Twenty years on, court ruling changes condo law

'You can forget about a 30-year mortgage.'

Two decades after Rhode Island was rocked by the 1990s credit union crisis, lingering complications of the Depositors Economic Protection Corp. era are still being unraveled in unpredictable areas, such as condominium development. More

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Focus: LAW

Twenty years on, court ruling changes condo law

'You can forget about a 30-year mortgage.'

PBN PHOTO/DAVID LEVESQUE
OWNER'S RIGHTS: Gene Savory, president of the Bowen Court association, at the condominiums. Twenty years after the Bowen Court condominiums were built, a court decision is giving residents collective ownership of an undeveloped parcel of the property.
Posted 9/10/12

Two decades after Rhode Island was rocked by the 1990s credit union crisis, lingering complications of the Depositors Economic Protection Corp. era are still being unraveled in unpredictable areas, such as condominium development.

This summer, a DEPCO-era dispute involving an East Providence condominium complex was settled by the R.I. Supreme Court in a decision that could alter how developers and lenders approach large condominium projects.

The decision, in Alessi v. Bowen Court Condominium Association, strengthens the position of condominium associations to take control of undeveloped parcels within multi-stage projects when those projects go through foreclosure.

“Given the current economic climate, additional foreclosure scenarios such as the one presented here are sure to arise,” wrote Frank A. Lombardi, the Providence attorney who represented the victorious condominium association in the case. “When this happens, associations and their representatives now will have the ability to refuse to grant developers and their banks permission to build – and they may also be able to negotiate for compensation in exchange for the possible extension or resurrection of developer rights.”

Christopher A. Anderson, who represented the plaintiff, Dr. Joseph Alessi, said the decision could make lenders more cautious in financing large developments out of concern, that if things go wrong and efforts to foreclose take too long, they could be left with nothing.

“I think the Supreme Court just put a landmine out there for lenders,” Anderson said.

The roots of the case go back to 1989, when developer Bowen Court Associates started building a complex of townhouse-style units on 6.7 acres of land off Willett Avenue in the Riverside section of East Providence.

The idea was to build out the complex in stages and, as is customary with such projects, a provision was made for one of the parcels in the back of the property to be withdrawn from the condominium association if, for economic or other reasons, developing it became undesirable. The withdrawal provision had a limit of 10 years.

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