Boston has its share of mixed-use developments that combine luxury residences, five-star hotels and upscale shopping. The Mandarin Oriental in the Back Bay and the W Boston in the Theater District are noteworthy examples of successful projects. Similar developments are under way at One Dalton Place and North Station.

Visitors to completed projects appreciate their beauty and functionality. Passers-by marvel at new projects rising along Boston’s skyline. Most people, however, are blissfully unaware of the creative lawyering that goes into the condominium documents governing these developments.

Such documents lay out the ground rules that enable residents, hotel operators and retail businesses to coexist while literally on top of each other. Lawyers who prepare condominium documents often resort to tiered condominiums to best address the rights and obligations of different owners within mixed-use projects. In tiered condominiums, there is an overriding master condominium that creates a few large units which, in turn, are subdivided into secondary condominium units.

When it comes to mixed-use or phased condominium projects, the Massachusetts condominium statute offers no guidance. Some states, such as Florida, have enacted second generation condominium statutes that comprehensively address tiered condominiums, phasing and even consumer protections and disclosures. The Massachusetts condominium statute, enacted in 1963, falls short in these areas. It does not discuss tiered condominiums or phasing. Nevertheless, Massachusetts lawyers make do with this antiquated statute. They employ various strategies for phased condominiums, such as reserving future development rights and phasing leases in favor of developers. State courts uphold properly documented phasing rights. Massachusetts lawyers show similar resourcefulness when documenting tiered condominiums for mixed-use projects. Battery Wharf in Boston’s North End is a worthy example.

A Tale of Three Condo Associations

With PNC Realty Investors Inc. as its lead investor, RBW LLC developed Battery Wharf in the North End. This waterfront project opened for business in 2008. It features four multistory buildings, underground parking, a marina and attractive open space, all governed by a tiered condominium.

The project’s master condominium established three large-scale units; namely, a residential unit, a hotel unit and a commercial unit. The residential unit contains luxury apartments that regularly sell for over $1,000 per square foot. It includes rights to the marina.

The hotel unit is the 150-room Battery Wharf Hotel and associated retail space. The commercial unit consists of the parking garage and additional retail space. When the developer created the three-unit master condominium, it simultaneously set up two secondary condominiums, one for the residential unit and the other for the commercial unit. The residential unit is subdivided into 103 residential condominium units, and the commercial unit is subdivided into the parking garage unit and three retail units with over 28,000 square feet of area. Owners of residential units have parking easements in the commercial unit’s parking garage, allowing each owner to park a single vehicle in an undesignated space. The owners may not park their own cars, but must rely on valet attendants to do so.

This tiered arrangement presents some challenges. Buyers of condominium units are expected to familiarize themselves with two sets of condominium documents and annual budgets. They also should be prepared to deal with the politics involved where unit owners are subject to decisions of both a master condominium association and a secondary condominium association. Nevertheless, the developer of Battery Wharf (or, one should say, the developer’s lawyers) did an admirable job of dovetailing the conflicting interests of residents, retailers and a hotel operator. The condominium documents are thorough, but refreshingly succinct for such a large project.

There is little interest in updating the Massachusetts condominium statute to something more akin to Florida’s statute, but real estate lawyers can use expert draftsmanship to compensate for the Massachusetts statute’s shortcomings.

Christopher R. Vaccaro is a partner at Dalton & Finegold in Andover. He may be reached at cvaccaro@dfllp.com.