Breach of Covenant
The Aspenwood Condominium Association voted in favor of conducting a major renovation project. Included in the project was the creation and sale of two additional condominium units. As part of the proposal, the unit owners agreed that the two (2) new condominium units would be sold via a private auction. In this case, the plaintiffs (Platt) successfully bid on one (1) of the units and entered into a contractual agreement . The Association sought the approval of 67% of the Association unit owners for the purchase of the unit. However, less than 67% approval was received.
Plaintiffs filed a complaint arguing that the 67% approval of the renovation project was sufficient. Their argument centered around the notion that the approval of 67% for the project was sufficient and that the Association had authority to enter into a contractual agreement. In its findings, the court ruled that 67% approval of the Unit Owners was required otherwise a failure to obtain the required 67% approval rendered the contract unenforceable. However, the court did allow the plaintiffs to prosecute claims for "Breach of Implied Covenant", "Good Faith", "Fair Dealing", "Fraud", and "Negligent Misrepresentation". The basis for these claims rested upon the courts opinion that the Association had represented itself as being duly authorized to enter into a contractual agreement for the sale and subsequent purchase of the condominium unit.