| When developing residential condominiums in New Hampshire, elevenis the loneliest number. What makes this number so lonely? When a residential condominium development project has eleven or more condominium units, it must be registered with the Consumer Protection Division of the New Hampshire Attorney General's office (the "Consumer Protection Division"). In other words, when a residential condominium development moves from ten units to eleven units a new and substantial step appears in the process of getting the condominium units to market.
The Condominium Act, first passed in 1977, governs the development of "all condominiums and [applies] to all condominium projects" in the State of New Hampshire. RSA 356-B:2. The good news for those pursuing smaller residential developments is found in RSA 356-B:49, I(a), which exempts from the generally applicable registration requirement residential condominiums of "not more than 10 units[.]" While this is good news for those working on smaller developments, this means that all large-scale residential condominium developments have another hurdle the developer must overcome before the first unit is sold.
To gain a better understanding of the application process, a developer should consider why the registration process was created. The Consumer Protection Division is first and foremost concerned with protecting the consumer from buying into a condominium project that never gets completed. Rather than making a qualitative judgment, as a planning board might regarding the look of the development, the Consumer Protection Division is essentially making a quantitative judgment. The Consumer Protection Division's role is to make sure the developer (also known as the "Declarant") provides enough information to demonstrate that it is ready and able to deliver a finished condominium project. Viewed from this perspective, it is easier to understand, if not accept, why the registration applications require so much documentation.
The condominium application's primary document, which runs a mere twelve pages, is Form CPLS 100. However, associated with this application are up to eighteen separate appendices. When the appendices are included, the final application package is routinely four to five inches thick and runs hundreds of pages.
The documentation required for the appendices concerns everything from town or city approval of the project, to the plan of financing, to the marketing effort associated with selling the units. Of special note is Appendix A, which consists of form CPLS 170. Form CPLS 170 must be completed by the principal of the company doing the development, and requires disclosure of background and financial information that a developer might otherwise wish to keep private. The Consumer Protection Division provides editable CPLS 100 and 170 forms on its website and has issued numerous rules, JUS 1400 et. seq, that help guide applicants and their attorneys in completing the registration applications.
Along with a completed registration application, the developer must also submit the application registration fee. This fee is currently set at $30 per unit being registered, with a minimum fee of $300 due with the first application associated with the development (a minimum fee of $200 applies to subsequent applications related to the same development) and a maximum fee of $2000. RSA 356-B:51, VII. Upon receipt of the application and fee, the Consumer Protection Division has ten business days to issue a notice of filing to the developer. RSA 356-B:54, I. After the notice of filing is issued, the Division has sixty days in which to register or reject the condominium. Id. However, this sixty-day period can be extended with the assent of the developer. Id.
During this sixty-day period the application passes through the review process at the Consumer Protection Division, which currently consists of a review by both an attorney and a non-attorney. The informal report of the Division staff is that in most cases additional documentation will be required before a registration will be issued. Where such additional information is required, the Division gives notice to the applicant and the applicant has fifteen days to provide the necessary information. RSA 356-B:54, III. If the additional information is not submitted, the application for registration can be rejected. Id. During this fifteen-day period an applicant can petition the Attorney General for reconsideration of its request for additional information. Id. However, such administrative appeals are generally unattractive for developers because they drag out the registration process and the likelihood of a successful appeal is uncertain.
The role of the attorney in preparing and submitting registration applications is fourfold. First, the attorney is responsible for drafting the core legal documents pertaining to the creation of the condominium and the unit owners' association (e.g. the Declaration, By-laws, and Rules and Regulations). Second, the attorney works with the developer and its engineer and architect to manage the process of obtaining the local development approvals that are a necessary part of the application. Third, the attorney works with the developer and its bank to close on the loan (or other financing instrument) that furnishes the funds needed to purchase the land and complete the construction. Fourth, the attorney serves as the "field general" for the application, collecting, collating and analyzing the hundreds of pages of documentation that make up a completed registration package.
When a good attorney is engaged early in the process, he or she can make the process more predictable for the developer and keep the length of the process to a minimum. However, while a good attorney can make the process easier, no attorney can make it go away. As long as it is the eleventh unit that triggers the condominium registration requirement, eleven will be the loneliest number in condominium development in New Hampshire.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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