i. this is where most of the conflict has come from in these cases -- rules generally upheld if reasonable
3. Restriction on transfer
a. Restraint on alienation - problem b/c each owner owns a fee simple (see above rules on alienation)
i. what is reasonable
a) See Laguna v. Darger
ii. adminstrative regulations
a) state often defines what is a reasonable restraint on alienation
b. Preemptive right to buy by association
i. A preemptive option in a condo agreement or homeowners association has generally been held reasonable if the preemption is limited in time and fives the association the riht eithe to match a bona fide offer or to purchase at market price
i. if condo association is seeking to prevent a constitutionally allowed action then it probably will not be upheld
4. Laguna Royale v. Darger
i. ∆ tried to create a time share
ii. subassignment agreement has a clause in it that requird the approval of the Assoc b/f owner could lease to someone
iii. court adds a reasonable term to this clause
i. whether the reason for withholding approval is rationally related to the protection, preservation or proper operation of the property and the purposes of the Assoc as set forth in the governing instruments and
ii. whether the power was exercised in a fair and non-discriminatory manner
i. how do condos come up with the rules that limit freedom of individual owners
ii. is it appropriate for the court to apply this rational standard?
iii. Once the court adopts it, does the court actually apply it or is there some higher standard?
5. Lawsuits stemming from objectionable activity
a. Nahrstedt v. Lakeside Villate Condo Assoc., Inc.
a) π is challenging blanket restriction on pets
a) majority requires reasonableness test --- reasonable and enforceable when they prohibit conduct which, while otherwise lawful, in fact interferes with, or has a reasonable likelihood of interfering with, the rights of other condo owners to the peacefule and quiet enjoyment of their property
iii. Arguments for the rule
a) she moved in after the rule was established
b) why couldn't she have bargained for the cats?
c) what if she didn't have a choice?
iv. What if the rule is created after a person has already moved in?
a) purpose of rule -- to gang up on one person to get him out of the association?
b) what if the person could easily move elsewhere
b. O'Buck v. Cottonwood
a) roofs repaired after leaking and antennas prohibited -- cable provided
a) it is necessary to balance the importance of the rule's objective against the importance of the interest infringed upon
c. Trustees of the Prince Condo Trust v. Prosser
a) A system that would tolerate a unit owner's refusal to pay an assessment b/c the unit owner asserts a grievance, even a seemingly meritorious one, would threaten the financial integrity of the entire condo operation
1. Basic form
a. a corporation holds legal title to an apartment building
b. Shares of stock are sold to the persons who will occupy the apartments
c. the amount of stock required depends on the value of the apartment
d. occupants also receive leases from the corporation
e. residents are both tenants and owners of the cooperative corporation