Franklin v. Spadafora
447 N.E.2d 1244 (1983)
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Rule of Law:
A condominium by-law limiting the number of units a single person or entity may own is a reasonable restraint on alienation and does not violate constitutional rights to due process or equal protection, provided it serves a legitimate purpose to which it is rationally related.
Facts:
- George J. Franklin, Jr. owned six units in the Melrose Towers Condominium.
- On September 25, 1980, the trustees of the condominium trust, with the consent of owners holding 80.45% of the beneficial interest, amended the by-laws to prohibit any person or entity from owning more than two units.
- On October 17, 1980, Franklin executed a purchase and sale agreement to buy a seventh unit from fellow unit owners, Daniel and Florence A. Clarke.
- As required by the Master Deed, the Clarkes notified the trustees of the pending sale to allow them to exercise their right of first refusal.
- The trustees informed the Clarkes that the proposed sale to Franklin was in violation of the recently adopted by-law amendment.
- Despite the trustees' notification, the Clarkes proceeded with the sale and transferred the unit's deed to Franklin on April 16, 1981.
Procedural Posture:
- George J. Franklin, Jr. and the Clarkes brought an action for declaratory relief in the Massachusetts Superior Court against the trustees of the condominium.
- The Superior Court judge entered a judgment declaring the by-law amendment valid and the Clarke-Franklin deed null and void.
- The plaintiffs (appellants) appealed the judgment to the Appeals Court.
- The Supreme Judicial Court of Massachusetts transferred the case from the Appeals Court on its own motion before the Appeals Court could hear it.
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Issue:
Does a condominium trust by-law that limits to two the number of units any single person or entity may own constitute an unreasonable restraint on alienation or violate the rights to equal protection and due process?
Opinions:
Majority - Nolan, J.
No. The condominium trust by-law does not constitute an unreasonable restraint on alienation and does not violate the plaintiffs' constitutional rights. A reasonable restraint on alienation may be enforced. Applying the factors from the Restatement of Property, the court found the restriction reasonable because: (1) the trustees have an interest in the entire condominium complex; (2) the restraint's duration is not unreasonable as it can be amended by a majority of owners; (3) its purpose of encouraging owner-occupancy and residential stability is worthwhile; (4) it prohibits only a specific type of conveyance to a narrow class of buyers; and (5) the number of persons to whom alienation is prohibited is small. On the constitutional claims, assuming state action, the court applied the rational basis test, finding the amendment does not impinge on fundamental rights. The by-law's purpose of creating a residential atmosphere is legitimate, and limiting ownership to two units is a rational means of achieving that purpose, thus surviving challenges under due process and equal protection.
Analysis:
This decision affirms the broad authority of condominium associations to regulate property ownership within their communities, adapting traditional common law doctrines like the rule against restraints on alienation to the modern context of condominium living. By upholding a numerical cap on unit ownership, the court validates the goal of promoting owner-occupancy as a legitimate purpose that can justify significant restrictions on an individual's property rights. The application of the deferential rational basis test for constitutional challenges signals that courts will likely uphold similar economic and social regulations within condominiums, so long as they are not arbitrary or discriminatory and are passed according to proper procedures.
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