Meghan Cover Association, Inc. v. Meghan Coves Property, Inc., et al.

1 Meghan Coves is a unit ownership estate development. The Declaration of Unit ownership for Meghan Coves Condominium Estates was filed in 1983. At the time of this lawsuit, about 78 of the planned 179 condominium units had been built and were owned by third parties. Plaintiff Meghan Coves Association, Inc. (Association) denied membership in the Association to Defendant Meghan Coves Property, Inc., effectively stopping completion of the development. Among other things, the trial court ruled that a "unit" had to be built and ready for habitation before the owner was eligible for membership in the Association. It also held that Meghan Coves Property, Inc. held fee simple title in the platted land containing unbuilt units. We affirm.

2 Defendants/Appellants/Counter-Appellees Meghan Coves Property, Inc. and Meghan Coves Builders, L.L.C. (collectively Developer) contend that the trial court erred in holding that it was not a unit owner until a structure is built. Developer also claims the court erred when it held that Developer did not have or own an undivided interest in the common elements until it had constructed a unit.1

3 On counter-appeal, Plaintiff/Appellee/Counter-Appellant Meghan Coves Association, Inc. (the Association) claims that the trial court erred in determining that Developer was the owner of the fee simple title to all the land within the platted but unbuilt units in the condominium estates. It also maintains that the trial court erred in holding that Developer was liable for dues and assessments only for the constructed units it owns.2

4 The trial court certified the matter for review pursuant to 12 O.S. Supp. 1995 �994 on the ground that there was no just reason for delay even though the order did not resolve all the pending claims. The court's ruling decided issues raised on the Association's Motion for Summary Judgment, Developer's Counter-Motion for Summary Judgment filed February 8, 2000, and Developer's second Motion for Summary Judgment, filed March 31, 2000. In decisions rendered based on motions for summary judgment, because the ultimate determination addresses questions of law, the "... appellate standard of review of a trial court's grant of summary judgment is de novo." Carmichael v. Beller, 1996 OK 48, 2, 914 P.2d 1051, 1053.

5 The parties dispute the trial court's fifth, sixth and seventh findings:

. After hearing argument and reviewing the briefs, the Court finds that there is no legitimate dispute about the facts material to the Fifth Cause of Action as set forth in the Petition filed by [Association]3 under Case No. CV-98-201 and judgment should be entered as a matter of law decreeing that the Declarant must own a constructed unit to be considered a member of Meghan Coves Association, Inc., and to exercise and enjoy the rights, duties and obligations of a member of the Association, including voting on any Association matters pursuant to the Declaration of the Bylaws.

. After hearing argument and reviewing the briefs, the Court finds there is no legitimate dispute about the facts material to the Third and Fifth Causes of Action as set forth in the Petition filed by [Association] under Case No. CV-98-201 and judgment should be entered as a matter of law decreeing that the Declarant shall be liable for dues and assessments only for constructed units owned by the Declarant.4

After hearing argument and reviewing the briefs, the Court finds there is no legitimate dispute about the facts material to the First Cause of Action as set forth in the Petition filed by [Association] under Case No. CV-98-201 and judgment should be entered as a matter of law decreeing that [Developer] is the owner of the fee simple title to all of the land within the footprint of the platted but unconstructed units in Meghan Coves Condominium Estates as shown on the plat attached as Exhibit "B" to the original Declaration of Unit Ownership Estates for Meghan Coves Condominium Estates. The Court additionally finds and therefore rules that [Developer] does not have or own an undivided interest in the common elements until [Developer] has a constructed unit.



6 The Oklahoma Unit Ownership Estate Act, 60 O.S. 1991 �501 et seq., defines "unit."

"Unit" means an enclosed space consisting of one or more rooms occupying all or part of a floor or floors in a building of one or more floors or stories regardless of whether it be designed for residence, for office, for the operation of any industry or business, or for any other type of independent use, provided it has a direct exit to a thoroughfare or to a given common space leading to a thoroughfare; ....



60 O.S. 1991 �503(b).4

7 The Declaration and statutory language defining "unit" is clear that a unit is a constructed thing, not the promise of a construction. The Declaration specifically excludes land, which is essentially all that the Developer owns absent construction. The Developer argues that 60 O.S. 1991 �503(r) which defines "unconstructed unit" or "unconstructed building" supports its interpretation that units exist before construction.5 However, the definition contemplates the beginning of construction of a unit or building and then defines when construction will be deemed completed. It does not support Developer's argument that raw land may be considered units. Developer's reliance on such cases as Pilgrim Place Condominium Association v. KRE Properties, Inc., 666 A.2d 500 (Me. 1995) for the proposition that a "condominium is created by the act of recording a declaration, not by the erection of a physical structure....." is inapplicable in Oklahoma. The Supreme Judicial Court of Maine applied its statutory language to resolve the questions before it. "A condominium may be created pursuant to this Act only by recording a declaration executed in the same manner as a deed, by all persons whose interests in the real estate will be conveyed to unit owners and by every lessor of a lease ...." 33 M.R.S.A.�1602-101(a). Oklahoma law is dissimilar to that of Maine. The declaration creating and establishing unit ownership estates must contain many particulars such as a description of the land, 60 O.S. 1991 �514, but units (unit ownership estates) are conveyed by deed. 60 O.S. 1991 �515. These requirements certainly contemplate a constructed unit rather than an idea expressed on paper.6 The trial court did not err in ruling that a unit did not exist until it was built.

8 Related to the definition of "unit" is the question of eligibility for membership in the Association. The trial court held that Developer had to be the owner of a unit before it could be considered a member of the Association. A "council of unit owners" means "all the unit owners." 60 O.S. 1991 �503(m). If Developer builds a unit and retains title, then, according to Article 7.1, it automatically becomes a member of the Association.

9 The trial court also held that Developer was liable for dues and assessments only for any constructed units it owned. The Declaration in Article VIII makes it clear that the Association makes assessments and unit owners are liable for payments of assessments. Developer's liability is limited to 20% of any assessment for units it owns and which are unoccupied.7 This provision confirms that Developer could be a member of the Association when it owned units.8

10 We also agree with the determination of the trial court that Developer owns fee simple title to all of the land within the footprint of the platted but unbuilt units. The Declaration specifically states that Declarant was "the owner of the fee simple title in and to the following described land situated in Delaware County, Oklahoma [description omitted here] upon which Declarant desires to construct single family residences and town houses..... It further states that "Declarant desires to convert all of the Property to Unit Ownership Estates (hereinafter called 'Condominiums') under the Oklahoma Unit Ownership Estate Act; ...." The Declaration was properly filed and there was no dispute concerning whether Developer had fee simple title to convey the units already built and sold. It is also clear that the fee owner may by deed convey a unit ownership estate, 60 O.S. 1991 �504 and 575, which is a conveyance of exclusive ownership and possession of a unit. See 60 O.S. 1991 �511 (no lien shall be effective against the property as a whole, but only against each unit ownership estate). As unit ownership estates are conveyed to unit owners, the Declarant's ownership interest diminishes but it is not extinguished simply because units are constructed and conveyed. The Declarant and its successors clearly retain the right to complete the construction of the number of units designated in the Declaration.

11 Finally at issue is the trial court's ruling that Developer does not have to own an undivided interest in the common elements until Developer has a constructed unit. The law plainly states that unit owners are "entitled to an undivided interest in the common elements in the ration expressed in the declaration." 60 O.S. 1991 �505(A). Once it is understood that a unit must be constructed in order to be a unit, then this conclusion naturally follows. There was no error on this account.

�12 For the reasons stated, we AFFIRM the order entered by the trial court, filed October 18, 2000 and REMAND the case to the trial court for resolution of the reserved issues.

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