Altering The Distribution Of Condominium Common Expenses Requires Unanimous Consent

In Arapaho Owners Association v. Alpert, 2015 VT 93 (July 10, 2015), the Vermont Supreme Court ruled that a unanimous decision of condominium unit owners was required to change the formula used to assess common expenses.

Issue: The Board of a condominium owners association filed suit seeking to reform its declaration to accurately reflect the number of units. The original declaration stated that 55 units existed, and divided the common expenses among the owners. However, only 54 units were actually built, and the master schedule of units was never amended to reflect the number of units built. After concerns were raised regarding the marketability of title and the division of common expenses, the Board looked into amending the bylaws. The association’s bylaws stated that any provision could be amended with the approval of 75% of the owners. A bylaw revising the division of common expenses was passed, but it did not receive unanimous approval. After being informed by counsel that the bylaw revision may not be allowed under 27 V.S.A. § 1306(b), as the statute requires any change in ownership shares to be approved unanimously, the Board filed suit seeking to reform the declaration and restate each unit’s appropriate share of the common expenses.

Several condo owners filed a counterclaim against the Board. The Owners argued that since the bylaw did not receive unanimous approval, it failed to pass. The Owners also sought an injunction and attorneys’ fees. The Board filed a motion for summary judgment against the Owners’ counterclaim. The trial court denied the Board’s motion, and awarded the Owners partial attorneys’ fees. The Board appealed.

Holding: The Court held that the distribution of common expenses is considered a permanent property interest pursuant to 27 V.S.A. § 1306(b). Therefore, a unanimous vote was required to disturb the division of common expenses. The Court also held that the trial court had the authority to reform the original declaration based on the doctrine of mutual mistake. On those grounds, the Vermont Supreme Court affirmed the judgment of the trial court, including the award of partial attorneys’ fees to the Owners.