Pilgrim Place Condominium Association v. KRE Properties, Inc.

Pilgrim Place, Inc. (Pilgrim) created a condominium by recording a condominium declaration that created 48 units, requiring the declarant to build 24 units immediately, with a set control period to build the remaining 24 additional units. The declaration provided that each unit owner, including the declarant, owned an undivided one forty-eighth interest in the common elements. The declaration also created the Pilgrim Place Condominium Association (the association) (plaintiff) and empowered the association to make common-expense assessments for which the unit owners and the declarant were liable for their pro rata shares. The association could modify the pro rata share assessed against each unit owner only after the declarant’s control period expired. Pilgrim’s interest was foreclosed, and KRE Properties, Inc. (KRE) (defendant) acquired title at the foreclosure sale to units 25-48, which were unbuilt, and Pilgrim’s rights, subject to any unpaid assessments. When Pilgrim controlled the association, assessments were made according to the declaration based on 48 units. From the time KRE took control until the expiration of its development rights, KRE built 16 units and paid no assessments on any of its unbuilt units. The association filed suit against KRE to collect assessments on KRE’s unbuilt units from the time it acquired them at the foreclosure sale. The trial and superior courts ruled for the association. KRE appealed, arguing that the state condominium act prevented the association from levying assessments on unbuilt units. Nothing in the state condominium act compelled or prohibited an assessment against unbuilt units, and the act recognized that an obligation to pay assessments could arise before physical units were constructed and also prohibited discrimination favoring the declarant regarding the allocation of common-expense assessments.