## Facts

- Siena at Old Orchard, LLC (the developer) created a condominium association and, during the initial period of developer control, drafted the association’s bylaws and appointed the association’s first board of directors.
- The bylaws set limits on who could bind the association by contract: a majority of the board at a meeting with a quorum could authorize an officer to contract, or the association’s president or vice president could sign contracts if the secretary (or an assistant secretary) attested to the signature.
- In 2007, control of the association was turned over to a board elected by unit owners.
- After turnover, water leaks and other problems appeared. Unit owners hired a consultant, who reported multiple construction defects attributed to the developer that affected the building’s structural integrity.
- In 2008, the developer paid the association about $28,500 in exchange for broad releases of construction-defect claims.
- Larry Keer, the association’s president, signed the releases on the association’s behalf without a board meeting authorizing the transaction and without an attesting signature from the secretary or assistant secretary.
- The association accepted the funds but did not learn of the releases until more than a year later.
- The association and its board sued Keer and the developer, asserting construction-related claims. Defendants relied on the releases and obtained dismissal in the trial court on the ground that the releases bound the association.
- The association appealed the dismissal.

## Issues

1. Whether the association was bound by releases signed by its president when the bylaws required board authorization (or, alternatively, an attesting signature by the secretary or assistant secretary) and those requirements were not satisfied.
2. Whether the association ratified the releases by accepting and retaining the developer’s payment despite allegedly lacking knowledge of the releases when it accepted the funds.

## Decision

- The appellate court reversed the dismissal and remanded for further proceedings.
- The court held the releases did not bind the association because they were executed without the authority required by the association’s bylaws.
- The court rejected the claim of ratification because ratification requires knowledge of the material facts; accepting payment without knowledge of the releases was insufficient to show the association affirmatively adopted the releases.

## Legal Principles

- A condominium association’s bylaws function as governing rules that define and limit an officer’s power to bind the association by contract.
- An officer’s signature does not bind the association when the officer lacks actual authority under the bylaws and the counterparty cannot show a legally sufficient basis to treat the officer as authorized despite those limits.
- Ratification requires that the principal, with knowledge of the material terms and consequences of the unauthorized act, accepts the benefits or otherwise manifests an intent to be bound; mere receipt or retention of funds without such knowledge does not establish ratification.

## Conclusion

The court held that broad releases of construction-defect claims were not enforceable against the condominium association where the releases were signed by the association’s president without the bylaw-required board authorization or secretary attestation, and where the association’s acceptance of payment—without knowledge of the releases—did not amount to ratification.


Siena at Old Orchard Condominium Association v. Siena at Old Orchard, LLC, 75 N.E.3d 420 (2017)