Hobson v. Hilltop Place Community Ass'n

• Decision Date: 10 December 1982
• Docket Number: No. 81-444,81-444
• Citation: 122 N.H. 1023,453 A.2d 841
• Parties: John HOBSON et al. v. HILLTOP PLACE COMMUNITY ASSOCIATION.
• Court: New Hampshire Supreme Court

Page 841

453 A.2d 841

122 N.H. 1023

John HOBSON et al. v. HILLTOP PLACE COMMUNITY ASSOCIATION.

No. 81-444.

Supreme Court of New Hampshire.

Dec. 10, 1982.

Gallagher, Callahan & Gartrell P.A., Concord (W. John Funk, Concord, on the brief and orally), for plaintiffs.

McSwiney, Jones & Semple, New London (F. Graham McSwiney, New London, on the brief and orally), for defendant.

BOIS, Justice.

This is an interlocutory transfer without ruling from the Superior Court (Johnson, J.). The plaintiffs, owners of condominium units in the Hilltop Place Condominiums project, challenge the manner in which the defendant homeowners' association has assessed them for certain expenses relating to the maintenance of the "common areas" of the condominiums. We hold that the defendant's method of assessment is lawful.

The instant dispute arises from a rather complex factual context. Hilltop Place is a one-hundred-forty-seven-unit residential condominiums complex, consisting of six individual condominium structures, known as "clusters," each of which is situated on its own separate parcel of land. Each condominium cluster was created in accordance with RSA chapter 479-A, the "Unit Ownership of Real Property" statute, and each cluster has its own declaration, by-laws, and cluster owners' association. Each cluster is thus responsible for managing its own affairs and for maintaining all common areas within its confines. The common expenses of each cluster are apportioned according to the percentage interests of each owner.

The defendant Hilltop Place Community Association (HPCA) is distinct from the individual cluster owners' associations. The defendant is a non-profit corporation which was established under RSA chapter 292 to promote the recreational and cultural interests and the health, safety and social welfare of all one hundred forty-seven unit owners. As such, it owns and manages "community property" consisting of roads which connect the clusters, a recreational building, and lands interspersed between the clusters. All unit owners are required to become members of HPCA, which is operated, pursuant to a declaration, by a board of directors elected by the members. The HPCA declaration states that HPCA expenses are to be assessed equally against each owner.

Because of its corporate status, HPCA, unlike the cluster owners' associations, is not subject to the condominium ownership statute, RSA chapter 479-A. In short, HPCA is a corporate entity which owns and manages the "community property," obtaining funding through equal assessments against its members. On the other hand, the cluster associations are condominium entities which manage their respective "common areas," obtaining the requisite funds through proportional assessments levied on the unit owners.

In order to establish reasonable uniformity in the maintenance and management of the Hilltop Place Project, each cluster has delegated its "common area" managerial functions to HPCA. As a result, HPCA now has two functions: to manage its own "community property" and to administer the "common area" of each cluster.

By vote of its directors, HPCA has established a standard formula for allocating HPCA managerial expenses. Approximately fifteen to twenty percent of the expenditures go to management of "community property." These expenses are assessed equally upon each of the one hundred forty-seven units, as required under HPCA's declaration. The remaining eighty to eighty-five percent of HPCA's managerial expenditures are allocated towards the management of the cluster "common areas." Each cluster must pay its share of this amount on a monthly basis. To obtain these funds, each cluster, in accordance with RSA 479-A:9, requires its unit owners to contribute sums which are proportionate to their ownership interests.

The particular HPCA practices which have given rise to this controversy are as follows. At various times, HPCA's assessments have yielded insufficient funds to meet its managerial expenses. In such situations, HPCA has paid for these expenses from surplus working capital which it raises through equal assessments against its members. Thus, some of HPCA's surplus working capital has been used on occasion to maintain the clusters' "common areas." The cluster owners' associations have reimbursed HPCA for these advances when making their monthly installment payments.

In addition to assessing its members for surplus working capital, HPCA has required its members to contribute equally towards the purchase of various maintenance equipment. While HPCA originally employed an outside contractor to carry out its grounds maintenance duties, it decided to terminate this practice in September 1977 and to perform the work itself thereafter. HPCA subsequently purchased grounds maintenance equipment costing approximately $32,000, paid for in equal amounts by its members.

The plaintiffs, who are all owners of units in cluster three, claim that the manner in which HPCA assessed the equipment and working surplus capital expenses violated RSA chapter 479-A and the general scheme of organization of Hilltop Place.

Because the plaintiffs base their argument largely upon RSA chapter 479-A, a brief discussion of the relevant provisions will be helpful. RSA 479-A:5 states that the percentage of an individual's ownership interest in a condominium is computed by comparing the value of his unit with the value of the condominium as a whole. Under the statute, each unit owner shall be entitled to an undivided interest in the "common areas" of the condominium according to his ownership percentage. Id. RSA 479-A:1 VI defines "common areas" to include "all other parts of the property" which, pursuant to RSA 479-A:1 XIII, encompasses "articles of personal property intended for use in connection with ... [the total condominium property]."

We have already noted that RSA 479-A:9 requires that "common expenses" shall be...