Appeals Court Takes New Stance on “Pay Under Protest” Principle for Challenging Improperly Imposed Condominium Late Fees and Fines

In the matter of Trustees of 10 Porter Street Condominium Trust v. Cerda, the Massachusetts Appeals Court has, for the first time, distinguished the types of condominium charges that must be “paid under protest” as a condition of challenging their propriety. Based on longstanding law in the Commonwealth of Massachusetts, the appeals court affirmed the lower Court’s ruling that a condominium unit owner cannot challenge unpaid condominium fees and special assessments without first paying them under protest, but held that the “pay under protest” principle does not apply to penalties, fines and late fees imposed by the Condominium.

The 10 Porter Street Condominium (“Condominium”) is a six-unit residential condominium in Salem, MA. On December 15, 2016, the Condominium imposed a $140,000 special assessment for “immediate deferred maintenance work,” due two weeks later, on January 1, 2017. The share of the two defendants in the lawsuit, a mother and daughter (“Defendants”) each owning a unit in the Condominium, were $22,512 and $19,502, respectively. In addition, in late October 2016, the Condominium began fining the Defendants $50 per day for installing unauthorized surveillance cameras in common areas. The Defendants asserted the cameras were lawfully placed within their units and balconies and were necessary to defend themselves against harassing and intimidating conduct from other unit owners.

The Defendants did not pay their portion of the special assessment or fines. On March 3, 2017, the Condominium board filed suit against the Defendants to recover the unpaid charges. The lower Court held a hearing on summary judgment motions on February 6, 2019. Due to the passage of time, the trustees sought, as of January 18, 2019, a total of $94,117,07 and $90,805.15, respectively, from the Defendants. Most of the increase from 2017 was attributable to fines and late fees. The Defendants argued that it was impossible for them to pay the challenged fee and assessments under protest without selling their units. They also argued bad faith – the Condominium had required the Defendants to pay their portion of the special assessment by January 1, 2017, yet the other four unit owners did not pay their shares of the $140,000 special assessment until April 10, 2018, yet the trustees had not instituted collection cases against them. Notwithstanding these arguments, the lower Court judge allowed the Condominium Board’s motions for summary judgment on the ground that the Defendants were not permitted to challenge the charges by refusing to pay them.

Condominiums and their organizations of unit owners are governed by G. L. c. 183A and the provisions of the condominium’s master deed. In general, unit owners may not refuse to pay their share of common charges, even if they claim such charges are invalid or unlawful. The Supreme Judicial Court laid down this principle in Trustees of the Prince Condominium Trust v. Prosser, 412 Mass. 723 (1992). In that case, a unit owner withheld from his monthly common charges an amount he claimed he was owed for loss of use of a parking space. The Court held that such a set-off was impermissible. The Court reasoned that the daily functioning of the condominium required the regular collection of common charges. Instead, the Courts have consistently held that an aggrieved unit owner must timely pay, under protest, the common expense, then seek a judicial determination of its legality, and suitable reimbursement.

The cases did not distinguish among the types of charges that must be paid under protest. At issue in this case were three distinct type of charges: monthly condominium fees, special assessments, and fines and penalties. The Appeals Court agreed that the “pay under protest” principle applied to the monthly condominium fees and special assessments but took a different view with respect to fines and late fees, which were approximately two-thirds of the amounts being sought against each of the Defendants. The Appeals Court held they are not “common area charges” or “common expense assessments” and, therefore, the rationale behind the “pay under protest” principle does not apply because fines and late fees are not necessary to keep the Condominium solvent. In addition, there was no explanation of the varying fines and late fees on the record submitted to the Court. As a result, the Appeals Court vacated the lower Court’s issuance of a judgment for the Condominium with respect to the penalties, fines and late fees, and remanded the matter to the lower Court to determine what is reasonable. Notwithstanding the foregoing, unit owners would still be well advised to consult with legal counsel and pay under protest, then challenge the propriety of any wrongfully imposed fines or late fees.