Tuesday, April 19, 2016

Life Estate: A Property Interest or a Trust Interest?

REBA Estate Planning, Trusts & Estate Administration Committee
Life Estate: A Property Interest or a Trust Interest?
A. Miriam Jaffe, Esq.
Leo J. Cushing, Esq.,
April 14, 2016

Monday, April 11, 2016



If either you or a client owns a vacation home or other land in a private subdivision, you will want to be aware of legislation before the Massachusetts legislature that would enact a workable procedure better to insure the continuing maintenance of private ways and other common amenities.  If no HOA (Homeowners Association) has been established, what will you tell your lender client who advises that, for a Fannie Mae conforming loan, a house on a private way must have a recorded “private way agreement” to insure that the way will be maintained?  If your client is concerned for how to insure that financial responsibility for these expenses will be shared by those who benefit from use of the way, Senate Bill 1113 may have the answer. 
Many roads and other private amenities, such as bridges or common beaches and recreational areas, are privately owned. Therefore, the municipality is not required to provide maintenance or upkeep of these common amenities, which may be at risk of falling into serious disrepair.  This is especially problematic without an established owners’ association or other method for raising the necessary sums for maintenance and upkeep.  The existing provisions of M.G.L. c. 84, §§ 12-14, first enacted in 1787 and essentially unchanged since then, provide a procedure to call a meeting of proprietors and rightful occupants of a private way or bridge.  Those provisions include a cumbersome process for calling such a meeting, limit the parties entitled to call a meeting, and provide little guidance in terms of assessing and collecting maintenance costs. 
REBA Practice Standard No. 26, Land Subject to a Non-Statutory Obligation to Pay Assessments, recommends in such situations that the conveyancer obtain written documentation that all outstanding assessments have been paid through the date of conveyance.  However, such assessments are not enforceable as a lien since there is no statutory authority for it.  That there may exist an equitable servitude based upon an implied in fact contract may be of little comfort to your client. There is no obligation to record an instrument evidencing payment of assessments, and certain Registries may not even accept such an instrument for recording. 
Senate Bill 1113, in lieu of requiring a warrant from a district court or town clerk or from a justice of the peace to call a meeting of property owners as in the current statute, instead allows such a meeting to be called by mailed notice together with publication in a local newspaper in accordance with other modern statutory notice provisions.  The bill also expands the universe of property owners entitled to call a meeting to include not only those who own the common amenity, as in the existing statute, but also to include other property owners who have the benefit of using the common amenity.  This serves to include in the maintenance and repair process all affected property owners and not simply those who have an ownership interest in the common road, bridge or other amenity by virtue of owning property immediately adjacent thereto.  In addition, the proposed bill expands the scope of common amenities covered by the statute to include not only private ways and bridges but also other common amenities requiring shared maintenance, such as private parks, buildings, recreational facilities, beaches and the like and privately owned utility lines.  The bill provides the necessary framework for the property owners to form an owners’ association where none currently exists, and to make assessments for maintenance and repair costs.  If such an association has been created by a recorded instrument, its provisions continue to apply.
REBA’s Legislation Committee, chaired by Fran Nolan and Doug Troyer, has recommended certain perfecting additions to Senate Bill 1113, including to allow an HOA to lien the property of owners that fail to pay their allocable share of maintenance and repair costs similar to that provided for a condominium association for unpaid common charges under M.G.L. c. 183A, and to provide a parallel to the 6(d) certificate.  Primary drafting of the REBA-recommended text came from committee members Lisa Delaney, Marty Loria, Dan Ossoff and Doug Troyer. A copy of the REBA-recommended changes is at:
Senate Bill 1113, co-sponsored by Senator Daniel A. Wolf (D-Harwich) and Representatives Thomas J. Calter (D-Kingston) and Brian R. Mannal (D-Barnstable), follows the framework of legislation originally sponsored in past years by retired Representative Cleon H. Turner (D-Dennis). Three other bills, with bipartisan sponsorship, have similar provisions.  S.1113 has been recommended by the Joint Committee on Municipalities and Regional Government.   
The bill seeks to be fair to property owners, recognizing that those who use the roads and amenities are the logical parties to pay for their upkeep.  If you support these improvements in the statute, please let your State Senator and State Representative know as soon as possible.  Formal sessions end this year on July 31, 2016.  Contact information is available at https://malegislature.gov/People/Search. 
REBA Legislation Committee
Click here to visit the REBA Legislation Committee Page

Thursday, March 10, 2016


Senate No. 122  is entitled: “An Act promoting the planning and development of sustainable communities”.   The Bill intends to make major changes to MGL Chapter 40A and the Subdivision Control Law. There are many facets to the Bill, but for simplicity’s sake I will focus on one example to illustrate that the Bill is not as innocuous as it may first appear.

Sections 10, 11 and 12 of the Bill, if read in a vacuum, may appear to be harmless. However, the changes proposed therein will harm landowners and slow economic development in the Commonwealth. One purpose of the proposed amendment is to eliminate the use of Subdivision Plan filings to create a temporary zoning freeze on a parcel of land. The proposed changes would only freeze the particular layout of lots shown on a plan filed with the Planning Board from subsequent changes in the zoning bylaw. The goals espoused by the supporters of the Bill are contrary to the fundamental fairness principals articulated by the Massachusetts Courts for decades.  The courts have consistently ruled that landowners have the right to know in advance of the permitting process the details of the land use regulations that will apply to their land. Keep in mind that developers typically do not purchase land until all permits are granted; and the landowners get nothing, or next to nothing, if the projects are not approved. Meanwhile, the developers are required to prepare and submit mountains of expensive engineering data and plans to cities or towns to meet the ever-increasing regulatory requirements for submissions. If developers face the risk that their efforts can be thwarted by a zoning change half way through the project engineering or permitting process, they are unlikely to take the risks in the first place.

The language that the Bill aims to eliminate is exactly the language that the Supreme Judicial Court has identified as crucial to the creation of a level playing field:

“We have opined that the intent of the statute was to protect landowners and developers ‘from ‘the practice in some communities of adopting onerous amendments to the zoning by-law after submission of a preliminary plan which is opposed by segments within the community.’”   Massachusetts Broken Stone Co. v. Town of Weston, 430 Mass. 637, 640-41, 723 N.E.2d 7, 9-10 (2000)

I have had the unfortunate experience of having town meetings change zoning bylaws midway through the permitting process. The towns around me commonly amend zoning bylaws twice a year. There has to be a way to freeze the zoning bylaw while an applicant is engaged in the permitting process. Otherwise it is like travelling 65 MPH on the Mass Pike and then getting pulled over and having your car confiscated and being told that the speed limit and the penalties were changed during the time you drove from Allston to Weston.

Landowners and builders need a way to lock in the rules while they generate engineering and plans, and wind their way through the permitting gauntlet. At the point at which the engineers are drawing up plans, everyone from brokers to backhoe operator have knowledge of the proposal (not to mention the relatives of the sellers, brokers and backhoe operators). Word gets around town very quickly, and it would be easy for opponents to gather 10 signatures and get a rezoning article on a town meeting warrant before the application is submitted or the project approved. And freezing the “plan” provides insufficient protection to the landowners and builders as (a) the final plan ultimately approved by the boards can be significantly different that the original plan submitted and (b) as stated above, once engineered plans are ready for submission word has leaked about the proposal and the opposition can become organized.

The above is but one example of how Senate 122 is not as simple as it may first appear. Please read the Bill, and if you have similar concerns, perhaps you can express same to your Senator.  

Paul F. Alphen, Esquire

Alphen & Santos, P.C.

Westford, MA

Wednesday, August 26, 2015


In 2007 the applicant/Plaintiff Buccaneer Development, Inc applied for a special permit to build a “retirement community,” the minimum requirements for which are set forth in § 9.6 of the Town of Lenox by-law. The proposed project satisfied all of the special provisions set forth in that section. And the Appeals Court agreed with the trial judge's conclusion that “the density of the proposed project is well within the requirements of Section 9.6,” and that the board had no basis to deny the special permit under the square footage, acreage, frontage, or setback provisions included in that section. Buccaneer Dev., Inc. v. Zoning Bd. of Appeals of Lenox, No. 14-P-855, 2015 WL 4725043, at *2 (Mass. App. Ct. Aug. 11, 2015)
Nevertheless, the Appeals Court on August 11, 2015 upheld the Land Court’s decision that the denial by the Lenox Zoning Board was erroneous.
The Appeals Court stated that the Board’s decision can only be disturbed if it was unreasonable, whimsical, capricious or arbitrary.
“However, ‘[e]ven if the record reveals that a desired special permit could lawfully be granted by the board because the applicant's evidence satisfied the statutory and regulatory criteria, the board retains discretionary authority to deny the permit.’ Davis v. Zoning Bd. of Chatham, 52 Mass.App.Ct. 349, 355, 754 N.E.2d 101 (2001). ‘[T]he decision of the board can only be disturbed ‘if it is based ‘on a legally untenable ground’ ... or is ‘unreasonable, whimsical, capricious or arbitrary.’  Subaru of New England, Inc. v. Board of Appeals of Canton, 8 Mass.App.Ct. 483, 486, 395 N.E.2d 880 (1979), quoting from Gulf Oil Corp. v. Board of Appeals of Framingham, 355 Mass. 275, 277, 244 N.E.2d 311 (1969).” Buccaneer Dev., Inc. v. Zoning Bd. of Appeals of Lenox, No. 14-P-855, 2015 WL 4725043, at *2 (Mass. App. Ct. Aug. 11, 2015)
The Court determined that the denial based on broad subjective grounds was within the Board’s authority.

“Nonetheless, the three other criteria in § 6.1.1 of the by-law specifically require the board to consider more subjective factors and not to grant a special permit unless it finds that the proposed use ‘(a) [i]s ... in harmony with [the by-law's] general intent and purpose; (b) [i]s essential or desirable to the public conveniences or welfare at the proposed location; [and] (c) [w]ill not be detrimental to adjacent uses or to the established or future character of the neighborhood.’ The board's denial of the special permit was firmly grounded in its assessment that the proposed use failed to meet these criteria……’[P]articularly where the judge conducted a view,’ we are reluctant to disturb her findings. Bernier v. Fredette, 85 Mass.App.Ct. 265, 275, 8 N.E.3d 769 (2014).” Buccaneer Dev., Inc. v. Zoning Bd. of Appeals of Lenox, No. 14-P-855, 2015 WL 4725043, at *3 (Mass. App. Ct. Aug. 11, 2015) 

The decision gives greater authority to special permit granting authorities to deny permits even when the applicant has met the objective requirements. Again, as usual, note that the process took over eight years to reach this point.

Paul F. Alphen, Esquire

Alphen & Santos, P.C.

Westford, MA

Tuesday, August 25, 2015


A local attorney informed me of a scam perpetrated on his firm involving a wire transfer. I shared the horrible story with a number of attorneys in the area, and I received numerous responses that similar scams had been attempted at their offices. Apparently this is big problem:
After a closing, the Settlement Agent received emails that appear to come from the Seller’s attorney and the Sellers asking that the proceeds be wired (with wiring instructions). In one case the Sellers had left the office with a check and the Settlement Agent received emails from the Seller and the Seller’s attorney that they had problems depositing the check and the check has been destroyed and requesting a wire.
The attorney was alert enough to call the Seller’s attorney by phone, only to learn that he never sent the emails and the proceeds check had been safely deposited. Apparently somebody had hacked the email account of one of the parties in the transaction. The email addresses being used to send the wiring instructions looked legitimate, but after closer inspection it appears that one letter was different; so that hackers are fairly sophisticated. 
Somehow the hacker knew the details of the closing, the names of the parties, the proceeds amount, etc. Very disturbing.
Some attorneys have said that they will only process wire transfers if they have an authorization letter signed in person by the Seller accompanied by written instructions, or similar safeguards.
Keep your eyes open and share this with your colleagues

Paul F. Alphen, Esquire

Alphen & Santos, P.C.

Westford, MA

Wednesday, June 24, 2015


If you have not progressed sufficiently through your summer reading assignment of the regulations of the CFPB, permit me to share this nugget. We all have clients that do favors for friends and business associates and lend them mortgage money to allow their friends and associates to get past a speed bump in their lives. You probably already know that drafting loan documents with an interest rate greater than the state usury rate of 20% you can be charged with participating in a crime; but there are also civil and criminal penalties if you participate in the preparation of loan documents that do not comply with the voluminous and very complicated rules of the CFPB. By way of illustration, unless your client is a properly registered loan originator, your client cannot provide seller financing unless he/she is exempt in accordance with the rules.

Section 1026.36 (a) (4), which pertains to seller financing of up to three properties per year, states:

“(4) Seller financers; three properties. A person (as defined in §1026.2(a)(22)) that meets all of the following criteria is not a loan originator under paragraph (a)(1) of this section:

(i) The person provides seller financing for the sale of three or fewer properties in any 12-month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing.

(ii) The person has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person.

(iii) The person provides seller financing that meets the following requirements:

(A) The financing is fully amortizing.

(B) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay.

(C) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or LIBOR.”

Ok, if your client was a contractor he/she cannot take back a note. And, if your client has not properly documented that the borrower has the reasonable ability to repay the mortgage, he/she cannot take back a note.

Section 1026.36 (a) (5), which applies to one seller financing of one property per year, states:

“(5) Seller financers; one property. A natural person, estate, or trust that meets all of the following criteria is not a loan originator under paragraph (a)(1) of this section:

(i) The natural person, estate, or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate, or trust and serves as security for the financing.

(ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person.

(iii) The natural person, estate, or trust provides seller financing that meets the following requirements:

(A) The financing has a repayment schedule that does not result in negative amortization.

(B) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations. The index the adjustable rate is based on is a widely available index such as indices for U.S. Treasury securities or LIBOR.”

Again, the Seller/Lender cannot be the contractor, but the requirement that the lender determine that the borrower can repay has been deleted.

Proceed with caution unless you have the ability to track how many loans your clients are granting in any 12 month period and you have compared the loan terms to the regulations.

But there is more, even if a lender is not a seller, a person or entity is considered to be a “Creditor” under the rules and subject to numerous requirements if they extend credit secured by a dwelling more than five times in a calendar year. Section 1026.2 (a) (17) reads, in part:

“(v) A person regularly extends consumer credit only if it extended credit (other than credit subject to the requirements of §1026.32) more than 25 times (or more than 5 times for transactions secured by a dwelling) in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year. A person regularly extends consumer credit if, in any 12-month period, the person originates more than one credit extension that is subject to the requirements of §1026.32 or one or more such credit extensions through a mortgage broker.”

Holy mackerel!

Alphen & Santos, P.C.

Friday, June 19, 2015


Have you started to wade through the regulations of the Consumer Finance Protection Bureau? Did you know there was an Interstate Land Sale Registration Program which generally requires that “a developer may not sell or lease lots in a subdivision, making use of any means or instruments of transportation or communication in interstate commerce, or of the mails, unless a Statement of Record is in effect in accordance with the provisions of this Part…” §1010.3 ?

Furthermore, “In non-exempt transactions, the developer must give each purchaser a printed Property Report, meeting the requirements of this part, in advance of the purchaser's signing of any contract or agreement for sale or lease. Information collection requirements contained in this part have been approved by the Office of Management and Budget under the provisions of 44 U.S.C. 3501 et seq. and have been assigned OMB Control No. 3170-0012.”  §1010.3   

Also, Section 1011.2 allows purchasers to revoke a contract or a lease within seven days, unless the lot is “exempt” from the regulations. We all have to become familiar with the voluminous Regulations and what qualifies a transaction as “exempt”. Fortunately, there is a Single Family Residence Exemption. Unfortunately, it is a page and a half long:

“§1010.10   Single-family residence exemption.

(a) General. The sale of a lot which meets the requirements specified under paragraphs (b) and (c) of this section is exempt from the registration requirements of the Act.

(b) Subdivision requirements. (1) The subdivision must meet all local codes and standards.

(2) In the promotion of the subdivision there must be no offers, by direct mail or telephone solicitation, of gifts, trips, dinners or use of similar promotional techniques to induce prospective purchasers to visit the subdivision or to purchase a lot.

(c) Lot requirements. (1) The lot must be located within a municipality or county where a unit of local government or the state specifies minimum standards in the following areas for the development of subdivision lots taking place within its boundaries:

(i) Lot dimensions.

(ii) Plat approval and recordation.

(iii) Roads and access.

(iv) Drainage.

(v) Flooding.

(vi) Water supply.

(vii) Sewage disposal.

(2) Each lot sold under the exemption must be either zoned for single-family residences or, in the absence of a zoning ordinance, limited exclusively by enforceable covenants or restrictions to single-family residences. Manufactured homes, townhouses, and residences for one-to-four family use are considered single-family residences for purposes of this exemption provision.

(3) The lot must be situated on a paved street or highway which has been built to standards established by the state or the unit of local government in which the subdivision is located. If the roads are to be public roads they must be acceptable to the unit of local government that will be responsible for maintenance. If the street or highway is not complete, the developer must post a bond or other surety acceptable to the municipality or county in the full amount of the cost of completing the street or highway to assure completion to local standards. For purposes of this exemption, paved means concrete or pavement with a bituminous surface that is impervious to water, protects the base and is durable under the traffic load and maintenance contemplated.

(4) The unit of local government or a homeowners association must have accepted or be obligated to accept the responsibility for maintaining the street or highway upon which the lot is situated. In any case in which a homeowners association has accepted or is obligated to accept maintenance responsibility, the developer must, prior to signing of a contract or agreement to purchase, provide the purchaser with a good faith written estimate of the cost of carrying out the responsibility over the first ten years of ownership.

(5) At the time of closing, potable water, sanitary sewage disposal, and electricity must be extended to the lot or the unit of local government must be obligated to install the facilities within 180 days following closing. For subdivisions which will not have a central water or sewage disposal system, there must be assurances that an adequate potable water supply is available year-round and that the lot is approved for the installation of a septic tank.

(6) The contract of sale must require delivery within 180 days after the signing of the sales contract of a warranty deed, which at the time of delivery is free from monetary liens and encumbrances. If a warranty deed is not commonly used in the jurisdiction where the lot is located, a deed or grant which warrants that the seller has not conveyed the lot to another person may be delivered in lieu of a warranty deed. The deed or grant used must warrant that the lot is free from encumbrances made by the seller or any other person claiming by, through, or under the seller.

(7) At the time of closing, a title insurance binder or title opinion reflecting the condition of title must be in existence and issued or presented to the purchaser showing that, subject only to exceptions which are approved in writing by the purchaser at the time of closing, marketable title to the lot is vested in the seller.

(8) The purchaser or purchaser's spouse must make a personal, on-the-lot inspection of the lot purchased prior to signing a contract or agreement to purchase.

(d) The sale must also comply with the anti-fraud provisions of §1010.4(b) and (c) of this part.”

Said anti-fraud provisions as contained in Section 1010.4 require, among other things, that “if a developer or agent represents that roads, sewers, water, gas or electric service or recreational amenities will be provided or completed by the developer, the contract must stipulate that the services or amenities will be provided or completed.”

Good Grief, Charlie Brown!


Alphen & Santos, P.C.