Monday, December 5, 2016

The Future of M-792s and Release of Estate Tax Liens under the New MassTaxConnect Electronic Filing System

On December 5, 2016, the Department of Revenue plans to go live with its new MassTaxConnect electronic estate tax filing system, which will dramatically change the process of obtaining M-792s and estate tax lien releases in general.

In the video below attorney Luke C. Bean from the firm of Cushing & Dolan P.C. will explain in detail the new electronic filing requirements focusing on real estate lien releases, including the M-792 and Form M-4422, both of which are critical to a prompt and efficient closing in the case of decedents. Attorney Bean is particularly well equipped to present this material having been invited to the Department of Revenue to participate in a pre-MassTaxConnect rollout of its new system. Don't be caught short on this very important change affecting all lawyers involved in real estate transactions in Massachusetts.
 
 


MassTaxConnect How to Tutorials:

Wednesday, November 2, 2016

SHOULD I BE CONCERNED WITH COMMISSION ADVANCES?


Paul F. Alphen, Esquire
Our office does not perform a ton of residential loan closings these days, but we recently received an email related to an upcoming closing that was disconcerting; but perhaps I am too conservative. It was an email from a company that provides brokers with an advance on the commission the brokers may earn as a result of a real estate closing. The email asked us to confirm the following (the names have been changed to protect the innocent):
1) Has earnest money been deposited for 123 Main Street? Yes or No
2) Is this sale a short sale? Yes or No. If Yes, does it have lender approval? Yes or No
3) Do you show the property with a tentatively scheduled closing date of November 21, 2016?
4) Is John Smith shown on the file as earning a commission?
Once this commission advance has been funded, you will receive a CDA signed by Jack Doe, Broker of Real Estate Broker Co, with instructions for disbursement of funds to Advance Commission Company upon the successful closing of this sale.
I love brokers and I don’t want to become a hindrance to their livelihoods. Perhaps the commission advance business has all the checks and balances in the world. But I have some questions:
1. I cannot always answer the above questions with accuracy. The name of the broker’s agency is often stated in the P&S, not the specific broker. I don’t know the relationship that the broker has with his/her agency and if the broker owes the agency for past due agency expenses. If I am not the escrow agent I cannot accurately represent that the deposit money has been “deposited”; I’ve been to more than one closing when I learned that the full deposit had not been paid.
2. We are already up to our necks in performing uncompensated services (everything from ordering insurance binders to contacting moving companies). We don’t need to add another.
3. A commission is not earned until and unless the closing occurs. I do not want to be part of a process that could result in a commission being advanced in a transaction that ultimately falls through. I expect that much finger pointing will follow; perhaps litigation. Perhaps there could be problems having the deposit released to the proper party if one of the brokers already spent the commission.
4. If a dispute arises, I do not want to become a witness, or an alleged co-conspirator to claims that (a) I should have advised the commission advance company that there were outstanding contingencies or other concerns with the pending transaction or (b) I breached a duty to a buyer or seller by participating in the commission advance because the advance interfered or delayed the release of the deposit when the transaction fell through.
Perhaps these concerns are just a reflection of my age. I also don’t like ride sharing apps, vacation rental apps, internet fantasy sports gaming, and electronic signatures on P&S agreements.
Paul Alphen is an Emeritus member of the REBA Board of Directors and a member of the Association’s Strategic Planning Committee.  Paul can be contacted by email at palphen@alphensantos.com.

Friday, October 28, 2016

Taylor v. Martha’s Vineyard Land Bank Commission


By Caitlin E. Loftus

Massachusetts courts have long applied a bright-line rule, established in 1965 in Murphy v. Mart Realty of Brockton, Inc., that prohibits the use of an easement to benefit land to which that easement is not appurtenant. The Supreme Judicial Court recently examined a challenge to this rule in Taylor v. Martha’s Vineyard Land Bank Comm’n, 475 Mass. 672, a dispute over the scope of easements benefitting several parcels owned by the Land Bank in Aquinnah.

 The Land Bank advocated replacing the rule with a fact-intensive inquiry weighing whether the use of a particular easement to access non-appurtenant parcels unfairly increases the burden on that easement. After granting direct appellate review and soliciting amicus briefs, the Supreme Judicial Court reaffirmed the rule set forth in Murphy in a concise and unanimous decision.

 The Land Bank owns and manages a nature preserve on the Gay Head Cliffs of Martha’s Vineyard. At issue in Taylor were four parcels in the preserve benefitting from two separate easements over property owned by the plaintiffs Hugh and Jeanne Taylor. The easements provide access to and from Lighthouse Road, the nearest public way.  Neither easement is appurtenant to all four parcels. The first easement, referred to as the Disputed Way, is appurtenant to the three southernmost parcels. The second easement, referred to as the Twenty-Foot Way, is appurtenant to the northernmost parcel, so-called Diem Lot 5. A separate parcel, owned by the Taylors and on which they operate the Outermost Inn, connects the southernmost parcel to Lighthouse Road.

 In May, 2010, the Land Bank received approval for a plan to create a hiking trail over the four lots. The plan called for both easements to be incorporated into a single loop trail. The proposed loop, beginning at Lighthouse Road, would run the full length of the Disputed Way over the Taylors’ property and then continue over the three southernmost parcels. The trail would then run over Diem Lot 5 and intersect with the Twenty-Foot Way, running along the Twenty-Foot Way until returning to the trail’s point of origin at Lighthouse Road.

 Land Court Decision

In June, 2010, the Taylors filed a complaint seeking a declaratory judgment that the Land Bank could not use the Disputed Way as part of the proposed hiking trail. Because the Disputed Way was appurtenant only to three parcels, the Taylors argued the Land Bank could not use it to reach the fourth parcel, Diem Lot 5, and that such use constituted overloading. Plaintiffs also argued that opening the Disputed Way to the public, even without using it to reach Diem Lot 5, constituted overburdening. Overloading refers to the use of an easement to serve land other than that to which it is appurtenant, while overburdening describes the use of an easement for purposes different from those intended when it was created.   

 Plaintiffs moved for summary judgment in March, 2011, which was allowed in part. The Land Court judge ruled that incorporating the Disputed Way into a hiking loop that reached Diem Lot 5 would overload the easement and, accordingly, any trail over the Disputed Way must end before connecting to Diem Lot 5. This effectively divided the proposed loop into two separate trails that would prevent hikers from completing a single connected loop. The judge denied summary judgment on the overburdening issue, finding there was a genuine issue of material fact whether opening the Disputed Way to the public would unreasonably increase pedestrian traffic. After conducting a trial on the overburdening issue, he concluded that such public use fell within the easement’s original scope and did not constitute overburdening. Final judgment issued, incorporating the summary judgment decision.

 The Land Bank appealed and applied for direct appellate review. Its notice of appeal challenged only the summary judgment ruling that the Disputed Way could not be used to benefit Diem Lot 5. Direct appellate review was allowed.

SJC Decision  

Under Murphy, “a right of way appurtenant to the land conveyed cannot be used by the owner of the dominant tenement to pass to or from other land adjacent to or beyond that to which the easement is appurtenant.” Both parties agreed that under this rule, the Land Bank is prohibited from using the Disputed Way to access a parcel the easement was not intended to benefit, in this case, Diem Lot 5. The Land Bank, however, urged the SJC to adopt a new rule replacing the bright-line Murphy rule. It proposed a fact-based inquiry to determine whether use of an easement to benefit non-appurtenant land would place additional burdens on a servient estate and, if yes, whether the additional burdens would constitute an unfair extension beyond the easement’s original scope. Under the proposed rule, the Land Bank argued use of the Disputed Way to reach Diem Lot 5 would not constitute overloading, as pedestrian traffic over the Taylors’ property was unlikely to increase merely because the Disputed Way could now be used to access a fourth lot.

While the SJC acknowledged the proposed rule provided more flexibility, it ultimately was not persuaded that the benefits of flexibility outweighed its costs. The SJC explained a new rule could inject uncertainty in land ownership, where individuals often base their actions and decisions on existing precedent, and further stated it could potentially extend the litigation process, hurting owners of small servient parcels lacking the financial means to challenge defendants seeking to acquire and develop multiple parcels of land. The proposed fact-intensive inquiry also presented difficult factual disputes, such as defining an easement’s purpose or determining whether an expansion of the easement’s use would cause unreasonable damage or interference. The SJC expressly hoped to avoid these situations with the formulation of the Murphy rule.

 The SJC noted that maintaining the Murphy rule comported with the principle that the terms and conditions of an easement are well within the control of the parties creating it. The SJC distinguished the out-of-state cases cited by the Land Bank in support of a more fact-based analysis as situations in which the parties, at the time they created the easements, intended or contemplated that they could benefit after-acquired or non-appurtenant lots. Here, however, the Disputed Way was not intended to benefit Diem Lot 5 at the time of its creation.

 The SJC rejected the Land Bank’s assertions that the Murphy rule creates “substantial impracticalit[ies]” for landowners in similar situations and is inconsistent with the public policy favoring “socially productive” uses of land. The application of the bright-line rule in Taylor will not prevent hikers from making use of both the Disputed Way and the Twenty-Foot Way. It only prevents them from walking the two trails in a single connected loop. This disconnect may be inconvenient, but the SJC did not view it as a “substantial impracticality.”

 After taking this case for direct appellate review, some may have wondered whether the bright-line rule articulated in Murphy was marked for replacement or modification. The SJC stated that, while it may deviate from precedent, it chooses to do so only when the benefits of the change outweigh those provided by stare decisis.  In upholding the Murphy rule, and declining to add or create exceptions, the SJC found that the certainty provided by a bright-line rule defining a property owner’s rights outweighed any perceived advantages of a more flexible standard.

Caitlin Loftus is a research attorney at the Land Court Department of the Trial Court.  Prior to that she served as law clerk to Associate Justice Karyn F. Scheier.

Thursday, October 27, 2016

The Security Deposit Sky Is Not Falling: Meikle v. Nurse Did Not Change Evictions Forever


By G. Emil Ward

Lately this author has been hearing a lot of comments swirling around Meikle v. Nurse, 474 Mass. 207 (2016), a recent security deposit case. Some think the case means that $4.61 in unpaid interest on a security deposit claim can in and of itself act as a complete defense to an eviction. Others feel that this decision portends the doom of all evictions if the tenant files a security deposit counterclaim. This author has heard it said that this spells the end of the no-fault eviction and that the fate of landlords now lies in the hands of the legislature.

This author’s response is simple: This is not so.
The case does not represent a sea change in landlord-tenant law. The case came out the way it should have under the present incarnation of M. G. L. c. 239, § 8A, the statute that was not properly applied by the Boston Housing Court to produce the Meikle decision in the trial court. While one can argue that Section 8A should be changed, Section 8A is not producing any worse results for landlords after this decision than it did before it was handed down. Here is why.
For many years, security deposit claims have been an integral part of almost every tenant's defenses that this author has ever faced under Section 8A. In Meikle, the SJC confirmed this. “The steady progression in the availability of tenant defenses, culminating in the elimination of conditions-based restrictions, confirms the Legislature’s intent to provide tenants with a broad set of defenses and counterclaims in the summary process action, including the defense asserted by the tenant in this case [alleging a violation of the security deposit statute, M.G.L. c. 186, § 15B].” Id., p. 213.
M. G. L. c. 239, § 8A allows the tenant to raise any “counterclaim or defense” arising out of the tenancy, such as a security deposit claim.  In a trial, an award under any such claim can be added to the tenant's damage award along with other damage awards, if any, and then matched against the unpaid rent found due to the landlord to determine if the tenant or landlord wins possession after setting one off against the other. This is what is usually known as the “pay over” provision.
For those of you unfamiliar with Section 8A's “pay over” provision, here is how it works. Under Section 8A, if after trial the landlord wins judgment for unpaid rent in the same amount of the tenant’s damages or less than the tenant’s damage award, (for say, a leaky radiator ignored by the landlord for months in winter) the tenant keeps possession and the landlord must pay to the tenant the balance the court found that is due to the tenant. M. G. L. c. 239, § 8A, fifth paragraph.
On the other hand, if the tenant wins an amount of money damages less than the landlord wins in unpaid rent, then the tenant has seven days in which to pay the difference between the rent found due and the damages won by the tenant into the court clerk’s office. If he pays that sum into court, the tenant retains possession. If not, the tenant loses possession. “Where a tenant prevails in a defense or counterclaim and is awarded damages in an amount less than the amount owed to the landlord, the statute provides that ‘no judgment shall enter until after expiration of the time for such payment and the tenant has failed to make such payment.’” Id., p. 213.
In Meikle, the trial judge found that the landlord won $3900 (three months' unpaid rent). The tenant won the return of the security deposit and unpaid interest: $1304.61 ($1300 security deposit, plus $4.61 unpaid interest= $1304.61).  The difference is, of course, $2595.39 that the tenant would have had to pay to the landlord through the court clerk's office to maintain possession. It is at this point that the trial court decision went off track.
For some reason not articulated in the decision, the judge failed to end the decision by offering the “pay over” opportunity, as has been the law for decades, to the tenant who would then have had the option to pay the difference in 7 days' time and retain possession, or not as she chose. The trial judge then awarded $2595.39 and POSSESSION to the LANDLORD in violation of the statute.
That is the key part of the decision that was appealed by the tenant, namely, the judge's failure to state in the decision that now that the damages had been found for both sides and set off against one another, the tenant was to be offered the opportunity to pay the difference between unpaid rent of $3900 and her judgment for damages of $1304.61, or $2595.39, and thus retain possession. Of course, if the tenant had been given the “pay over” opportunity in the decision and failed to make the payment in seven days, judgment for possession would have issued for the landlord, Mr. Meikle. While Mr. Meikle was pro se in the appellate court, landlord groups filed an amicus brief as to the issue that concerned them most which is described below.
The interesting part, and the reason the author believes landlords were so upset with the decision is this. In the appellate brief drafted by the Harvard Legal Aid Bureau (HLAB) who represented the tenant, the brief tracks the SJC’s arguments and the current law as the author understood the applicable law until its conclusion. In its “Conclusion” section, HLAB goes out of bounds and asks the SJC to ignore application of the “pay over” provision that might benefit the landlord, and just grant possession to the tenant. “This Court should vacate the judgment for possession to the Landlord, award possession of the premises to the Tenant, and hold that G.L. c. 239, § 8A provides a defense for possession when there are violations of the security deposit statute, c. 186, § 15B.” Brief of Appellant at 23, Meikle v. Nurse, 474 Mass. 207 (2016) (SJC-11859).
The SJC reversed the order for possession to the landlord and remanded for entry of an order “providing notice to the tenant of the right to retain possession in compliance with G. L. C. 239, § 8A, fifth paragraph.” Id., p. 214.
However, to clear the air regarding the reach of the decision, the SJC stated that a security deposit counterclaim would not provide the tenant with a right to possession, “in perpetuity” if she made timely payment of the amount found due. Id., p. 214. “The statute does not impose an obligatory tenancy on the landlord.” Id., p. 214.
Please note the “pay over” provision may only be used by tenants who are evicted for nonpayment or in no-fault evictions. On its face, the statute bars its use in defense of possession by tenants who are evicted for fault, i.e., breach of the tenancy terms.  The statute does not consider nonpayment of rent to be a “fault” ground.
That's it.  The Supreme Judicial Court simply rectified that error. It did not make new law. In this author’s opinion, no big deal. Just another expensive and time-consuming security deposit case. But, not a sea change in the law.
Emil Ward chairs the Association’s Landlord/Tenant Law Section.  He can be contacted by email at gemilw@aol.com.

The Security Deposit Sky Is Not Falling: Meikle v. Nurse Did Not Change Evictions Forever


By G. Emil Ward

Lately this author has been hearing a lot of comments swirling around Meikle v. Nurse, 474 Mass. 207 (2016), a recent security deposit case. Some think the case means that $4.61 in unpaid interest on a security deposit claim can in and of itself act as a complete defense to an eviction. Others feel that this decision portends the doom of all evictions if the tenant files a security deposit counterclaim. This author has heard it said that this spells the end of the no-fault eviction and that the fate of landlords now lies in the hands of the legislature.

This author’s response is simple: This is not so.
The case does not represent a sea change in landlord-tenant law. The case came out the way it should have under the present incarnation of M. G. L. c. 239, § 8A, the statute that was not properly applied by the Boston Housing Court to produce the Meikle decision in the trial court. While one can argue that Section 8A should be changed, Section 8A is not producing any worse results for landlords after this decision than it did before it was handed down. Here is why.
For many years, security deposit claims have been an integral part of almost every tenant's defenses that this author has ever faced under Section 8A. In Meikle, the SJC confirmed this. “The steady progression in the availability of tenant defenses, culminating in the elimination of conditions-based restrictions, confirms the Legislature’s intent to provide tenants with a broad set of defenses and counterclaims in the summary process action, including the defense asserted by the tenant in this case [alleging a violation of the security deposit statute, M.G.L. c. 186, § 15B].” Id., p. 213.
M. G. L. c. 239, § 8A allows the tenant to raise any “counterclaim or defense” arising out of the tenancy, such as a security deposit claim.  In a trial, an award under any such claim can be added to the tenant's damage award along with other damage awards, if any, and then matched against the unpaid rent found due to the landlord to determine if the tenant or landlord wins possession after setting one off against the other. This is what is usually known as the “pay over” provision.
For those of you unfamiliar with Section 8A's “pay over” provision, here is how it works. Under Section 8A, if after trial the landlord wins judgment for unpaid rent in the same amount of the tenant’s damages or less than the tenant’s damage award, (for say, a leaky radiator ignored by the landlord for months in winter) the tenant keeps possession and the landlord must pay to the tenant the balance the court found that is due to the tenant. M. G. L. c. 239, § 8A, fifth paragraph.
On the other hand, if the tenant wins an amount of money damages less than the landlord wins in unpaid rent, then the tenant has seven days in which to pay the difference between the rent found due and the damages won by the tenant into the court clerk’s office. If he pays that sum into court, the tenant retains possession. If not, the tenant loses possession. “Where a tenant prevails in a defense or counterclaim and is awarded damages in an amount less than the amount owed to the landlord, the statute provides that ‘no judgment shall enter until after expiration of the time for such payment and the tenant has failed to make such payment.’” Id., p. 213.
In Meikle, the trial judge found that the landlord won $3900 (three months' unpaid rent). The tenant won the return of the security deposit and unpaid interest: $1304.61 ($1300 security deposit, plus $4.61 unpaid interest= $1304.61).  The difference is, of course, $2595.39 that the tenant would have had to pay to the landlord through the court clerk's office to maintain possession. It is at this point that the trial court decision went off track.
For some reason not articulated in the decision, the judge failed to end the decision by offering the “pay over” opportunity, as has been the law for decades, to the tenant who would then have had the option to pay the difference in 7 days' time and retain possession, or not as she chose. The trial judge then awarded $2595.39 and POSSESSION to the LANDLORD in violation of the statute.
That is the key part of the decision that was appealed by the tenant, namely, the judge's failure to state in the decision that now that the damages had been found for both sides and set off against one another, the tenant was to be offered the opportunity to pay the difference between unpaid rent of $3900 and her judgment for damages of $1304.61, or $2595.39, and thus retain possession. Of course, if the tenant had been given the “pay over” opportunity in the decision and failed to make the payment in seven days, judgment for possession would have issued for the landlord, Mr. Meikle. While Mr. Meikle was pro se in the appellate court, landlord groups filed an amicus brief as to the issue that concerned them most which is described below.
The interesting part, and the reason the author believes landlords were so upset with the decision is this. In the appellate brief drafted by the Harvard Legal Aid Bureau (HLAB) who represented the tenant, the brief tracks the SJC’s arguments and the current law as the author understood the applicable law until its conclusion. In its “Conclusion” section, HLAB goes out of bounds and asks the SJC to ignore application of the “pay over” provision that might benefit the landlord, and just grant possession to the tenant. “This Court should vacate the judgment for possession to the Landlord, award possession of the premises to the Tenant, and hold that G.L. c. 239, § 8A provides a defense for possession when there are violations of the security deposit statute, c. 186, § 15B.” Brief of Appellant at 23, Meikle v. Nurse, 474 Mass. 207 (2016) (SJC-11859).
The SJC reversed the order for possession to the landlord and remanded for entry of an order “providing notice to the tenant of the right to retain possession in compliance with G. L. C. 239, § 8A, fifth paragraph.” Id., p. 214.
However, to clear the air regarding the reach of the decision, the SJC stated that a security deposit counterclaim would not provide the tenant with a right to possession, “in perpetuity” if she made timely payment of the amount found due. Id., p. 214. “The statute does not impose an obligatory tenancy on the landlord.” Id., p. 214.
Please note the “pay over” provision may only be used by tenants who are evicted for nonpayment or in no-fault evictions. On its face, the statute bars its use in defense of possession by tenants who are evicted for fault, i.e., breach of the tenancy terms.  The statute does not consider nonpayment of rent to be a “fault” ground.
That's it.  The Supreme Judicial Court simply rectified that error. It did not make new law. In this author’s opinion, no big deal. Just another expensive and time-consuming security deposit case. But, not a sea change in the law.
Emil Ward chairs the Association’s Landlord/Tenant Law Section.  He can be contacted by email at gemilw@aol.com.

Wednesday, October 26, 2016

HUD’s Guidance on Criminal History Screening Procedures

By Kenneth A. Krems

HUD’s Office of General Counsel issued guidance on April 4, 2016 relative to the Fair Housing Act and landlords using criminal history as a basis for denying applicants for housing.  Among other things, the Fair Housing Act, 42 U.S.C. §3601 et seq., prohibits discrimination in the rental of apartments on the basis of race, color, religion, sex, disability, familial status or national origin.  As a result of HUD’s guidance, attorneys representing residential landlords should advise them to review their qualifying criteria and standards for rejecting applicants.

There are two types of discrimination:  intentional discrimination, or disparate impact/discriminatory effect, which is when a neutral policy or procedure has a disproportionately negative impact on a protected class.  In 2015, the U.S. Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507, recognized that the disparate impact theory applies in fair housing cases, and the HUD guidance concentrates on this type of discrimination in the context of criminal history.  It points out that as many as 100 million adults in the United States have a criminal record and that it is important for individuals released from incarceration to be able “to access safe, secure and affordable housing.” Applicant screening policies that disqualify individuals who have been arrested or convicted of a crime have a disproportionately negative effect on African Americans and Hispanics who are arrested and convicted at a rate much higher than that of the general population.

Landlords generally refuse to rent to applicants with an arrest or conviction because it is believed that they are more likely to pose a risk to tenant safety or property.  As perhaps the most fundamental obligation of a landlord is to strive to keep its residents safe and secure, that is certainly a legitimate concern for landlords.  The guidance recognizes this but states that landlords must be able to prove that their criminal screening policies actually do protect tenant safety or property.  It then rejects the approach of denying all applicants who have been arrested or convicted as not being an effective means of achieving that goal.

The guidance states that arrest records are not proof of past criminal conduct, since they just show the individual was suspected of committing a crime.  An individual with an arrest record does not necessarily constitute a risk to other residents, so excluding that person does not really protect residents and does not satisfy the landlord’s burden of demonstrating that the policy “is necessary to achieve a substantial, legitimate, nondiscriminatory interest.”  The guidance quotes the U.S. Supreme Court in Schware v. Board of Bar Examiners, 353 U.S. 232, 241 (1957), where the court stated that “the mere fact that a man has been arrested has very little, if any, probative value in showing that he has engaged in any misconduct.  An arrest shows nothing more than that someone probably suspected the person apprehended of an offense.”

Individuals who have been convicted did commit a crime.  However, the guidance notes that there are many different types of crimes that one may be convicted of, some much more serious than others.  Similarly, some crimes occurred long ago, while others were more recent.  It states that a landlord who has a blanket prohibition on accepting any applicant with any type of conviction cannot meet the same burden, that the policy “is necessary to achieve a substantial, legitimate, non-discriminatory interest.”  The guidance goes on to say that landlords should tailor their criminal history policy so it distinguishes between which criminal conduct poses a risk to resident safety or property and which does not, and consider the “nature, severity and recency of the criminal conduct.” 

It recommends that landlords perform an individualized assessment of a conviction and relevant mitigating circumstances, which could include the facts surrounding the criminal conduct, the age of the applicant at the time, the applicant’s tenant history before and after the conduct, and evidence of rehabilitation efforts.

Since the Fair Housing Act has specific exemptions for the illegal manufacture or distribution of controlled substances, the guidance points out that it is acceptable for a landlord to maintain a blanket rejection policy for convictions for those specific crimes.  These exemptions do not apply to arrests for drug manufacture or distribution, or to convictions for drug possession.  Aside from these specific exemptions, the guidance states that denying applicants based upon “a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.”

Landlords should now be reviewing and revising their qualifying criteria.  Arrests should be eliminated as a basis for denying applicants, and landlords should carefully examine the various types of convictions for their relation to threats to safety or property.  Landlords who use firms to search criminal histories and recommend acceptance or rejection of applicants should revise the specific criminal decision criteria used by the firms.  An applicant who is rejected solely for criminal history should be given an opportunity to provide evidence of mitigating circumstances for the landlord to consider. 
 
Implementing these new policies will take some time but should not be overly burdensome to landlords.  Without a doubt, taking steps now to comply with the Fair Housing Act can help avoid potential disparate impact claims in the future.

Co-chair of REBA’s residential landlord/tenant section, Ken Krems is a partner in the Boston office of Shaevel & Krems, LLP, where he focuses his practice on real estate management. Ken represents large residential management companies and is responsible for more than 11,000 units of housing in Massachusetts; he also represents landlords and tenants regarding commercial leasing issues, condominium associations and a buyers and sellers of real estate.  Ken can be reached at kkrems@shaevelkrems.com. 

 

 

Tuesday, October 25, 2016

Medical Marijuana in Apartments

By Kenneth A. Krems

Issues regarding medical marijuana are beginning to confront landlords in Massachusetts.  This is because in 2012, voters overwhelmingly approved a referendum allowing for the use of medical marijuana.  Implementation of this has been very slow, but it is now picking up steam and a number of dispensaries have opened.  Also, here in Massachusetts, recreational marijuana is on the ballot this November.

Residents in both completely smoke-free buildings and buildings which are not smoke-free often complain more about the odor of marijuana wafting into their apartments than they do about cigarette smoke coming into their units.  Smoke free or not, leases should provide that the illegal possession or use of marijuana is prohibited.  Since 2009, the possession of one ounce or less of marijuana has no longer been a criminal offense here.  However, possession of marijuana is still a federal crime.  In addition to the violation of federal law, marijuana smoke entering other units or being in the hallways interferes with the quiet enjoyment of other residents.  If a resident continues to smoke marijuana in violation of the lease, he should be given several oral and written warnings, and if the behavior continues he can be evicted.

But what about medical marijuana?  A resident who wants to use medical marijuana will need a medical marijuana card, and to get that she will need a doctor’s authorization that she has a qualifying disability.  Since the resident will have a disability, do we have to allow her to smoke medical marijuana as a reasonable accommodation?

Under Massachusetts and federal law it is unlawful for a landlord to refuse to make a reasonable accommodation in rules, policies, practices or services when the accommodation is necessary to afford a disabled person an equal opportunity to use and enjoy the apartment.

The Massachusetts medical marijuana statute doesn’t cover the use of medical marijuana in housing, but it does provide that “nothing in this law requires the violation of federal law or purports to give immunity under federal law.”

A 2011 memorandum from the U.S. Department of Housing and Urban Development dealing with the use of medical marijuana in multifamily assisted properties provides that owners of federally assisted housing are required to deny admission to any household with a member who is using medical marijuana; that owners cannot have lease provisions that permit occupancy by a household member who is using medical marijuana; and that owners can terminate the tenancy of current households with a member who is using medical marijuana if the owner wishes to do so.  HUD concluded that owners “may not grant reasonable accommodations that would allow tenants to grow, use, otherwise possess, or distribute medical marijuana, even if in doing so such tenants are complying with state laws authorizing medical marijuana-related conduct.”

There are no Massachusetts cases on the issue of the use of medical marijuana in apartments or condos.  However, in December, 2014 a federal court in Michigan in Forest City Residential Management, Inc. v. Beasley, 71 F.Supp.3d 715 (E.D. Mich. 2014) was faced with this question.  In that case a tenant possessed a medical marijuana card and asked the landlord for a reasonable accommodation to allow him to smoke marijuana in his apartment.

The court stated that federal law making the use of marijuana a crime supersedes state medical marijuana laws allowing marijuana use, so to require a landlord to grant this accommodation would not be reasonable because it would require the landlord to violate federal law.  The court stated:  “Such a requirement would fundamentally alter the nature of [the landlord’s] operation by thwarting Congress’s mission to provide drug-free federally assisted housing.”  The court held that a landlord is not required to grant a reasonable accommodation to allow a tenant to use medical marijuana.

So as of now, a landlord does not have to allow a tenant to use medical marijuana inside the building.  If a tenant wants to smoke marijuana for medical purposes, he can go outside to a location off the property where the smoke won’t bother other residents.  If the tenant is going to use medical marijuana inside the apartment, the tenant should have to ingest it in some other form, such as a pill or a brownie, or use a topical oil.

There is no question that in the next few years there will be cases in Massachusetts dealing with whether a landlord has to allow medical marijuana to be smoked in its building.  We’ll look forward to those decisions, but until a court rules otherwise landlords don’t have to allow this.

Co-chair of REBA’s residential landlord/tenant section, Ken Krems is a partner in the Boston office of Shaevel & Krems, LLP, where he focuses his practice on real estate management. Ken represents large residential management companies and is responsible for more than 11,000 units of housing in Massachusetts; he also represents landlords and tenants regarding commercial leasing issues, condominium associations and a buyers and sellers of real estate.  Ken can be reached at kkrems@shaevelkrems.com.