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.

Thursday, April 2, 2015


In a recent SJC decision, at first blush it would appear that the basic ruling comes as no surprise and does not change the way we look at non conforming structures. In  Palitz v. Zoning Bd. of Appeals of Tisbury, No. SJC-11678, 2014 WL 7930410 (Mass. Mar. 3, 2015), the court said:


“Although preexisting nonconforming status under the Zoning Act runs with the land…, ‘the introduction of a new nonconformity to a pre-existing nonconforming residential structure requires a variance’”


Seems straightforward doesn’t it?  Not so fast.


The case pertained to a preexisting non-conforming structure in Tisbury, which has a zoning bylaw that states:  This ordinance shall not apply to existing buildings or structures, nor to the existing use of any building or structure, or of land to the extent to which it is used at the time of adoption of this ordinance, but it shall apply to any change of use thereof.” The land owner obtained endorsement of a plan of land pursuant to ch. 41, § 81L, placing the building on a separate lot,  as the overall tract had three dwellings that preexisting the adoption of the subdivision control law in the Town of Tisbury. The statute reads:


“…the division of a tract of land on which two or more buildings were standing when the subdivision control law went into effect in the city or town in which the land lies into separate lots on each of which one of such buildings remains standing, shall not constitute a subdivision.” Mass. Gen. Laws Ann. ch. 41, § 81L (West)


The landowner sought a variance to tear down the non-conforming building and build a new dwelling within the same footprint. The Court mentioned that the new building would have been taller than the old building and would have blocked the view of Vineyard Haven Harbor for the abutter across the street. The ZBA denied the variance.


You have to read the decision yourself to appreciate the Court’s analysis.  Please read it and get back to me if you can follow the analysis. The troubling conclusion is that the decision appears to say that a lot shown on a ch. 41, § 81L plan, which does not meet all applicable zoning requirements at the time of endorsement, is not a lawful lot unless a variance is issued to cure all dimensional non-conformities.  I understand that certain towns are now being advised that lots created by §81L cannot be placed in separate ownership, or thereafter constructed upon, without variances to cure all their dimensional limitations. To which I say: Uh oh! If that was the intention of the legislature, there would be no reason for said last line within §81L!


There must be thousands of lots out there which were created by §81L, and then conveyed into separate ownership.  Does the decision now render all of them illegal? When we perform a title examination how are we supposed to determine if a plan was endorsed under §81L? And if we suspect a plan was endorsed under §81L, are we then expected to research the archives of the local zoning bylaw and determine if the lot complied with the then applicable zoning when it was conveyed into separate ownership?


Clearly, unless a contrary interpretation of the protections afforded by §81L prevail in the future, any landowner with a 81L lot should be advised to obtain a variance for all new construction and simultaneously seek a variance for all lot dimensional non-conformities, notwithstanding that prior to March 3, 2015 we believed the lots to be lawfully non-conforming.


I would be interested in alternative interpretations.



Alphen & Santos, P.C.

Wednesday, December 24, 2014

SJC Upholds Convictions in Internet Harassment Case

You may have read in the Globe on December 24th that the SJC upheld the conviction of an Andover couple who harassed a neighbor via the internet. In Commonwealth v. William P. Johnson decided on December 23rd, The Johnsons were charged on October 16, 2008, in Lawrence District Court with making a false report of child abuse (G.L. c. 119, § 51A [c ] ); identity fraud (G.L. c. 266, § 37E); conspiracy (G.L. c. 274, § 7); and criminal harassment (G.L. c. 265, § 43A [a ] ). It all started when the Johnsons proposed to subdivide their land and their neighbors James (“Jim”) and Bernadette Lyons opposed the development.  In either late February or early March, 2008, William Johnson telephoned his friend Colton “and enlisted him to play a series of ‘pranks’ on Jim. The ideas for these ‘pranks’ were generated in several ways: (1) William would directly instruct Colton or convey ideas through Gail; (2) the Johnsons would provide information about the Lyons family to Colton so that he could use this information to harass them; or (3) the Johnsons would prompt Colton to think of ideas. Over the course of thirty-five days in late March and early April, 2008, the defendants, directly and through Colton, engaged in a series of acts directed at the Lyons family. The Commonwealth alleged four separate acts of harassment in addition to the false report of child abuse…” Com. v. Johnson, No. SJC-11660, 2014 WL 7261476, at *2 (Mass. Dec. 23, 2014). The defendants also posted fake ads on the internet that caused numerous people to call or go to the Lyonses home or call them late at night.

William Johnson was sentenced to 18 months behind bars; his wife was given a six-month sentence to serve.

We have seen circumstances when citizens who are opposed to a development have engaged in smear campaigns on social networks. And the Johnson decision will cut both ways when opponents to a project go beyond protected free speech and engage in harassment.
Paul F. Alphen, Esquire
Alphen & Santos, P.C.

Wednesday, December 17, 2014


Massachusetts Lawyer’s Weekly reported on the U.S. District Court case of Cohen v. Elephant Rock Beach Club Inc where a negligence suit was brought by a guest of a member of the Elephant Rock Beach Club. She swam 250’ out into the ocean and dove off a natural rock formation in the water within area owned by the Commonwealth of Massachusetts. As my mother would have warned me, she was injured when she jumped off the rock and smashed her foot on a submerged portion of the rock. It is indeed unfortunate that the Plaintiff was injured, and I wish her a speedy and complete recovery.

The Beach Club argued that it had no legal right to control the rock and therefore had no duty to warn people that swimming out to rock and jumping off the rock may be dangerous. The Court disagreed and reasoned that because the Club both encouraged and prohibited the use of the rock by guests by placing some ropes on floats near the rock and having the life guards whistle at swimmers to stay away from the rock in dangerous sea conditions.  The case will proceed to a jury.

So, this means that the Beach Club should have either (a) hired life guards to blow whistles all day long and yell at anybody who looked like they may swim out to the rock or (b) sought an Order of Conditions for permission to post a half dozen signs telling everyone to stay off the rock and then instructed the lifeguards to ignore those who swam out to the rock. They had already posted signs stating that use of the rock was at one’s own risk. May I recommend changing their name to “Stay Off the Elephant Rock Beach Club”?
Paul F. Alphen, Esquire
Alphen & Santos, P.C.

Thursday, November 6, 2014


The Appeals Court upheld the Superior Court in a recent decision concerning the disapproval of a subdivision plan in F&D Cent. Realty Corp., Inc. v. Planning Bd. of Bellingham, 86 Mass.App.Ct. (October 14, 2014). The Appeals Court, noting Judge Richard T. Tucker’s thoughtful findings and detailed analysis, agreed that the Town of Bellingham planning board “exceeded the scope of its authority.” Citing Sealund Sisters, Inc.[1] and Beale[2], the court held that a planning board may not base its reasons for disapproval on requirements beyond those prescribed in the rules and regulations, or exercise its discretion to import its own standards.

The Superior Court determined, and the Appeals Court agreed, that the reasons given by the Planning Board for disapproval of the subdivision plan was outside its authority under its rules and regulation.

The court found that Planning Board applied an erroneous standard in finding that Section 324(F) raises sight distance concerns for the developer at a certain intersection of two public ways, as 324(F) only applies to intersections of access ways and subdivision proposed streets. The court also held that the Planning Board exceeded its authority by disapproving the subdivision in part on a finding of the applicant’s noncompliance with Section 26, reasoning, simply, that the board did not set forth how Section 26 had been violated. Furthermore, the judge held that Section 324(F) also did not apply to the “Environmental Analysis”, for the same reasons, while also crediting the developer’s traffic expert. In addressing the board’s fourth reason for disapproval, the judge found, and the Appeals Court agreed that evidence produced at trail was insufficient to establish any other hazards of a certain street as an access to the subdivision. Likewise, the judge concluded that a rule and regulation cited by the board did not apply to access roads to a subdivision. Finally, the court held that the board’s sixth reason that “[t]he project is not consistent with the purposes of the Subdivision Control Law” was not “elucidated” in the board’s decision or in its submissions to the court.

The Appeals Court rejected the Planning Board’s argument that it acted within its authority, and that the judge erred in failing to give deference to the board’s interpretation of its own rules, regulations and findings of fact stating: “[a]lthough deference is given to a board in granting a special permit or waiver, here, such deference was not warranted where the reasons stated for disapproval fell outside the provisions of the rules and regulations.”

Christopher J. Alphen, J.D.

Alphen & Santos, P.C.

200 Littleton Rd.

Westford, MA 01886

[1] v. Planning Bd. of Weymouth, 50 Mass.App.Ct. 346, 348 (2000).
[2] v. Planning Bd. of Rockland, 423 Mass. 690, 696 (1996).

Monday, July 28, 2014


In the Appeals Court case of Samuelson v. Planning Bd. Of Orleans, 86 Mass. App. Ct. 901 (2014), the court agreed with the Land Court that conditions imposed within a Definitive Subdivision approval do not expire after 30 years (as would a restriction on land in accordance with G.L. c 184 s 23). The court referred to Killorin v. Zoning Bd. of Appeals of Andover, 80 Mass.App.Ct. 655, 657, 955 N.E.2d 315 (2011) in which such a conclusion was already established as applied to conditions within a Special Permit.


But, that does not mean that subdivision or special permit conditions can never be removed or modified; it means that the party seeking the removal or modification must do so with the proper procedure, i.e an application for a subdivision modification in accordance with G.L. c41 s81W. However, in the Samuelson case, the applicant never sought a modification, and the court said:


“The fact that the condition imposed by the board in 1975 did not automatically expire in 2005 does not necessarily mean the Kennedys lack any potential recourse. Subdivision approvals are not permanently etched in stone, but can be modified in accordance with the provisions of G.L. c. 41, § 81W. Some claim can be made that that is in fact what the board did here, and the Kennedys now argue that the board's decision should be analyzed and upheld on that basis. However, our review of the summary judgment record reveals that the Kennedys never raised such an argument to the judge below. Moreover, despite the fact that the judge repeatedly stated that the Kennedys never requested a modification of the 1975 approval pursuant to § 81W, and that the board never treated their request as such, the Kennedys made no argument in their opening appellate brief that the judge erred in this regard. Instead, they raised the § 81W issue for the first time in their reply brief. Accordingly, even had the Kennedys raised the issue below, that argument was waived.” Samuelson v. Planning Bd. Of Orleans, 86 Mass. App. Ct. 901 (2014)

Paul F. Alphen, Esquire

Alphen & Santos, P.C.