I too remember Bucky F&*ing Dent. The Sox had choked away a seemingly insurmountable lead in September and wound up tied for the AL East lead with the Yankees. Hey Pink Hats, the 2011 collapse was nothing compared to this, I don’t care what the stats say. Back then the AL East consisted of seven teams, the Sox, Baltimore, Yankees, Detroit, Cleveland, Milwaukee (now in the National League) and the recent expansion Toronto Blue Jays. There was no wild card. The division winner would meet the Kansas City Royals in the five game American League Championship Series (the ALCS was relatively new having been added in 1969 when the American League was split into two divisions). So a one game tiebreaker between the Sox and the Yankees would be played at Fenway (the venue was decided by a coin toss—will the Baseball people ever get their sh*t together?). I believe this was the first (and some thought likely to be the only) playoff game between the Red Sox and the Yankees. Okay so the wild card definitely has some benefits.

It was October 2, 1978. Almost 35 years ago today. I was a skinny nine year old growing up in Pawtucket RI. The game started in the afternoon. On that day, instead of hoping on the bus, my mom picked up me and my brother (a.k.a,. the Boog) in her beat up station wagon, as the Boog had a doctor’s appointment. The station wagon had a large dent in the side of it, from the time we got blindsided by a guy who blew a red light while we were crossing Farnham Street. My father took the insurance money and never fixed the cavernous dent in the side of the vehicle. Fortunately, the radio still worked in the dented vehicle. I listened intently as we drove. My hero the Captain, the old man, Yaz, #8 (every little leaguer wanted #8 or #14, I got #13) hit an early solo shot off Yankee fireballer Ron Guidry. Jim Ed drove in another run, the Sox were up 2-0 and on their way.

I somehow convinced my mom to drop me off at the house at 880 Cottage Street, while she took my brother to see Dr. Giorgio. People did not think much of leaving a nine year old alone in those days. Hell my father would send me three blocks to Cumberland Farms to buy his Newport cigarettes, so home alone was not such a big deal. I ran to the tiny bedroom I shared with my brother and turned on the 14″ black and white Zenith that sat on the top of our dresser. I stood right in front of it because of the constant need to adjust the rabbit ears to get the picture to stay somewhat viewable. Thankfully the game was on a normal channel instead of Channel 38 like most Red Sox and Bruins games in the day. I am convinced that Channel 38 was broadcast from dark side of the moon, because frankly, anything on that channel resembled the moon landing. To make matters worse, the damn TV had a loud vibration or reverberation, because my brother had recently dared me to stick a metal pen clip into a hole near the speaker, which got sucked into the set and settled on the bottom and vibrated and echoed with every sound the TV set made. As an aside I lied to my parents about how I broke the TV but my brother swore by my story and somehow we avoided punishment for that crime.

Anyway, I settled in to watching my team and what a team it was. The Rooster at short, Remy at second, Yaz in left, Boomer at first, Jim Ed in right (Dewey would soon settle into right, with Rice going to left and Yaz playing first and DH as his career wound down), Leapin Freddy Lynn in center, Butch Hobson at third and of course Pudge behind the plate. They wore their 70′s polyester whites with their red hats. Unfortunately we had Mike Torrez on the mound that day. Man did he suck. Fortunately, in the 2000′s the Red Sox finally learned the importance of pitching, “we want a pitcher, not a belly itcher” (one of our little league dugout chants, though my favorite was the “pitcher’s blowin up”)….try doing that in a little league game today.

With the Sox holding onto their 2-0 lead in the seventh, Torrez gave up a 3 run shot over the wall to the Yankee’s nine hitter. Their diminutive shortstop. He was a slap hitter. He choked up on the bat like a new little leaguer needed to because the bat was too freakin heavy. I did not think he could hit a home run in a Darlington National little league game in Slater Park. Dent batted .243 (please don’t ask me about obp, we lived by pure batting average in those days) and hit a whopping 5 home runs that year. He hit 40 home runs in his 12 year career. Yaz’s knees buckled as he helplessly watched his last chance at a World Series title sail over the wall. I think it went into the net, though I honestly can’t remember if the net was there yet. (remember the net?).

The Sox rallied in the ninth, and trailed 5-4 with two men on, two outs and Yaz at the plate. He popped up to third and ended the rally. I reacted instantly. I smashed up my bedroom like some insolent rock star. Yes, I was a nine year old with anger issues. My brother, the Boog, fancied turtles. He had made clay turtles and egg shell turtles in some art class, and they were scattered around our room. I smashed them all to smithereens. I broke some other items as well. My brother and mother were upset with me when they arrived home. My father came home a couple of hours later and had no idea what to make of me. He told me I was sick in the head. He told me that I had a disease. “Why do you give a god damn about these stupid sports teams” (we would have constant run ins about my level of sick commitment to the awful Patriots”), he asked. I gave him my best, “I don’t know”. So, not only did the Sox lose, but I got “the belt” that night for my tirade (no worries it was the strap end, not the buckle). My Old Man always told me that it hurt him more than it hurt me, which I think I understand now.

My lickin (my old man called it a “lickin” I think, because it sounded better than a beating, although it could have just been the vernacular of the day) did nothing to change my passion and resolve for my teams. Instead it was a badge of courage. I got the belt because of Bucky F&*ing Dent. Damn Yankees. The Red Sox, Patriots and Celtics (sorry Bruins fans, I was one of the few kinds in the Bucket that did not play Hockey) coursed through my veins. Its all I did, play sports and watch sports. I lived and died on every pitch, throw and shot. I combed the statistics in the Sunday Providence Journal Sports page (remember the batting averages from first to worst of every player in the Majors).

While the tie braker did not turn out the way I had hoped. It gave me the memory and lesson of a lifetime. It hardened my resolve, made me a true Boston Sports fan. A fighter, not a quitter, loyal to the laundry. The fact is every fan realizes at some point that the game (and for that matter life) is a constant struggle and that it is the rare season that ends with champagne (i.e. two Championships in 95 years). It is the constant struggle that I enjoy, the chase, the fight, even though sometimes, some days Buck F&*ing Dent rears his ugly head, dings one over the proverbial wall and I take a beating. But every ending has a beginning and it is the bitter memories that makes the champagne taste sweeter when it eventually flows. Thirty-five years later, I still blame Bucky F&*ing Dent for that beating I took, and I look forward to tasting that champagne one again. Lets go Sox.

Feel free to send your sport story to Ed Allcock at eallcock@meeb.com.

The lawsuit was started by one of the unit owners, whose name is Vitorino America, who sued the condominium association for failing to effectively enforce the smoking ban.  America alleged that he “could not enter or leave his unit without passing the exhaust of a unit in which tobacco is being smoked in violation of the ban” and that “the Board, despite having received numerous reports of violations” repeatedly failed to take action to enforce the ban”.

The Maine Supreme Court upheld the Trial Court’s dismissal of the ban on various grounds.  First it noted that America did not allege any individual harm or injury from the smoke.  In response to efforts to dismiss his case, America claimed that while he had not alleged any particular injury, he claimed that “cigarette smoke is universally understood to be a toxic and carcinogenic substance” and therefore his allegations that he was exposed to second hand smoke describe an injury sufficient to withstand a motion to dismiss.  The Court disagreed, holding that he must state or identify a particularized physical injury or illness caused by the exposure to the smoking.  His mere exposure to second hand smoke was insufficient to state a cause of action for individual harm.

With respect to the adequacy of the Condominium Association’s enforcement of the smoking ban, the Court relied upon the Business Judgment rule holding: “the business judgment rule provides that business decisions made by the directors [of a condominium] are not subject to judicial review unless they are the result of fraud or bad faith”…”the rationale for the rule is that it falls outside the proper judicial domain to inquire and second guess the prudence of particular business decisions honestly reached by those entrusted with the authority to determine what course of action best advances the well-being of the enterprise”.  The Court went on to note that disagreement about the method or manner of enforcement is not bad faith, but that bad faith “imports a dishonest purpose and implies wrongdoing or some motive of self-interest”.  The Court further explained that while no response might have been tantamount to bad faith, insufficient speed or vigor in responding to complaints does not survive the application of the business judgment rule.

The Court’s focus on the lack of a cognizable injury resulting from exposure to second hand smoke and detailed analysis and application of the business judgment rule to alleged selective and/or inadequate  enforcement of smoking bans, provides useful insight and persuasive authority for condominiums, attorneys and insurers addressing smoking litigation, which undoubtedly will continue to be a hot button issue throughout America for years to come.   The case, America v. Sunspray Condominium Association,  61 A.3d 1249 (Me. 2103) can be accessed at the following link.

For several years, a group of dedicated condominium managers have been working to convince condominium insurance carriers to create an endorsement to its policies that would pay the association in the event that the manager charge the association for handling association claims.  The problem is that the condominium managers spend a lot of time on insurance claims and up until now, the association had to pay the managers for these extra expenses out of pocket.  While other carriers have not been receptive to the idea, we are pleased to inform you that effective September 21, 2013, the insurance commissioner has approved this endorsement.

Basically the endorsement gives the insured an extra 5% of the paid claim to apply to the expenses relating to handling the claim.

The monies could be used in the following ways:

(1)    Pay the extra expenses of the property manager that were not part of the normal contract.

(2)    Pay the cost of hiring a public adjuster.

(3)    Pay the association’s expenses for gathering information, or lost time from work.

[Click here for the Endorsement]

The term “associational discrimination,” in the context of an employment discrimination claim, refers to a claim that a plaintiff, although not a member of a protected class himself or herself, is the victim of discrimination animus directed toward a third person who is a member of the protected class and with whom the plaintiff associates.

The Massachusetts Supreme Judicial Court (“S.J.C.”) has, in a narrowly tailored decision, expanded the reach of the state’s anti-discrimination statute, M.G.L. c. 151B, to include claims of associational discrimination in the employment context on the basis of an employee’s association with an immediate family member who is disabled. 

In the July 17, 2013 decision of Flagg v. AliMed, Inc., 466 Mass. 23 (2013), the S.J.C.  recognized, for the first time, that MG.L. C. 151B bars employers from discriminating against employees based not only on their own handicap or disability, but also based on the handicap or disability of an immediate family member with whom the employee associates.  The Supreme Judicial Court emphasized, however, that the holding of the case was limited to the narrow circumstances presented in the case. 

In Flagg v. AliMed, Inc., Mark Flagg, a former employee of AliMed, filed suit against AliMed on the basis that it had terminated his employment because of his association with his disabled wife. Mr. Flagg had worked for AliMed for approximately 18 years and received positive performance reviews. During that time, Mr. Flagg received benefits under an employer-sponsored health insurance plan for him and his family.  On December 7, 2007, Mr. Flagg’s wife underwent surgery to remove a brain tumor, leaving Mr. Flagg responsible for the care of their children, including picking up his daughter from school which required him to leave work from approximately 2:55 p.m. until 3:20 p.m. on certain days.  Mr. Flagg asked his manager for permission to leave work during those times and the manager replied that he should take the time necessary to do what he had to do to care for his family.  Between December 27, 2007 and January 15, 2008, Mr. Flagg picked up his daughter from school, but did not punch out when he left or punch in when he returned to work.  Mr. Flagg’s manager knew that he did not punch out during those times, but did not say anything to him.  On February 4, 2008, AliMed terminated Mr. Flagg’s employment stating that because he had failed to punch out when he left to pick up his daughter, he had been paid for time that he did not work — essentially, that his behavior amounted to a violation of policy and/or misconduct.  At the time of his termination, Mr. Flagg’s wife had been hospitalized due to a recurrence of the brain tumor.  Mr. Flagg contended that the reason offered by AliMed for termination was false and that the real reason for the decision to terminate him was that AliMed did not want to pay for his wife’s expensive medical treatment (for which AliMed was responsible through its health plan).  Mr. Flagg’s termination resulted in the immediate cancellation of his health insurance benefits — including much needed benefits for his wife’s ongoing care —  and, to make matters worse, Mr. Flagg was initially denied unemployment benefits. 

The Trial Court initially dismissed Mr. Flagg’s claim on the grounds that the Commonwealth does not recognize a discrimination claim based on an employee’s association with a disabled person.  Mr. Flagg appealed and the SJC took up the case.

Developers and their attorneys across the state are ecstatic about a U.S. Supreme Court ruling that reduces the amount of concessions and conditions municipalities can extract in granting permits.

A 5-4 majority in Koontz v. St. Johns River Water Management District held that the U.S. Constitution’s takings clause not only applies to cases in which a project is approved with “extortionate” conditions, but also to those denied when a developer refuses to agree to the coercive demands of the government.

The court granted certiorari because Koontz raised questions of constitutional law on which the lower courts were split.

The case, which prompted the filing of nine amicus (“Friends of the Court”) briefs, seemingly expands the scope of takings law by making it clear that the law’s protections apply to monetary exactions as well as demands for real property by a municipality in a permit context.  Until now, no court had held a landowner could receive a takings award in a case in which a permit application was denied.  The court held that monetary exactions and conditions meet a proportionality test by being reasonably related to the project.  In other words, the town will be hard pressed to request a $50,000 donation to a library for construction of a voluntary project.

 Municipalities approaching a developer’s project with an aggressive mitigation package may now open themselves up to a potential claim for a taking.  Until this ruling, there would not have been any potential liability for situations where there was a denial of an application.

Looking forward, Koontz may strengthen the position of property owners and developers entering the permitting process with municipalities by requiring that permitting bodies meet the nexus and rough proportionality test for monetary conditions instead of benefitting from a lower judicial review standard of reasonableness and deference to actions of local officials absent arbitrary action. A landowner now may more readily consider litigation as a viable tool for challenging an unfavorable special permit condition rather than continue to negotiate with government officials, or at least use the threat of litigation as a negotiation tactic.

Recently, the Massachusetts Supreme Judicial Court (“SJC”) had an occasion to review the case law and policies concerning the interpretation of the Massachusetts lodging house law.  In the matter of City of Worcester v. College Hill Properties, SJC 11166 (May 15, 2013), the SJC considered a case involving two-family and three-family rental properties in the City of Worcester owned by the Defendants.  The properties contained units consisting of a living room, dining room, kitchen, bathroom and unspecified number of bedrooms and eat unit in the case was leased to four un-related college students for one-year terms.  The City of Worcester issued citations to the owners of College Hill Properties ordering them to cease and desist from operation unlicensed lodging houses.  When the Defendants failed to reduce the number of occupants in each unit the City filed complaints in the Housing Court seeking injunctive relief to enjoin the Defendants to comply with the City’s administrative orders and from operating unlicensed lodging houses.  The City cited fire safety and overcrowding concerns as a basis for bringing the enforcement actions. 

The Housing Court judge issued the preliminary injunctions in the five separate cases filed concluding that the units as occupied constituted lodgings under the Lodging House Law.  The Defendants failed to comply with the court orders and the City of Worcester filed Complaints for Contempt.  The judge found the Defendants in contempt and issued monetary fines against each Defendant.  The five cases were consolidated and appealed.  The Appeals Court affirmed the housing court judge the SJC granted Defendant’s application for further appellate review.

            In reviewing the case on appeal, the SJC focused on the meaning of the term “lodgings” under the lodging house act.  See M.G.L.c. 140, §[1].  The Court focused on the phrase lodgings as the Act defines a “lodging house” but does not define lodgings anywhere within the Act.  This ambiguity opened the door for the Court to look to external sources for a “definition” of lodgings where the statute was not clear and unambiguous.  The SJC distinguishes a tenant from a lodger stating that a tenant has a property interest whereas a lodger merely has a contractual interest in agreeing “to live in and occupy a room or other designated portion therein that still remains in the owner’s legal possession.” The SJC found that the units as occupied in the five cases were not lodgings and as such found the lodging house act has no applicability to the units and therefore no license is required.  The Court recognized the City’s interest in protecting safety but ruled that “such concerns are better addressed through enforcement of applicable zoning ordinances and provisions of the sanitary and fire safety codes.” The Court vacated the judgments enjoining the Defendants from allowing four unrelated adults to occupy the units and the judgments for contempt. 

In short, the SJC’s decision removes the burden from the landlord in obtaining a license for units occupied by more than four unrelated individuals and leaves the issue of safety to the applicable zoning ordinances and provisions of the sanitary and fire safety codes. 

For a copy of the decision please [click here]. 

Like the garden perennials that bloom in spring and fall, some condominium issues surface repeatedly, if not seasonally. How to deal with rentals is one of them. The triggers that make this an agenda item (problems with renters, economic conditions, changing owner populations) vary in different communities, but the questions boards ask are always the same:

• Can associations prohibit rentals or restrict them?
• Can they do so retroactively? And if so
• What form should these restrictions take?

The answers to the first two questions are straightforward: Yes and yes. Associations can restrict rentals – if a supermajority of owners (at least 67 percent and sometimes more) agree to amend their bylaws; and they can impose these restrictions retroactively, making them applicable to existing owners, who bought their units when rentals were allowed, as well as to future purchasers who buy when the rules are in effect.

Courts in Massachusetts and other jurisdictions have long recognized that, with the requisite vote of the unit owners, condominium associations can change their rules. They can prohibit pets, they can ban smoking and they can restrict rentals in the community, notwithstanding the potentially adverse impact on owners who purchased with rental in mind.

THE RULES CAN CHANGE

A Washington, D.C. court stated the issue clearly in a decision refusing to overturn one condominium’s rental ban: “Potential purchasers

of condominium units should realize that the regime in existence at the time of purchase may not continue indefinitely and that changes in the declaration may take the form of restrictions on the unit owner’s use of his property.”

The Massachusetts Supreme Judicial Court echoed that view in a 1983 decision (Franklin v. Spadafora) upholding an association’s right to limit the number of units owned by an individual. “Those who live in condominiums must be willing to give up a certain degree of personal choice in order to promote the welfare of the majority of the owners,” the court observed. The court also agreed that preserving the community’s ownership character and protecting property values (two of the major arguments for restricting rentals), are appropriate and justifiable goals.

A third argument – complying with secondary market rules for condominium mortgages – is equally compelling. Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA), which collectively purchase most of the residential mortgages financial institutions originate, all impose some restrictions on rentals in condominium communities, and they will not finance loans in communities that do not comply with their guidelines. However, the secondary market limits are considerably less restrictive than they used to be and significantly looser than many condominium boards assume.

For example, at one time, Fannie Mae and Freddie Mac would not approve condominium loans if more than 30 percent of the units in a community were investor-owned, and they still impose strict limits on loans to investors. But they currently set no rental ratio limits at all on loans to owner-occupants.

Condominium associations that want to obtain FHA certification – a requirement for anyone who wants to obtain an FHA loan to finance or refinance a condominium in the community – must have an owner-occupancy rate of at least 50 percent; no more than half the units can be investor-owned. That is not a difficult standard to meet; associations can easily comply without setting excessively low rental ceilings, which can have unintended negative consequences. These include:

• Reducing the pool of prospective buyers for units in the community. (Investors who plan to rent their units and owner-occupants who think they might want to do so in the future will avoid condominiums in which rental caps are set too low); and
• Limiting the options available to owners in a weak real estate market, forcing them either to sell their units at a loss or lose them to foreclosure.

REAL WORLD PROBLEMS

These problems are not theoretical. They are all too real byproducts of the economic downturn that has depressed real estate values and left many condominium owners financially “under water”, struggling with units worth less than they paid for them and with mortgages exceeding the current value of their homes.

To cite just a couple of recent examples from my practice: One condominium owner who has lost his job is moving in with his parents. He can’t sell his unit for enough to pay off the mortgage, but the rent he could command would cover his mortgage payments and common area fees. He can’t rent the unit, however, because the community has reached its 10 percent rental cap. As a result, this owner will lose his unit to a foreclosure he might otherwise be able to avoid.

The somewhat more fortunate owner of a unit in another building has found a job in another city. But the unit he purchased for $750,000 is worth only $650,000 today. He’d like to rent the unit until the market recovers, avoiding a $100,000 loss, but again, his community has reached its rental limit, precluding that option for him.

These outcomes aren’t desirable, to say the least, for the two owners involved, but foreclosures and below-market sales will impair the value of other units in their communities as well. Many boards think strict rental limits are needed to preserve property values, but as these examples illustrate, they could have the opposite effect.

TROUBLING DECISIONS

Overly restrictive rent restrictions could create legal as well as financial problems for condominium associations. Although the courts have generally upheld their right to restrict rentals and even prohibit them, there have been some exceptions to these favorable rulings. An Indiana appeals court found that rental restrictions in one community had a discriminatory ”disparate impact” on minorities, who were most likely to be affected by a shortage of rental units in the area. The state’s Supreme Court eventually overturned that decision, but it made a lot of industry executives very nervous at the time.

More recently, a condominium owner in Florida argued that a rental restriction should be overturned because the board had granted a waiver to a non-profit organization that planned to rent units to handicapped tenants. The owner maintained that enforcement of the rule was arbitrary and improperly created two classes of owners, but the state Supreme Court backed the association, finding that the waiver was a reasonable and necessary accommodation required by the Fair Housing Act.

While there is nothing in these decisions to suggest that courts won’t uphold rental restrictions, they do highlight a point boards should keep in mind: The more restrictive a community’s rental limits are, the more likely they will be challenged.

That said, there are legitimate concerns on the other side – permitting too many rentals can also have adverse and undesirable consequences, starting with this one: Communities that exceed the 50 percent investor ratio will not meet the FHA’s certification guidelines, making it impossible for owners to or prospective buyers to obtain FHA-insured loans. Even if that isn’t a concern – and it isn’t for all communities – investors controlling a large number of the units could dominate the association’s board, rejecting necessary maintenance expenditures and increases in common areas fees in the interest of reducing expenses and maximizing their profits.

Investors do not always wear the black hat in these debates, by any means; sometimes the desire to protect their investment will make them more supportive of maintenance and capital expenditures than owner-occupants. But investor dominance can create potential risks that boards should not ignore.

AVERSION TO TENANTS

For many condominium boards and owners, it is the tenants who rent the units, not the investors who own them, that are the primary concern. Conventional wisdom holds that tenants, by definition, will less conscientious caretakers of the units they occupy, less respectful of common property and more likely than owner residents to violate association rules. Experience suggests that those assumptions are largely unfounded.

Tenants are no more likely than owners to park illegally, dispose of trash improperly, fail to clean up after their dogs, have loud parties and otherwise annoy or offend their neighbors. There are as many drug-dealing tenants as there are drug-dealing owners. The only real difference: Landlords can evict a bad tenant; condominium associations can’t evict a bad owner.

There is no question that excessive concentration of tenants – more than 30 or 40 percent – can change the ownership character of a community, and that is a legitimate concern. But it is a concern boards can address with a balanced approach, setting reasonable limits that address the concerns of owners who occupy their units while protecting the interests of owners who are renting their units or want to ensure their ability to do so.

SETTING ‘REASONABLE’ LIMITS

Those reasonable limits won’t be the same for all condominium associations. They will vary depending on a community’s location, the price of its units, the age of its residents, and the demand for rentals in the local market. A community with a large population of older residents might want to establish a higher rental cap, anticipating that many owners may have to vacate their homes for extended periods (because of illness) or face other age-related concerns (estate-planning for example) that may make rental an appealing and possibly a necessary option.

A community with low-or moderately priced units surrounded by colleges can reasonably expect rental demand to be strong and so might want to set lower rental limits, to prevent investor dominance and avoid an undue concentration of tenants. But a community of multi-million-dollar units far-removed from colleges, where rental demand is slim and rental prices would be prohibitive, would not share that concern.

Boards should avoid the knee-jerk assumption that rent restrictions are necessary or desirable. They should reflect the needs of the community and the preferences of its owners. A poll of owners is the best way to assess their views. If owners want to set limits, there are several ways to go about it. You can:

• Limit the number or percentage of units that can be rented
• Establish a minimum lease term – one-year is common – to prevent hotel-type occupancies and avoid the transient atmosphere frequent turnover can create.
• Restrict the number of units a single individual can own. While this aims to discourage investors, it can be difficult to enforce. Determined investors can buy multiple units in the names of relatives or friends.
• Require owners to live in their units for a minimum period before renting them. A one-year requirement is common; longer occupancy periods (two years or more) violate FHA rules and would disqualify the community for FHA certification

GRANDFATHERS AND HARDSHIPS

Boards may also want to consider grandfather provisions exempting some or all current owners from the rental caps, and hardship waivers for owners who would be severely disadvantaged by them. Both provisions can reduce opposition to rental restrictions, but they also create potential problems of which boards need to be aware.

Exempting all current owners from the rental limits – one grandfathering option – would effectively preclude all new owners from renting their units and would eliminate investors as prospective buyers. Exempting existing tenants avoids that problem; owners currently renting their units could continue renting them. But if rentals have reached the community’s cap when the existing tenants leave, the landlord would go to the end of the rental queue and might have to wait years before renting the unit again.

The cap in this case has effectively destroyed this owner’s investment. And the grandfather provision has created something of an administrative nightmare for the association. Someone will have to keep track of the rental tally, maintain a list of current tenants and lease expiration dates, and monitor the priority positions of owners who are waiting for their turn to rent their units. Establishing a sensible rental cap in the first place will avoid most of these problems and may make a grandfathering provision unnecessary.

A hardship exemption, on the other hand, is essential. Boards need the flexibility to bend the rules when necessary to address extraordinary problems. But it is important to define hardships clearly and narrowly: The unemployed owner who has to relocate to accept a new job but can’t sell his unit has a hardship; the owner who wants to rent her unit in order to move in with her boyfriend has an inconvenience. Boards should expect to use the hardship waiver only rarely; if they are using it frequently, the association’s rental cap is probably too low.

Associations should also make sure their rental caps don’t interfere inadvertently with estate-planning strategies. For example, older owners may put the unit they own in the name of a child to keep it out of their estate, making the owners technically tenants. The FHA will count the unit as a rental for purposes of its 50 percent investor limit, but the association does not have to count this unit toward its internal cap. Similarly, if a unit is owned by a trust – another estate –planning tool – the rental rules could specify that either the named trustee or the trust’s beneficiary is allowed to occupy the unit as its “owner” keeping the unit out of the rental pool.

Rental caps also should not apply to units on which lenders have foreclosed. The foreclosure process can be protracted and lenders may want to rent units they have seized to offset their carrying costs in the interim. Most condominium documents require mortgagees to approve material changes in association bylaws, and they would be unlikely to approve a rental limit that doesn’t exempt them.

TENANT APPROVAL – NOT THE BOARD’S JOB

Some associations want to make the preapproval of tenants a condition for landlords who want to rent their units, but this is a bad idea for several reasons. First, FHA rules specifically prohibit prior tenant approval, making this requirement a non-starter for any community that needs FHA certification or want to retain it. Equally important, the lease is between the unit’s owner and the tenant; the association is not a party to the agreement. The obligation to vet tenants rests entirely with the landlord, who also shoulders the financial consequences of a poor choice. If a tenant fails to pay the rent, that’s the landlord’s problem; it doesn’t affect the landlord’s obligation as the unit’s owner to pay common area fees and special assessments.

Moreover, if the board were to insist on pre-approving tenants, what criteria would the trustees use for rejecting them? Race, sex, gender, marital status, and age all would violate Fair Housing laws. Boards that reject tenants for any reason risk being sued, even if they had a non-discriminatory basis for the decision. Getting involved in the tenant selection process creates unnecessary liability exposure for the association. Associations don’t have a horse in the landlord-tenant race and risk getting trampled if they get in the way.

While boards should leave tenant selection to the owners, they can and should insist on lease provisions that protect the association’s interests and ensure the board’s ability to deal with problem tenants if the landlord (whose responsibility that is) fails to do so.

Among other measures, associations should require landlords to incorporate in their leases the community’s bylaws and rules and regulations; this makes violations of association rules ground for evicting the tenant. The lease should also specify that while landlords are responsible for ensuring that their tenants obey association rules, the board has the authority to evict problem tenants if the landlord fails to do so and can assess the eviction costs to the landlord.

That threat – and the board’s authority to fine landlords if their tenants violate the rules – is usually sufficient to persuade landlords to deal with problem tenants and evict them if necessary. If you make it sufficiently uneconomical for landlords to retain bad tenants, they will replace them with good ones.

In the case of Premier Capital, LLC v. KMZ, Inc. SJC-11136, (March 7, 2013), The Supreme Judicial Court held that the statute of limitations on an action to enforce a promissory note under seal is 6 years (under the Massachusetts version of UCC) and not 20 years as most lawyers and bankers thought to be the case, as provided under Massachusetts General Laws Chapter 260, Section 1.  The court limited its decision to promissory notes executed after Massachusetts adoption of the UCC in 1998.  This represents a significant change in the law. The shorter statute of limitations will have an impact on collectability and recovery of existing defaulted promissory notes.  Because of this decision, parties to promissory notes may want to write in a longer statute of limitations directly into the promissory note.

For a copy of the Decision please [click here].

“CONDOMINIUM ASSOCIATION TO PAY $1 MILLION IN DISCRIMINATION CASE.” “JUSTICE DEPARTMENT OBTAINS $120,000 SETTLEMENT IN DISCRIMINATION SUIT AGAINST CONDOMINIUM ASSOCIATION.” “CONDOMINIUM PAYS $20,000 TO SETTLE FAIR HOUSING COMPLAINT.”

To read the headlines, you’d conclude that condominium associations are forever on the wrong end of Fair Housing-related discrimination complaints, and in fact, they do lose often enough to make Saint Jude (the patron saint of lost causes) seem an appealing ally. But condominium boards win some of these battles, and the cases they win can be instructive as well as heartening for boards trying to navigate the litigation minefield that state and federal Fair Housing laws create.

The laws prohibit discrimination based on (among other factors) race, religion, marital status, gender, sexual orientation and disability. And complaints based on any of these factors will be distressing, to say the least. But it is the disability claims that are often the most perplexing and most frustrating for boards, simply because some of the people claiming disabilities don’t actually have them and so aren’t entitled to the “reasonable accommodations” the law requires for a “physical or mental impairment that substantially limits one or more major life activities.”

The disabilities of the wheel-chair-bound resident requesting a ramp or the blind owner seeking a service dog are clear; the disabilities of owners demanding dogs (or cats or gerbils or snakes) to ease their depression, bipolar disorder or anxiety are less obvious. Most of the disability disputes we see result because the board refuses to approve accommodations for owners they suspect just want to have pets in communities that restrict or prohibit them. The following cases illustrate that point.

APPROPRIATE INQUIRIES

A Florida Home Owners Association condominium association successfully defended a suit filed by an owner, who said the board illegally refused to approve an accommodation allowing his live-in fiancée to have the emotional support dog she claimed was necessary to deal with her depression and anxiety. A lower court ruled against the association, but an appeals court reversed that decision, ruling (in Sun Harbor v. Bonura) that the board’s request for more information verifying the fiancée’s disability (which the plaintiff refused to provide) was appropriate and permitted by the Fair Housing Act.

Although the law requires accommodations, the court noted, “the duty to make a reasonable accommodation does not simply spring from the fact that the handicapped person wants such an accommodation made. Defendants must instead have been given an opportunity to make a final decision with respect to Plaintiffs’ request, which necessarily includes the ability to conduct a meaningful review of the requested accommodation to determine if such an accommodation is required by law.”

A condominium association prevailed for similar reasons in another Florida case, Hawn v. Shoreline Towers, in which the court found that the board was within its rights in requesting documentation of the claimed disability and an explanation of how the accommodation requested (an “emotional support” dog) would address it. The fact that the plaintiff (Hawn) had previously lobbied for a change in the association’s no-pet rules without mentioning his disability significantly weakened his argument in the court’s view; evidence that the psychologist and chiropractor who submitted letters supporting his accommodation request had seen Hawn only twice and shortly before he submitted his accommodation request didn’t help him.

Potash v. Blair House Condominium likewise involved a request for an emotional support animal, but it was the plaintiff in this New Jersey case who held the higher ground. Unlike the plaintiffs in the two previous cases, Potash provided voluminous documentation from several care providers verifying her disability (depression), the treatments she was receiving for it, and the therapeutic value of the dog she was requesting. The board rejected the accommodation, nonetheless, ordered Potash to get rid of her dog, and threatened to fine and/or file suit against her if she failed to comply. When Potash sued the association, the board argued that her discrimination claim had no basis because, although the trustees had denied her accommodation, they had not actually forced her to remove the dog nor taken any of the actions they had threatened against her.

WHAT YOU DO – AND DON’T DO

The court wasn’t impressed. While the board hadn’t actually fined Potash or forced her to remove the dog, it did reject her accommodation request and actually filed a suit that was subsequently withdrawn. “Thus while Complainant still has the dog in her unit,” the court noted, “she does so under a cloud of uncertainty as to whether the dog will be able to stay.” The court went on to note that the New Jersey Supreme Court has held that “failure to reasonably accommodate or failure to engage in the interactive process in connection with an accommodation request” may constitute a violation of the anti-discrimination laws “even if there is no further adverse consequence.”

These cases illustrate both the possibility of winning disability discrimination cases and the difficulty of doing so. They also highlight what are probably the key questions for boards dealing with fair housing accommodation requests: How much information can you require and what kinds of questions should you ask?

If the disability is apparent, guidelines published by the Department of Housing and Urban Development (HUD) make it clear that you can’t ask anything about it. But if the disability isn’t obvious, which is the case with most requests for emotional support animals, boards have more discretion.

That discretion isn’t unlimited; privacy laws restrict the amount of medical detail you can seek. But boards can and should ask for information verifying that the individual has a condition that meets the legal definition of a disability (substantially limiting one or more major life activities) and explaining how the animal requested will help the individual cope with his/her limitations. The boa constrictor Mr. Jones wants will clearly keep his unit free of mice, but how exactly will it help him deal with his bipolar disorder?

Boards can also ask if alternatives to the animal requested might be equally helpful. Is a Great Dane essential, or might an animal weighing somewhat less than a horse suffice? An individual who already has an animal will argue, and the care providers supporting the accommodation request will almost certainly agree, that the existing bond can’t be broken. But there may be more room for negotiation with an individual who is seeking to acquire a new animal.

REASONABLE RESTRICTIONS

• There is also room for boards to establish reasonable restrictions on the animals they approve. They can’t charge extra fees (the HUD guidelines specifically prohibit that), but they can impose guidelines designed to ensure the health and safety of other residents and minimize the negative impacts on them. For example, boards may:
• Require owners to keep their animals either in their units or on leashes at all times.
• Bar Restrict animals (within reason) from lobbies certainand other common areas (such as pool areas).
• Prohibit Attempt to prohibit breeds recognized as “vicious” (although a disabled owner who already owns a “vicious” animal will almost certainly fight any effort to force its removal).
• Require owners to care for their animals and clean up after them.
• Require owners to obtain and show proof of liability insurance to cover property damage or injuries to others caused by their animal.
• For repeated or serious incidents involving the animal, such as Insist on the removal of an animal that threatens or disturbs other residents, for example, by barking incessantly or lunging at passersby, fine the owner and/or demand the removal of the animal from the premises.

What about requiring special training for the support that comfort animals are supposed to provide? That seems a reasonable enough requirement, on its face, but it takes boards into largely uncharted and potentially hazardous territory. Revised regulations adopted by the Department of Justice actually require special training for dogs to meet the definition of “service animals” under the Americans with Disabilities Act. But the ADA regulations don’t apply to comfort animals, and the guidelines make it clear that these regs can’t be used as a basis for denying reasonable Fair Housing Act accommodation requests.

While courts in some jurisdictions have ruled that training is a reasonable requirement for comfort animals, others have held that some animals – dogs specifically – have inherent qualities that enable them to provide emotional support and don’t need special training to do what comes naturally to them.

DON’T GO THERE

Massachusetts courts haven’t addressed the question and it is impossible to predict how they might rule. Given the uncertainty about whether a training requirement would be deemed reasonable and what kind of training boards might require, we advise our clients to avoid the question entirely.

Boards that reject accommodation requests for any reason will almost certainly be sued for discrimination, and they face potential penalties of as much a $25,000, not including the legal costs they will incur even if they prevail in court. The right decision for boards, although it doesn’t feel right, is often to approve a questionable accommodation request rather than face the litigation costs and liability risks involved in fighting a discrimination claim.

The best defense against a disability discrimination claim is an established process for dealing with accommodation requests. We recommend that boards adopt a resolution detailing their procedures and explaining that the board will require documentation from care providers, may seek additional information, and may propose alternatives to the accommodation requested.

In evaluating a discrimination claim, the Massachusetts Commission Against Discrimination (usually the first venue in which these complaints are heard) and the courts will look for evidence that a board has seriously considered an accommodation request, had a reasonable basis for denying it (if it was denied) and tried to offer reasonable alternatives. Establishing and following uniform procedures for handling accommodation requests may avoid some claims and will strengthen the association’s defense against the claims it can’t avoid.

It is possible, and probably likely, that boards will at some point encounter the fair housing equivalent of the “immovable object meeting the unstoppable force” – one disabled owner seeking an accommodation that has a negative impact on another owner with a different disability. An obvious example: An owner is violently allergic to the emotional support dog another is requesting.

The only thing boards can do in these situations is try to find an accommodation that satisfies both. Maybe the owner seeking a dog could get the comfort she needs from a cat; maybe she can avoid the floor on which the allergic owner lives, or only use the back entrance and the freight elevator. Maybe pigs will fly and peace will prevail in the Middle East. Board members wrestling with these conflicts may decide, understandably, that they need comfort animals of their own.

Recently, the Massachusetts Supreme Judicial Court (“SJC”) had an occasion to review the case law and policies concerning the interpretation of damage provisions in commercial leases in the event of a default.  To that end, in the matter of 275 Washington Street Corp. v. Hudson River International, LLC, SJC 11217 (April 30, 2013), the SJC considered a case involving a commercial landlord who entered into a twelve (12) year commercial lease with a tenant who was to use certain premises as a dental office, and to pay the landlord monthly rent plus a share of the operating costs and real estate taxes.  The lease provided that in the event of a default, the landlord had the right to reenter the premises and to declare the term of the lease ended “without prejudice to any remedies which might be otherwise used for arrears of rent of the default.”  The lease further included an indemnification clause which provided that “Tenant shall indemnify Landlord against all loss of rent and other payments which Landlord may incur by reason of such termination during the remainder of the term.”  The lease did not grant the landlord a liquidated damages remedy or any other remedy aside from the indemnification provision. However, the lease did provide for cumulative remedies.

The tenant took possession on April 16, 2006, but closed its dental office in May 2007 and removed all of its equipment in October 2007. The tenant made base rental payments through March 2008, but then it subsequently stopped making payments. On May 7, 2008, the tenant notified the landlord that it would not be making any further rental payments and on May 19, 2008, the landlord re-entered and took possession of the premises, thereby terminating the lease. Thereafter, the landlord entered into a new ten (10) year lease with a new tenant, with a lease term that extended beyond the original termination date of April 16, 2018 under the terms of the original lease, but at a lower base rent than was agreed to by the original tenant.

On May 29, 2008, the landlord filed suit in the Superior Court against the tenant and the guarantor under the lease for breach of contract to recover damages under the terms of the original lease. Through the Superior Court action, the tenant conceded that it was liable for unpaid rent that became due prior to the termination of the lease, but the tenant argued that the landlord could not recover under the indemnification provision of the lease, until the term of the original lease ended.  The Superior Court ultimately found that the landlord was entitled to pre-termination damages in the amount of $37,176.24, lost rent from the termination of the lease to September 2010, when the new tenant took occupancy of the premises in the amount of $449,759.92, and attorneys’ fees in the amount of $103,367.91, for which the tenant and guarantor were jointly liable.

In reviewing the case on appeal, the SJC cited to the well settled law in this Commonwealth that when a landlord terminates a lease upon the default of a tenant, the tenant is obligated to pay the rent due prior to the termination but the tenant does not have any obligation to pay rent that may accrue after the date of termination, unless the lease provides otherwise. For this reason, most commercial leases provide express provisions which clearly set out a landlord’s remedies in the event of a breach. Such provisions may take the form of a liquidated damages provision which contractually obligates a tenant to make a specified payment or series of payments in the event of default. An indemnification provision does not provided for a liquidation of damages, but rather requires a defaulting tenant to reimburse the landlord for the actual losses that the landlord suffers as a result of the breach of the lease.  However, unlike a liquidated damages provision wherein the damages are readily ascertainable, under an indemnification clause, the actual damages cannot usually be determined until after the end of the period set out in the lease. This rule is true even if the property is re-let before the end of the original lease term because commercial leases are not always limited to base rent only and there is always the uncertainty that the subsequent tenant may also default under their lease. Accordingly, it is nearly impossible to determine with a reasonable degree of certainty what a landlord’s damages are under an indemnification provision in a commercial lease until the term of the original lease expires.

To that end, the SJC held that “[i]f the landlord wants the indemnified amount to become due once the property is relet, it may insist that the lease so provided, and identify the means to calculate the amount of the indemnified loss.  Where the consequence of contractual silence has been clear under our common law, and where landlords need not enter into any lease that fails to provide them with the remedies they desire for posttermination loss, we see no justification to change our common law to give landlords an earlier due date for indemnification than that which they negotiated.”

Ultimately, the SJC upheld the Superior Court’s award of pre-termination damages, and further held that if there is a cumulative remedy provision contained within the lease, the landlord may seek any alternative remedy for post-termination damages and that it is not limited to pursuing indemnification simply because of the provision in the lease allowing for the same. Moreover, the SJC held that where the lease has been executed by a guarantor, the liability of such guarantor cannot exceed the liability of the tenant. Thus, if the landlord is precluded from recovering post-termination damages from a tenant under the terms of an indemnification provision in the lease until the expiration of the original lease term, it is similarly prevented from seeking the same from the guarantor until the expiration of the original lease term.

In short, landlords have an opportunity at the outset of any commercial lease to negotiate at length the terms of the lease agreement and should include any and all remedies in the lease agreement so as not to be delayed in their recovery of damages in the event of a default, and/or so as not to be otherwise prevented from recovering the full breadth of their damages.

In this regard, attorneys drafting commercial lease agreements should carefully discuss the terms of the lease with their clients to avoid potential ambiguity and future litigation.  Default provisions and potential remedies should be specific so that both the landlord and the tenant understand their respective rights, duties and obligations under the lease before signing.

In the matter of 275 Washington Street Corp. v.  Hudson River International, LLC , had the landlord incorporated a liquidated damages provision to the lease providing a specific remedy, or specified in the indemnification provision that damages could be recovered earlier than the period specified in the lease in the event of default by the tenant, then the landlord would have had an immediate remedy as opposed to having to delay his recovery until the end of the lease term called for under the terms of the original lease.  For example, the landlord could have included a specific date or dates prior to the lease term when the landlord’s indemnification clause would be triggered, and by what events, to measure the landlord’s damages at a time certain.  In conjunction with such a clause, the landlord would have been well-advised to include a liquidated damages provision specifying damages payable to the landlord in the event of tenant’s default.  These types of liquidation provisions can range from requiring the tenant to pay the monthly rental amount under the terms of the lease despite the termination, to full acceleration of the full amounts owed for the full duration of the lease.  Massachusetts courts are inclined to uphold liquidated damage provisions in leases entered into between sophisticated parties.

The lesson for attorneys drafting commercial lease agreements is to carefully consider each provision, particularly default provisions and potential remedies to avoid protracted and uncertain litigation.  The prospect of a tenant defaulting under the terms of a lease is always a foreseeable possibility and therefore, the landlord should always include specific remedies within the lease to protect itself in the event of default by the tenant.