Legacy Key is a condominium complex in Orange Beach. The complex contains 36 residential units and some “limited common elements” including boat slips, storage houses, and carriage houses. The limited common elements were included in an amendment (“the first amendment”) to the declaration of condominium as required by Ala. Code 1975, § 35-8A-208(c), which is part of the Alabama Uniform Condominium Act (“the Act”). The amendment provided that the limited common elements would be appurtenant to the units. The owners were permitted to reallocate the limited common elements by an amendment to the declaration.
In December 2003, Ellen McKinney purchased Unit 903 in Legacy Key. The deed conveying the unit included Unit 903 “together with Storage Closet Number 1” and “Boat Slip Number 6.” The deed stated that the storage closet and the boat slip were appurtenances to Unit 903. In July 2007, McKinney and her husband refinanced the original $322,700 loan that was used to purchase Unit 903 and obtained a new loan in the amount of $700,000. Bank of America, N.A., was the lender and it held a mortgage on Unit 903 to secure the loan.
In 2009, McKinney executed an amendment to the declaration, transferring the storage closet and the boat slip from Unit 903 to Unit 101. Evelyn Kinslow is the owner of Unit 101. In 2010, Kinslow filed an action to quiet title to the storage closet and the boat slip. The trial court granted a motion for summary judgment filed by Kinslow and determined that the boat slip and the storage closet were for the exclusive use of Unit 101. Bank of America appealed. Reversed.
Bank of America argued that a limited common element is appurtenant to a unit and not to a unit owner. Section 35-8A-208 makes clear that the limited common elements are appurtenant to a unit in a condominium. Furthermore, the first amendment contemplates that the limited common elements would be appurtenant to a specific unit. The trial court erred as a matter of law. The Court then considered whether the limited common elements are subject to the terms of the mortgage. In this case, the limited common elements were not specifically included in the property subject to the mortgage. The Commissioners’ Commentary to § 35-8A-204 states that it is not necessary to continue to describe the limited common element interests that are appurtenant to a unit in an instrument conveying title to that unit. The Court held that a description meeting the requirements of § 35-8A-204 is sufficient to encompass the limited common elements appurtenant to that unit. Therefore, the limited common elements in this case were subject to the mortgage. Bank of America, N.A. v. Kinslow