Real Property – Condominium Development – Common Area Removal

Listen to this article

During a condominium development’s transition period, the developer retained the authority to remove unimproved common-area property from the property regime. None of the events triggering the end of the transition period had yet occurred when – six years into the development – the developer removed from the regime a 2.58-acre tract that had been designated, but had not been developed, as a common area.

We affirm the circuit court’s grant of summary judgment for defendants.

The master deed creating the property regime at issue was filed on December 4, 2003. The master deed allowed the developer (Developer) to add or remove property from the regime during a transition period. The transition period was to end the earlier of December 31, 2017 (option 1); three months after the sale of 99 percent of the maximum number of units to be contained in all phases of the regime (option 2); or when Developer chose to end the development by surrendering its authority as a Class B member (option 3).

On April 6, 2009, Developer filed an amendment to the master deed, pursuant to which Developer removed a 2.58-acre tract of the regime’s common area (the Property) and added five acres to the regime.

On December 19, 2013, Developer sold the Property to GDMB Ocean, LLC, and assigned the developer rights to GDMB Operations, LLC. On November 7, 2014, GDMB Operations filed an amendment to the master deed surrendering its Class B Membership, which it contended triggered the three-month phase to end the transition period.

GDMB Ocean sold the Property (along with an additional 26.53-acre tract) to Atlantic Development Company on January 6, 2016.

Transition Period

Plaintiffs argue that, under option 2, the transition period ended before the removal of the Property from the regime because 99 percent of all already-constructed units had been sold. However, this option triggered the end of the transition period with the sale of 99 percent “of the maximum number of Units to be contained in all phases of the Regime.” The master deed clearly contemplated Developer constructing the regime in phases and allowed it the authority to expand and contract the regime as it desired.

Option 2 was never triggered because Developer never completed all phases of the regime contemplated in the master deed. Instead, the transition period did not end until February 2015, which was three months after GDMB Operations filed an amendment to the master deed surrendering its Class B authority. Accordingly, the circuit court did not err in finding the transition period had not ended and Developer still possessed the authority to remove the Property from the regime on April 6, 2009.

Removal of a Common Area

S.C. Code Ann. § 27-31-60(b) of the Horizontal Property Act (the Act) contemplates that a developer may choose to forgo completing all phases of the development. Section 27-31-60(b) of the Act grants unit owners “the right to require specific performance of any proposed common elements for recreational purposes set out in the master deed which are included in the next stage of the development that applies to recreational facilities in the event the additional stages of erection do not develop.” The Act does not grant unit owners similar rights to demand specific performance of the remaining common elements that are not recreational. However, once common elements are set aside and vested in the co-owners, such co-owners may not be unilaterally deprived of their interests in the common elements by the actions of the developer.

Considering the Act as a whole, we hold § 27-31-70’s prohibition of partition or division of common elements concerns the unit owners’ rights in the common elements and does not prohibit a developer from removing non-recreational common elements from a regime unless those common elements have vested in the unit owners pursuant to the terms of the master deed. Therefore, we look to the terms of the master deed to discern whether Developer’s removal of the Property from the regime was valid.

The master deed allowed Developer to “subdivide portions of the Common Area from the Project which are unimproved with structures and to remove the subdivided portion” with an amendment of the master deed. Because Developer had the right to unilaterally remove common areas unimproved with structures from the regime, the common areas did not become vested in the unit owners until they were improved or the transition period ended.

Plaintiffs have not presented any evidence the Property was improved with structures. Accordingly, Developer’s removal of the Property from the regime was valid.

Affirmed.

Vista Del Mar Condominium Association v. Vista Del Mar Condominiums, LLC (Lawyers Weekly No. 011-063-23, 13 pp.) (Letitia Verdin, J.) Appealed from Horry County Circuit Court (Larry Hyman, J.) Kenneth Ray Moss, Paul Ekster and Robert Lee for appellants; Demetri Koutrakos, Harry Alwyn Dixon and James Christopher Clark for respondents. South Carolina Court of Appeals