rather than through the lobby. (Apparently the commercial unit owners would themselves be permitted to continue to access their units from the lobby - the only restriction was on their customers.) Ultimately, the association amended its bylaws to impose such a restriction, obtaining the necessary two-thirds vote.

There was no question concerning the technical compliance with the laws and Declaration in connection with the adoption of this amendment, but the unit owners questioned whether the association had the power to adopt such an alteration of rights that they deemed fundamental to their interests in the condominium.

The trial court struck down the restrictions and the intermediate appeals court affirmed. The appeals court ruled that the restriction was "unreasonable" and that it had the inherent power to strike down unreasonable amendments to the bylaws as not within the contemplation of the parties at the time the condominium was formed. In this case, it commented that the restriction had a "discriminatory impact" on the commercial unit owners, and was subject to close scrutiny for that reason. Further, it reviewed the restriction without the deference that might be applied to rules that had been part of the original contract.

On appeal to the Maryland high court, held: affirmed. But the high court (the Court of Appeals) took a somewhat different tack, responding to arguments the parties had not raised below. The unit owners urged the high court to review the restriction from the perspective of whether it deprived them of a distinct property right. Such a deprivation, they argued, is a violation of Maryland law regardless of the justifications for it, and need not be measured by the "reasonableness" standard. The court suggested that this naked proposition was not properly raised in the prior proceedings, but nevertheless proceeded to evaluate the "reasonableness" of the standard on the basis of whether it indeed did deprive the commercial unit owners of a "vested" property interest.

The court appears to cite with approval two lines of cases that are marginally relevant to the facts here. The court's enumerating of these various cases is a valuable resource of rulings on this question (although undoubtedly the same information is available in other published sources). The first line of cases holds that conferring exclusive use of common areas on some unit owners is an impermissible infringement on the common area rights of other owners. The second line of cases holds that if an otherwise reasonable new restriction applies to all common owners, it does not change their respective percentage interests and is not invalid for that reason.

In the instant case, the court first determined that the right of access to the commercial units from the lobby was a species of identifiable property right - an easement. It might have been permissible to restrict the lobby access use of all unit owners, but it was impermissible to carve out only the commercial owners, because to do so reallocated use of the common areas away from the commercial owners and to the residential owners, something which cannot be done under Maryland's condominium laws without unanimous consent.

Comment 1: Maryland lawyer Roger Winston, who contributed this case, reminds us that in another recent case, a Maryland appeals court did authorize an association to confer exclusive parking rights upon certain tenants in parking areas that were common areas. Alpert v. Le'Lisa Condominium, 667 A.2d 947 (Md. Ct. Sp. App. 1995) (Alpert was the Daily Development for May 17, 1996 and the DD is available on the DIRT website.) Roger comments:

[Alpert] seems somewhat at odds with Ridgely, but the difference may be (1) the facts (depriving commercial owners of use of the lobby vs. telling a unit owner he must park outside until an indoor space becomes available (2) the parking assignment was "temporary." (3) [Alpert] never got to the Court of Appeals.

In the interests of intellectual purity, the editor hopes that Roger's third distinction is the correct one. The Alpert decision also confirmed a pre-existing custom that all unit owners had come to accept before a new unit purchaser challenged it. This certainly makes Alpert easier to understand, but it nevertheless seems inconsistent with the "vested property right" analysis at work in Ridgely.

Comment 2: Note the distinction the court draws, albeit unwittingly, between easement rights, which it views as a species of property interests, and other aspects of condominium regulation - i.e. mutual promises, which it apparently would not treat as inviolable.

Comment 3: As the editor reads the Uniform Common Interest Ownership Act, it would reach the same result as Ridgely, because the case deals with a unit owner's basic right of access across common elements, an easement specifically identified under 2-116 (b) (ii) and protected from modification without unanimous consent under 2-117 (d). The Act would appear to permit amendments to the Declaration that would reallocate common interests as limited common interests such as was done in Alpert, but the final answer would depend upon a reading of whether this would be a change in the "allocated interest of a unit," prohibited under 2-117(d). DIRT condominium mavens, please comment.

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