Opinion
10-P-1876
10-05-2011
FENMORE ASSOCIATES, LLC v. TRUSTEES OF THE FENMORE CONDOMINIUM TRUST & another.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The trustees of the Fenmore Condominium Trust (trustees) appeal from a Land Court judge's decision granting summary judgment to the plaintiff, Fenmore Associates, LLC (Fenmore). The judge held that the parking easements at issue were 'validly created and reserved, survived the mortgage foreclosure, and [are] still the property of [Fenmore and individuals who purchased or leased parking spaces]. Defendant Trustees can take no actions which will interfere with those rights.'
The relevant property was mortgaged by the developer, Michael Perry, in 1985. In 1986, Perry recorded a master deed converting the property to condominiums. The master deed included a provision reserving to Perry easements 'for the exclusive use of all of the parking spaces, if any, located on the land as shown on the Condominium Site Plan.' Ultimately, thirty-seven parking spaces were identified in the site plan. In 1997, the mortgagee and his assignee recorded a subordination agreement, which subordinated the mortgages to the master deed. The subordination agreement additionally provides that 'the lien of the Mortgage shall not be subordinate to, but rather shall be superior to . . . easements relative to parking spaces reserved by [Perry in the] Master Deed.' In 2002, Perry defaulted on the mortgage, and Fenmore became the owner of sixty-seven condominium units through a foreclosure sale. Fenmore contends it also acquired title to the thirty-seven parking easements through the foreclosure sale.
Discussion. On appeal, the trustees argue that the parking easements are extinguished by foreclosure because they were created subsequent to the mortgage without the consent of the mortgagee or subordination to the mortgage. We review a grant of summary judgment de novo, construing all facts in favor of the unsuccessful opposing party. Miller v. Cotter, 448 Mass. 671, 676 (2007).
Placing land into a condominium form of ownership does not 'preclude the existence of nonownership interests in the condominium land.' Commercial Wharf E. Condominium Assn. v. Waterfront Parking Corp., 407 Mass. 123, 129 (1990) (Commercial Wharf). Here, the relevant nonownership interests retained in the master deed are the parking easements. See Id. at 133. See also Queler v. Skowron, 438 Mass. 304, 313 (2002) (nonownership interest can be retained by operation of master deed itself).
Once an owner of land grants a mortgage, as Perry did here, the mortgagor's ability to grant an easement encumbering that land is limited by the rights of the mortgagee. See Mt. Holyoke Realty Corp. v. Holyoke Realty Corp., 284 Mass. 100, 106 (1933) ('In this Commonwealth a mortgage of real estate conveys title in fee which title continues in the mortgagee until the stated condition subsequent is fulfilled. . . . After the giving of a mortgage deed the mortgagor cannot create any easement in the land conveyed and thus diminish the estate granted to the mortgagee'); New York Life Ins. Co. v. Embassy Realty Co., 293 Mass. 352, 353, 355-356 (1936) (easement granted subsequent to mortgage was subject to mortgage where mortgagor 'never consented to the easement or subjected its mortgage thereto'); Barnside Realty Corp. v. Coughlin, 422 Mass. 233, 234-235 (1996) (easement granted after mortgage survived foreclosure where mortgage set forth mortgagee's approval of creation of easement). Here, the parking space easements were created subsequent to the mortgage. However, because the mortgagee implicitly consented to the easements by referring to them in the subordination agreement (quoted, supra) without objecting to their existence, they were not extinguished by the foreclosure. See Barnside Realty Corp., supra. Contrast New York Life Ins. Co., supra.
The trustees also argue that, in addition to consenting to the grant of easement, the mortgagee needed to 'amend its mortgage to include [easement] rights within its collateral.' We disagree. Because the mortgage interest was granted prior to the creation of the easement, the mortgagee's collateral included all of the property rights associated with that piece of land, which necessarily included the easements. Refusing to subordinate the parking easements to the mortgage has the effect of allowing the mortgagee to foreclose upon the parking easements as an interest retained by Perry to which the mortgagee had legal title under the mortgage. See Palmer v. Fowley, 5 Gray 545, 547 (1856) ('The substance of the contract of mortgage is, that if the debt is not paid, the mortgagee shall have the interest in the land, which his mortgagor had').
In sum, Perry's reservation of parking easements, and the subsequent subordination of the mortgage to the condominium expressly reserving the parking easements from the subordination, were both done for Perry's benefit -- and to preclude condominium ownership of those parking easements. The foreclosure did not extinguish the easements that benefitted Fenmore.
Finally, we reject the trustees' argument that the parking easements are part of the condominium's common areas. See Commercial Wharf, 407 Mass. at 130 ('A valid interest in a common area, to which the master deed is expressly subject, is not part of the common area'). See also Queler, 438 Mass. at 313. The trustees 'still [have] the powers guaranteed . . . by [G. L. c. 183A,] § 10(b) (1), but [they] simply cannot utilize these powers in such a way as to interfere with the interests retained by' Perry. Commercial Wharf, supra at 129.
Judgment affirmed.
By the Court (Grasso, Katzmann & Rubin, JJ.),