Due to the overwhelming response we would like to clarify that MEEB is now offering (free of charge) in-house mini seminars and question and answer workshops throughout Massachusetts, New Hampshire and Rhode Island for property management companies with 5 or more participants. Property management companies with less than 5 participants will be invited to join a free collaborative seminar where all questions and concerns presented will be addressed at a location selected by MEEB. Our attorneys will bring their knowledge and expertise to answer questions and discuss any topic concerning common condominium issues. We will design each seminar to specifically address your interests and concerns. To sign up or for any further questions please email us at: law@meeb.com

MEEB is now offering (free of charge) mini seminars and question and answer workshops for Property Managers throughout New England.   Our attorneys will bring their knowledge and expertise to your office to answer questions and discuss any topic concerning common condominium issues. We will design each seminar to specifically address your interests and concerns. To sign up or for any further questions please click on the button below.

On December 20, 2011, the Appeals Court ruled in an unpublished decision brought by a contractor against a condominium trust that mechanics liens imposed by contractors are inapplicable in the condominium context and cannot be utilized to attach common areas and/or secure contractor claims for non-payment. The case involves a subcontractor who was not paid by a general contractor hired by the condominium trust to perform work at a condominium.  The general contractor went bankrupt towards the end of the project and did not fully pay the subcontractor.  With no chance of a recovery in bankruptcy, the subcontractor filed a statutory mechanics lien against the condominium building and then filed a lawsuit to enforce the lien against the condominium trust. The subcontractor also asserted a claim for unjust enrichment against the condominium trust (i.e. that the condominium trust should pay the subcontractor since the condominium trust received the benefit of the work performed on the building).

The condominium trust moved to dismiss the lawsuit and dissolve the mechanics lien on the grounds that: (1) Section 13 of the Massachusetts Condominium Act prohibits the attachment of common areas to secure claims against a condominium board, and (2) the condominium trust was the party to the contract and does not own the common areas, but manages them for the benefit of the unit owners by statute. The condominium trust also moved to dismiss the unjust enrichment claim against the contractor on the theory that the subcontractor had written contracts with the now bankrupt contractor not the condominium trust and therefore it was not reasonable for them to expect payment from the condominium trust.

In affirming the Appeals Court held Section 13 OF THE Massachusetts Condominium Act controls and prohibits the use of mechanics lien to attach to common areas.  The Court also held that the contractor could not recover in quantum meruit against the Condominium due to the existence of a contract with the bankrupt general contractor.

The case was handled by MEEB Attorneys Edmund A. Allcock and Katherine Brady.  For any questions regarding this article please contact Ed Allcock at eallcock@meeb.com or at 781-843-5000 (ext. 150). Click here for a copy of the Decision.

Many prognosticators believe that the world will come to an end in 2012, based on upon the Mayan calendar.  There has been a movie about it, aptly named “2012.”  

Is YOUR Condominium prepared for the end of the world?  The end of the world will no doubt be fraught with legal challenges for your Condominium.  The end of the world is likely to create havoc with Condominium elections, meetings (especially quorum requirements), collections and enforcement of restrictive covenants.  The ensuing chaos from the end of the world will likely result in expensive litigation, possibly with other worldly beings.  Fortunately, certain of MEEB’s more careful lawyers have drafted extensive amendments that would fit neatly in most condominium documents to protect your Condominium in the event that the world does in fact come to an end this year or even some other year.  Actually, some of our lawyers have been drafting provisions that deal with the end of the world for years, but thanks to the Mayan calendar it looks like they may finally have some utility.  In recognition of impending doom in 2012, MEEB is offering its end of the world restrictive covenant enforcement provision (a/k/a the Gloom and Boom resolution) free of charge.  The Gloom and Boom resolution can be accessed at the following link.  MEEB’s more extensive end of the world resolutions, including the “extra terrestrial super lien resolution” will be released for distribution next month.  Wishing you all a happy, fun and healthy 2012.    

Click here for the provision>>  

When it comes to charitable giving, the attorneys at Marcus, Errico, Emmer & Brooks (MEEB) think more is better.  With that thought in mind, the firm has established a non-profit foundation as a vehicle for expanding its own contributions and possibly soliciting contributions from others.

Charitable giving has long been a priority for the firm, which has been donating between $30,000 and $40,000 annually to a variety of causes.  “But we thought that wasn’t enough,” explains Stephen Marcus, one of the founding partners.    So the firm has increased its annual commitment to $100,000 and has decided to channel a large portion of that increase toward issues related to condominiums – one of the firms’ primary practice areas.

“We will continue to support real estate industry trade groups (such as CAI and IREM), the Pan-Mass challenge (for cancer research) and the many other good causes we’ve supported in the past,” Marcus says. “But we thought it made sense for the firm to give more and to give back to the condominium world.”

The foundation’s most likely targets initially will be small inner city condominiums and condominium owners in need of assistance, “but that focus could change,” Marcus says, “depending on the needs we identify and the requests we receive.”

In addition to creating a more formal structure for the firm’s charitable giving, the foundation will make it possible to solicit contributions from others in the community association industry for projects too large for the firm to handle on its own.  The foundation has been incorporated and is awaiting approval of its non-profit status – a process that will take from two to three months.  In the meantime, MEEB attorneys are actively seeking funding targets for the $100,000 they have already committed for the coming year.

A project the firm has recently undertaken on a pro bono basis is an example of the initiatives the new foundation is likely to fund.

The project involves a small, three-unit condominium in Boston’s Dorchester neighborhood that Marcus describes as “completely dysfunctional.”  He learned of the building from students in The Transactional Law Clinics at Harvard Law School, who contacted him to ask about legislation to address the problems of smaller condominiums.    Marcus suggested that they start instead by focusing on a specific case with which the firm might help and the students identified this condominium, created in 1991 under an affordable housing program.

While the building itself was in reasonably good condition, Marcus says, the condominium had no formal association structure and bills were paid haphazardly, if at all.  Because of an unpaid $3,000 electricity bill, “there had been no lights in the common area hallways since 2008”; the insurance on the property had lapsed because of a failure to repair some structural damage to building.

Representing one of the three owners at no charge, the firm secured a court order appointing a receiver and convinced Scott Wolf, president of Greater Boston Properties, to fill that position and to waive the receiver’s fee.   In fairly short order, using a no-interest personal loan Marcus provided to cover expenses until the association could be reorganized, Wolf was able to get the electricity restored, paid a past-due bill for water services that were about to be suspended, arranged for the necessary structural repairs and had the insurance reinstated.  He also persuaded the three owners to agree on a monthly common area fee, and reports that all made the first payment due under this new structure.  “No one thought we would collect the fees,” Woolf says, “but everyone paid, and I’m very happy about that.”

While the community at this point is “far from self-sustaining,” Marcus, says, “it is moving toward recovery and stability, and that represents tremendous progress in a short time.”

“In addition to helping a community that desperately needed assistance,” Marcus adds, “this project is teaching us a great deal about the problems of smaller community associations and the kind of assistance they may need.  It is also demonstrating that smaller community associations will be a good target for the MEEB Foundation. “

Here’s a landlord’s nightmare — at least one of them. A fire has caused extensive damage to one of your buildings. No one was injured, fortunately, but all 50 tenants will have to be relocated while the building is being repaired, which will take at least five months and probably longer. The cause of the fire, as is often the case, is unrelated to the landlord or the physical structure of the property.

A Massachusetts statute requires landlords to provide $750 in relocation benefits to tenants displaced by a building disaster, so you cut those checks. But that payment won’t cover their temporary housing costs for long, and it certainly won’t replace the personal belongings that were damaged or destroyed in the fire. Many of your tenants, if not all of them, will need to blame someone for their losses, and will expect you to compensate them. At least some of them will sue you when you refuse.

Needless to say, both you and your tenants would be much better off if your tenants had renters’ insurance, which would cover both their temporary housing costs and their property damage. But the Insurance Information Institute estimates that only about 40 percent of tenants nationally have that coverage.

The benefits for tenants, although apparently ignored by many of them, are obvious. The relatively low-cost renters’ policy insures their personal property and provides liability coverage as well. If a visitor trips over a chair or falls off of a trampoline in a tenant’s apartment, the tenant alone will be liable for the damages. The landlord will have no liability unless his/her negligence caused the injury or contributed to it in some way, leaving the tenant on the hook for hundreds and possibly thousands of dollars in medical and legal costs that a renters’ policy would likely cover.

Landlords also benefit if their tenants have renters’ insurance in many ways, among them: Tenants who have this coverage are less likely to sue their landlords to compensate them for a loss. Even if landlords ultimately prevail in those suits, they still have to pay the legal costs involved. Rental property owners responding to a survey by Joshua Tree Consulting estimated that they juggle eight “nuisance” insurance claims per property every year. That can add up to a lot of legal bills and a lot of time landlords would almost certainly prefer to spend on other tasks.

Covering the Deductible

Equally important, a renter’s insurance policy would cover the landlord’s deductible on damages for which the tenant is responsible – no small consideration, given that the National Fire Protection Association estimates that 70 percent of fires in multifamily dwellings are the result of tenants’ negligence.

In a 2006 white paper analyzing the advantages of renters’ insurance, Joshua Tree (the consulting firm cited earlier) notes that landlords paid an average of $2,444 per property for tenant-caused damage in buildings where tenants weren’t required to have insurance compared with $1,364 in buildings where the insurance was mandatory.

The white paper also points out that in addition to being less likely to sue their landlords, tenants with insurance are also more likely to have the financial capacity to continue renting from the landlord after a disaster and “less likely to need free rent or other financial assistance.”

Although Massachusetts landlords aren’t required to provide assistance (beyond the $750 required by state law), we have found that judges and municipal officials sometimes pressure them to do much more. Standing in front of the city officials who are demanding that you pay for the tenants to stay in a hotel, even though the law does not require the payments, is not a pleasant experience.

Making it Mandatory

Landlords typically inform their tenants, or should inform them, that the landlord’s insurance will not protect the tenants’ personal property. Many include language in their leases making that point and “strongly encouraging” tenants to obtain renters’ coverage. Some property owners, particularly larger companies, go further and actually require tenants to obtain renters’ insurance as a condition of the tenancy.

One of our clients, a large Real Estate Investment Trust with holdings all over the country, has made renters’ insurance a requirement for all of its multifamily properties and more property owners appear to be following suit. A survey by the National MultiHousing Council found that 66 percent of the companies responding required insurance in 2010, compared with 45 percent in 2009 and only 24 percent in 2008.

One state (Virginia) specifically allows landlords to require renters’ insurance. The statute also authorizes landlords to obtain the insurance for tenants who don’t have it and bill them for its cost. Massachusetts, like most states, has no comparable authorizing language, but nothing in the state’s statutes prohibits landlords from making renters’ insurance mandatory for their tenants. And for all the reasons noted here, I think this is an option most rental property owners should consider.

Some are afraid adopting an insurance requirement will create a competitive disadvantage for them; given the option, they assume, tenants will choose a building where they don’t have to pay for insurance over one where the coverage is required. But that doesn’t appear to be the case. The Joshua Tree white paper describes the experience one landlord, who implemented an insurance requirement after fires in several of his buildings.

“We have had no reduction in traffic or leasing success….not one blip,” this landlord reported. “The benefits outweigh the cost and effort. If every apartment owner pushed it, all residents would be better off. We’re going to reeducate our renters about liability and the dangers of the way they live.” Renters’ insurance, he added, “is a solid risk management approach [for landlords] that benefits residents.”

Rental property owners responding to a national survey by Satisfacts agreed. Of the owners requiring insurance in some or all of their properties, nearly 85 percent described the impact as “positive” or neutral and 91 percent said the administrative burden has been “easy” or “manageable.”

A Few Basics

A renters’ insurance requirement doesn’t have to be complicated. Landlords implementing this policy should:

• Make the insurance requirement a provision of the lease or rental agreement.
• Specify a minimum insurance amount – higher in more expensive properties than in less expensive ones.
• Require tenants to provide evidence of insurance at the beginning of a new lease and at each renewal. The lease should specify that failure to do so will be grounds for eviction.
• Consider including a list of insurance companies offering the coverage, but don’t require tenants to use a particular company and don’t recommend any of them.
• Consider providing informational material explaining the benefits of renters’ insurance for tenants and why they need that protection. Education can help tenants understand that the insurance the landlord is requiring is in the tenants’ best interests.
• Enforce the insurance requirement uniformly. Allowing exceptions for some tenants will make it difficult to enforce the policy against other tenants and leave you vulnerable to charges of discriminating against them.

There will undoubtedly be some tenants who will balk at the insurance requirement, but probably fewer than you fear. The Joshua Tree white paper estimates that renters’ insurance will provide $110,000 annually in financial benefits to property owners for every 20 properties owned “at no cost” to them — a powerful argument in its favor.

Admittedly, that estimate assumes fairly extensive holdings, with an average of 250 units per property. But for smaller property owners as for larger ones, eliminating even a few nuisance suits every year or covering even one significant damage claim should more than offset the administrative burdens created by implementing an insurance requirement and enforcing it over time.

In DeWolfe v. Hingham Centre Ltd., the Massachusetts Appeals Court recently considered a Realtor’s duty to disclose and independently verify zoning information about a listing property.  The agent, relying on what turned out to be erroneous information supplied by his client, listed a Norwell property on Multiple Listing Service (MLS) and newspaper advertising as “zoned Business B.” The property was not in fact zoned for business use; it was zoned residential, thereby prohibiting the hair salon the buyer wanted to open at the property.

Despite the general disclaimer on the MLS system and in the purchase and sale agreement, the Massachusetts Appeals Court held that the Realtor could be held liable for misrepresentation and Chapter 93A violations due to providing this erroneous information.

Daniel DeWolfe became interested in opening a hair salon after reading a real estate listing in a local newspaper about property available for sale in Norwell.  The advertisement stated that the property was zoned as “Business B,” a designation which allowed for the opening of a hair salon. DeWolfe called the realtor and informed the listing broker that he would like to purchase the property to accommodate a six-station salon.

The broker gave DeWolfe a copy of the multiple listing service, which stated that the address was zoned as “Business B.”  The listing contained a disclaimer that the information was gathered from third party sources and no representations or warranties were being made as to its accuracy. The broker also provided DeWolfe with the Norwell zoning ordinance, which included the word “hairdresser” as one of the permitted business uses.  At no time did the broker verify the zoning classification with the Norwell Zoning Department.

During a viewing, DeWolfe testified that the broker informed him that he could purchase the property as a two-family residence and legally convert it to a hair salon.  At some time before an offer to purchase was made in October 2004, DeWolfe consulted his attorney.  His offer to buy was contingent on receiving approval of a hair salon by the town.  In October 2004, a purchase and sale agreement was executed with the same contingency.

The parties then drew up their papers using a Greater Boston Real Estate Board standard form purchase and sale agreement, which contained the following warranty language:

“The BUYER acknowledges that the BUYER has not … relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either the SELLER or the Broker(s): NONE.”

DeWolfe obtained the permit required to install a special septic system for disposal of chemicals used in his business and was given approval for a six-station hair salon by the town board of health in November 2004. A deed for the property was transferred to DeWolfe in December 2004.

In early 2005, DeWolfe learned that the property was actually in a “Residential B” district and a six-station hair salon was not a permitted use. He filed suit against the broker and real estate company, but Superior Court Judge Charles J. Hely dismissed the case.

 In reversing that ruling, Judge Rubin of the Appeals Court wrote that Judge Hely improperly relied on the Appeals Court’s holding in Quinlan v. Clasby to determine that the broker had no duty to inquire about the zoning classification.  He distinguished Quinlan because the broker in that case had not made any affirmative representations to the buyer.  In this case, however, the broker communicated to DeWolfe several times and in several manners that the property was zoned for commercial use and that DeWolfe would be allowed to operate his desired hair salon at the location.  The broker not only stated in the newspaper advertisement and on the multiple listing service that the property was zoned for a hair salon, she also orally advised DeWolfe of its classification during the viewing.

The full text of the ruling can be found by clicking here.
By Edmund A. Allcock 

Say the words “lodging house” or “rooming house” and most of us think of substandard transient housing filled with scofflaws and vagrants.  However, according to the Massachusetts Appeals Court, whenever a group of four or more unrelated people live together in an apartment, the landlord is operating an illegal lodging house in violation of state law.  This is regardless of the number of bedrooms in the apartment or the size of the dwelling.

General Laws c. 140, § 22 defines a lodging house as “a house where lodgings are let to four or more persons not within the second degree of kindred to the person conducting” such a facility. Some cities, including Worcester and Boston, have enacted even more restrictive lodging house statutes.  For example, Boston recently passed an ordinance which prohibits more than four undergraduate students from residing together.  These statutes are designed to address concerns with overcrowding, deplorable health and sanitary conditions as well as fire hazards prevalent in lodging houses.  See, Maher v. Brookline, 339 Mass. 209, 215 (1959); Newbury Jr. College v. Brookline, 19 Mass. App. Ct. 197, 203-204 (1985).

In City of Worcester v. College Hill Properties, LLC, the City of Worcester began a crack down on landlords that were leasing their apartments to groups of undergraduate students.  Specifically, they looked at properties that leased apartments to four or more students.  While each of these properties were large enough to accommodate these students under the state sanitary code, and were in pristine condition, the City claimed that they were lodging houses and were therefore prohibited.  The Housing Court judge agreed and ordered the landlords to cease renting there units to these people.  The Court also held them in contempt when they failed to remove the tenants.  The Appeals Court affirmed the trial court’s decision and reiterated its prior position that a landlord who leases to four or more unrelated adults is in violation of the state’s lodging house statute.   While the landlord argued that the four students were living together, sharing expenses, and sharing the facilities, and were therefore a “single housekeeping unit”, the Court rejected the argument.

As a result, landlords should be cautious not to violate the lodging house statute when renting to multiple people within a single dwelling.  If the apartment is being leased to four or more unrelated people, you are operating a rooming house.  Even if the apartment has four separate bedrooms, the lodging house statute would prohibit leasing the apartment to four unrelated adults unless the property is zoned and licensed as a lodging house.  Likewise, while most cities and towns do not expend significant resources enforcing this law, they tend to raise it when an issue arises regarding the behavior of the residents (i.e. loud parties, fights, etc.).  In such cases, the landlord not only is exposed to actions by the municipality, but is also subject to claims of the residents who the landlord is not compelled to remove.

For a copy of the decision click here.

If you would like further information please contact Lori Atkins at latkins@meeb.com or 781-843-5000 (102).

The Massachusetts Supreme Judicial Court recently answered an important zoning question in their decision in Connors v. Annino, 460 Mass. 790 (2011).  In reaching its opinion in Connors, the SJC confirmed the 2008 Appeals Court decision in Gallivan v. Zoning Board of Appeals of Wellesley, 17 Mass. App. Ct. 859 (2008), that an aggrieved party has thirty days from the issuance of a building permit to file an administrative appeal, if the aggrieved party received adequate notice of the issuance of the permit.

In Connors, on September 15, 2008, the building inspector issued two building permits to Annino.  While the building department did not provide Connors with notice of the permits, on September 25^th, Connors learned the permits had issued.  Prior to the issuance of the permits, Connors had sent a letter to the building commissioner opposing Annino’s building permit application.  The building commissioner responded to Connors’ letter on September 29^th.  On October 20, 2008, thirty-five days after the building permits had issued, but less than thirty days from when the building commissioner responded to Connors’ letter, Connors filed a petition of appeal.  The Zoning Board of Appeals dismissed Connors’ appeal noting that Connors “failed to bring the appeal within the time frame required by statute.”

Pursuant to G.L. c. 40A, §8 and §15, an aggrieved party has thirty days from the issuance of a building permit to file an administrative appeal.  However, G.L. c. 40A, §7, also provides that an individual may at any time within six years of an alleged zoning violation, make a written request to the town to enforce the zoning by-law.  If an individual is aggrieved by the town’s decision, the aggrieved party has thirty days to appeal the town’s decision.  These two sections of c. 40A have lead to uncertainty as to whether an aggrieved party, who despite having notice of the issuance of a building permit, may wait to request enforcement of the zoning by-law and appeal that decision, rather than appeal the issuance of the building permit within thirty days.  In Connors, the SJC attempts to clear up this uncertainty by finding that if adequate notice is provided of the issuance of a building permit, the aggrieved party may not use the enforcement provisions available in c. 40A, §7, and must appeal the building permit within thirty days.

Unfortunately, the SJC declined to create a distinct definition or bright line rule of what constitutes “adequate notice”.  However, in light of this decision, and in order to avoid disputes, we would expect that municipalities may take the proactive step of requiring the notice of the issuance of building permits to abutters.  Furthermore, the SJC advises applicants for a building permit to provide notice of the permit’s issuance in order to avoid similar disputes.

For more information regarding this case please contact Matt Gaines at mgaines@meeb.com or at 781-843-5000.

For a copy of the decision please click here.