Blog Archive

Wednesday, October 18, 2017

Issues and Strategies in Dealing with Lease Defaults and Remedies (Video)

Paul White of Sugarman Rogers and Ed Bloom of Sherin and Lodgen will be the featured speakers at the Fall Open Meeting of the Commercial Leasing Section, to take place on Tuesday, October 17th at REBA in Boston.

Paul and Ed will present on the topic of commercial lease disputes: issues and strategies in dealing with lease defaults and remedies in the wake of Cummings Properties, LLC v. National Communication Corp., 449 Mass 490 (2007) and its progeny.

Ed has many years of experience in drafting commercial leases and selecting the best language to include in a lease to address these situations. Paul's practice routinely encompasses the representation of commercial landlords and tenants in situations involving monetary and non-monetary lease defaults and bringing or defending lawsuits that present these claims. These are often fast-developing situations which require not only a careful analysis of lease terms but also an understanding of the pitfalls and opportunities they present depending on the needs of the client and the unique circumstances of any dispute.

Tuesday, October 10, 2017

Condominium Issues in the 21st Century

By Saul J. Feldman & Angel K. Mozina

In this article, we are going to discuss current condominium issues:

Although legal in Massachusetts, marijuana remains illegal under federal law. Some condominium associations have asked for us to
draft language making marijuana illegal except for medical purposes. Other associations have asked us to draft language making marijuana legal for recreational and medical uses. This issue of marijuana can be covered as part of a “no smoking” prohibition. For example, a prohibition against smoking except in an outdoor gazebo may encompass marijuana. These regulations can apply to both common areas as well as within individual units.

On-line Home-Sharing Sites:
The huge increase in Airbnb, HomeAway, and other on-line home-sharing sites has led associations and developers to wonder about whether to modify documents regarding short-term rentals of condominium units. The short-term rental may be for an entire condominium unit or just for a single room within the condominium unit. This practice may violate a town’s zoning by-laws, because a property may not be used for a commercial enterprise in a single-family zoning district. Notwithstanding such a zoning prohibition, in our opinion, the condominium documents should also address this issue as it affects insurance coverage, and taxation of these properties, similar to the taxation of hotels and motels.

Mixed-Use Condominiums:
The common belief is that tensions between unit owners in a mixed-use condominium often lead to total dysfunction in the condominium. We want to demonstrate that it is often possible to resolve the differences between differing uses. We will do this by exploring a common fact pattern.
The tensions are between:
(1)     the condominium association in a mixed-use building with residential units in most of the building, and
(2)     the owner of the restaurant unit.
In this example, there is a restaurant operating on the first floor of the building with the next several floors occupied by residential units.
The restaurant wants to obtain a liquor license and convert the restaurant to a sports bar which will, of course, generate even more noise. Under the condominium documents, a restaurant is allowed, but a sports bar is not allowed.  The zoning allows for both a restaurant and a sports bar.

On the surface, this may seem like an impossible problem between the owner of the restaurant unit and the Condominium Trustees. The Trustees could hold firm and not allow the sports bar. If the restaurant goes ahead and converts the use to a sports bar, the parties will end up in years of litigation. Eventually, the Trustees may win and the restaurant may lose. However, in reality neither party will win.  The costs of litigation in this case could be in excess of $200,000.00. This just happens to be the cost of proper sound-proofing.

The solution is for the two parties to come to an agreement on proper sound-proofing of the ceiling of the restaurant unit. The cost should, of course, be borne solely by the restaurant.

The agreement will also be signed by as many of the Unit Owners as possible. The Condominium Trust must indemnify the Owner of the Restaurant Unit against claims by any of the Unit Owners who fail to sign the settlement agreement. 

This fact pattern is quite common in Boston and other urban areas throughout the United States. Our point is that most tensions in a mixed-use condominium can be settled and need not lead to dysfunction and litigation.

Small Condominiums:
A small condominium (2-4 units) is really a joint venture – a general partnership limited to one project. The “project” is the operation of the condominium.
The condominium documents should be made as simple as possible.

There should also be a mechanism to settle disputes. I would recommend mediation and arbitration. REBA is set up to do both.
Each Unit Owner should be a Trustee. Decisions should require a 100% vote of the Trustees/Unit Owners. Sometimes this can present a challenge.

Regarding collections in a two (2) unit condominium, the documents should give one Trustee the ability to sue the delinquent Unit Owner who fails to pay after sixty (60) days’ notice from the Trustee of the other Unit.

Ideally, the Units should be kept as separate as possible. For example, yard areas could be exclusive-use areas if that is what the Unit Owners want.

The rules and regulations which are on exhibit in the condominium trust should be as simple as possible.

The Master Insurance Policy should be an “all in” policy that covers the units as well as the common areas. Each Owner should get his own insurance as well, just for the contents of the unit and for liability within the unit.

Problems such as budgets, tenants, noise, smoking, collections, and pets must be carefully addressed in the Master Deed or Condominium Bylaws.

There are some people who do not belong in a condominium. With a little luck, these people will not be in the condominium. If they are Unit Owners, you should expect trouble and we are not convinced that even the best drafted documents will be of any help.

Thursday, October 5, 2017

The Future of Real Estate Closings - The Pen Will No Longer Be Mightier (Video with Related Article)

Join us for a pre-Halloween trick-or-treat, as we survey chilling topics, including: "CFPB Issues its Final TRID Rule - What does it mean; and (if applicable) what about its Director? Off to Ohio or Not?," presented by Ruth Dillingham; "Cyber Security Vigilance is Key," presented by Kosta Ligris, and "The New ALTA Commitment, "presented by Gene Gurvits.  Joel Stein will close the session with some suggestions as to ways to keep egg off your face.

Related Article

Monday, October 2, 2017

Supreme Judicial Court Denies Developer’s Application for Review of Appeals Court Decision Concluding That Developer’s Partially-Constructed “Units” May Be Taxed

The Supreme Judicial Court recently denied a developer’s application for further appellate review of a decision concerning the taxation of development rights, whereby the Appeals Court had
ruled that a town may tax partially-constructed structures – existing on land that has been submitted to condominium status – which have not yet become lawful condominium units. R.I. Seekonk Holdings, LLC v. Board of Assessors of Seekonk, 91 Mass. App. Ct. 1104 (2017)(Rule 1:28) review denied 476 Mass. 1115 (2017). At first blush, the Appeals Court’s decision appears to run counter to the Massachusetts Condominium Act as well as its own previous decisions. Indeed, for the last seventeen years, it had generally been well accepted that land submitted to condominium status – which was subject to development rights – constituted common area of the condominium, which was exempt under G.L. c. 183A, § 14 from assessment. Spinnaker Island & Yacht Club Holding Trust v. Bd. of Assessors of Hull, 49 Mass.App.Ct. 20 (2000); see also First Main St. Corp. v. Bd. of Assessors of Acton, 49 Mass.App.Ct. 25 (2000). The Appeals Court, however, was able to differentiate the partially-constructed structures at issue in R.I. Seekonk based on (1) certain language in the condominium’s master deed concerning the subject development rights, and (2) the progress of construction performed.

The Massachusetts Condominium Act provides, in pertinent part, as follows:
Each unit and its interest in the common areas and facilities shall be considered an individual parcel of real estate for the assessment and collection of real estate taxes but the common areas and facilities, the building and the condominium shall not be deemed to be a taxable parcel.

G.L. c. 183A, § 14 (emphasis supplied).
In Spinnaker Island, the Appeals Court considered whether municipalities may tax rights retained by the declarant of a condominium to build additional phases of a condominium. Spinnaker Island, 49 Mass.App.Ct. at 20. In that case, the Assessors of Hull assessed real estate taxes on ten parcels of condominium land in which the declarant retained development rights but upon which units had never been “phased in” to the condominium. Id. at 21-22. The Appeals Court specifically held that these development rights, which had been reduced to the ten “expansion parcels,” are not subject to real estate taxation under G.L. c. 183A, § 14. Id. at 24. More specifically, the Appeals Court explicitly provided that “[b]y reason of the unambiguous exclusion in G.L. c. 183A, § 14, of common areas from taxation except to condominium unit owners in proportion to their percentage interests, the expansion parcels are not subject, as separate parcels, to real estate taxation.” Id.

In First Main Street, the Assessors of Acton – instead of assessing development rights as “real estate” under G.L. c. 59, § 2A, like the Assessors of Hull in Spinnaker Island – assessed development rights as “present interests” in real estate under G.L. c. 59, § 11. First Main St., 49 Mass.App.Ct. at 25. The Assessors of Acton contended that the development rights were severable from the underlying fee – that while the underlying fee was common area, the retained right to build on that land is not common area (and, therefore, was subject to taxation). Id. The Appeals Court rejected the Assessor’s argument and held that a declarant’s development rights are not taxable as “present interests” in real estate under G.L. c. 59, § 11. Id. at 28-30.

The R.I. Seekonk case involved the Greenbrier Village Condominium located in Seekonk, Massachusetts. When the Condominium was initially created in 2008, it consisted of eight units. Thirteen phases were subsequently added by phasing amendments – eventually creating thirty-one units at the Condominium. The Town of Seekonk assessed taxes against the declarant on structures that were under construction and prior to their addition to the Condominium as “units” – via master deed phasing amendment.

The Appeals Court held that these partially-constructed structures – unlike the development rights at issue in Spinnaker Island and First Main Street – were properly assessed by Seekonk. The Appeals Court seized upon the fact that language in the condominium’s master deed clearly defined the developer’s intent to exclude the structures from the condominium’s common area. R.I. Seekonk, 2017 WL 465322, *2. Indeed, the condominium’s master deed specifically provided as follows:
The Common Areas and Facilities of the Condominium (sometimes herein also referred to as the “Common Elements”) consist of the entire Land exclusive of the Units, all as hereinafter described and defined (and exclusive of any and all rights, interests and/or easements reserved by the Declarant), and any other property which is herein expressly included in the Common Areas and Facilities…Until such time as additional Phases are added to the Condominium by the recording of “Phasing Amendments” as described below, any buildings or portions thereof existing on the Land described in Schedule A (other than Phase 1), any other portions of the building(s) shown on the Site Plan, and any land not described in Schedule A shall not be part of the Condominium or subject to the Act, and shall be exclusively owned by, and shall be the exclusive responsibility of the Declarant or other owner thereof.

The Appeals Court in Spinnaker Island had specifically provided that “[o]nce it is recognized that the expansion parcels constitute common area of the condominium, it follows that they are not subject to real estate taxation because G.L. c. 183A, § 14…provides that ‘common areas and facilities…shall not be deemed to be a taxable parcel.’” Spinnaker Island, 49 Mass.App.Ct. at 23. The Appeals Court in R.I. Seekonk reasoned that – where this developer had gone to such lengths to specifically exclude the structures from the common area – the developer is not entitled to the tax exemption for common areas provided by G.L. c. 183A, § 14.

Unfortunately for many developers holding development rights, master deeds – for whatever reason – are commonly drafted with the exclusionary language seized upon by the Appeals Court in R.I. Seekonk. As a practical matter, developers should seek to avoid the inclusion of such language in their condominium documents and, instead, employ simple language concerning the land that has been submitted to condominium status (e.g., “The Common Elements are all portions of the Condominium other than the Units.”).

Perhaps more unfortunate for developers holding phasing rights is the fact that the Appeals Court in R.I. Seekonk went beyond distinguishing the case from Spinnaker Island based on the language in the master deed. The Appeals Court also held that the partially-constructed structures could be taxed as present interests in real estate, under G.L. c. 59, § 11. R.I. Seekonk, 2017 WL 465322, *2. The Court distinguished this case from First Main Street based on the fact that the structures “were in fact mostly completed” – whereas First Main Street involved assessed development rights where no construction had commenced. The Court provided that “as the First Main St. court reasoned, an unexercised development right could be converted into a present interest by initiating affirmative actions, such as ‘build[ing] the additional buildings and facilities.’”

Notably, the R.I. Seekonk Court failed to complete the quote from the First Main Street decision, which provided that the condominium developer must “build the additional buildings and facilities and amend the master deed, before the expansion phase land is the holder’s to deal with.” First Main St., 49 Mass.App.Ct. at 28 (emphasis supplied). It appeared that the Appeals Court, in First Main Street, recognized that in order to tax a development right as a present interest, the subject unit actually had to be phased into the condominium by recording an amendment to the master deed. The R.I. Seekonk Court, however, eschewed the necessity of having a legally-existing unit to tax – providing that a development right may be taxed once a structure is constructed on the property.
The Appeals Court’s decision is problematic, to say the least.
Essentially, towns may now tax condominium “units” that do not legally exist. If such a tax goes unpaid, what property interest will the town place a lien on? What property interest would be foreclosed upon? Will the town take common area land away from the unit owners of the condominium?

Additionally, the Appeals Court’s term “mostly completed” would seem to be open to broad interpretation. Can a structure be assessed once a developer has poured a foundation? Framed walls? Nailed roof shingles? It is unfortunate that the Court did not provide a stricter threshold than “mostly completed” (e.g., taxable as a present interest upon the issuance of a certificate of occupancy).
Also, towns typically tax common area proportionately to the unit owners of the condominium as “value added” to the condominium – in accordance with their percentage interest in the common area. Under the R.I. Seekonk decision, towns will essentially be able to (1) tax the unit owners in accordance with their percentage interest in the common areas, and (2) tax partially-constructed structures existing on the common areas. This would appear to be double taxation. The Appeals Court, in First Main Street, recognized this issue, providing “[a]s the unit owners have already been taxed for their interest in the common area land, the assessors may not tax another slice of the same real property to others.” First Main St., 49 Mass.App.Ct. at 29.

It is worth noting that, effective January 1, 2017, G.L. c. 59, § 11 was amended to provide local assessors with the discretion regarding whether to tax present interests in real estate. Previously, the statute authorized the imposition of a tax on a present interest upon written authorization from the Commissioner of Revenue. Accordingly, local assessors will now be able to tax structures on condominium property that – in their opinion – are “mostly completed”. A particularly aggressive town may now be emboldened to assess any partially-constructed structure on condominium property – whether it is ultimately to become a unit or some common area facility (e.g., a clubhouse).

The independent value of development rights, and the notion that a declarant of a condominium should be subject to taxation for same, has been acknowledged in the industry for more than three decades. Both the Uniform Condominium Act (“UCA”), which was most recently amended in 1980, and its successor act, the Uniform Common Interest Ownership Act (“UCIOA”) provide: “Any portion of the common elements for which the declarant has reserved any development right must be separately taxed and assessed against the declarant, and the declarant alone is liable for payment of those taxes.” UCA § 1-105(c) (1980); UCIOA § 1-105(c) (2014). As explained in Comment 2 to the UCA provision, “[e]ven if real estate subject to development rights is a part of the condominium and lawfully ‘owned’ by the unit owners in common, it is in fact an asset of the declarant… .’” UCA § 1-105(c), cmt. 2 (1980).

However, Massachusetts has its own unique condominium act codified at G.L. c. 183A, § 1 et seq., which has no comparable provision to that contained in the UCA and UCIOA. “Massachusetts has not adopted either the UCA or its successor, the Uniform Common Interest Ownership Act.” Drummer Boy Homes Ass’n, Inc. v. Britton, SJC-11969, 2016 WL 1191578, at *6 n.17 (2016). And while “the UCA may serve as a guide to the reasonableness of developer control of the structure, management and marketing of a condominium, it cannot override the existing tax law of Massachusetts. That is a task for the Legislature.” First Main St., 49 Mass.App.Ct. at 29-30 (citing Barclay v. DeVeau, 384 Mass. 676, 685 n.17 (1981)).

Until such time as the Legislature has determined whether it is appropriate to assess a condominium’s declarant for the value of its retained development rights, or partially constructed buildings on common area, this issue will likely find its way back to the appellate courts of the Commonwealth.

For nearly 15 years, Dave has been specializing in complex civil litigation at both the trial and appellate levels. He has extensive experience in the area of construction litigation. Dave’s practice is focused on construction, real estate, and condominium matters. His clients include condominium associations, real estate developers, general contractors, subcontractors, and individuals.

Dave is also certified as a player agent by the Major League Baseball Players Association and has negotiated more than $56 million in professional baseball contracts.

Thursday, September 28, 2017

Construction Law & Commercial Real Estate Finance Sections: Lender Requirements in Construction Contracts

September 26, 2017
Jonathan Hausner of Robinson + Cole will lead a discussion of typical lender requirements in construction contracts and construction oversight by lenders from the perspective of the owner and the construction team. He will be joined by Tom Guidi of Hemenway & Barnes LLP to give the lender's perspective. Jonathan and Tom will discuss borrower negotiations with architects and general contractors with an eye toward lender contract requirements and compliance with the lender requisition process. The discussion will also address issues from the perspective of the lender and the borrower.  

REBA Litigation Section September 27, 2017: Conducting Effective Witness Examinations with Judge Maynard Kirpalani

We are pleased to have the Honorable Maynard M. Kirpalani lead the discussion on conducting effective witness examinations at trial.  Judge Kirpalani was a civil trial attorney from 1978 until he was appointed to the Superior Court in 2010.  He has a wealth of knowledge, experience, and tips on effective trial strategies.  The focus of his discussion will be direct and cross-examination as well as the use of exhibits and demonstrative aids.  The meeting will be a fantastic opportunity to hear from an experienced former civil trial attorney and current sitting judge.

Wednesday, September 20, 2017

Vinnie Appreciates the Finer Point of Title Exams

My cousin Vinnie, the suburban real estate attorney, joined the gang in the Man Cave for a recent Patriots’ game. He brought some
terrible beer, suitable for his own personal consumption; which was fine because nobody else wanted to drink it. I am sure the smoked brisket made the beer taste better, because smoked meat makes everything better. After the victory, Vinnie hung around with the die-hard football fans to watch “Red Zone” and eat cookies. Only then did he start regaling us with stories from his small town practice.

“Paulie, I don’t know if you have noticed, but it seems to me that our brothers and sisters of the bar have upped their standards when it comes to reviewing title exams. I have been very pleased to see more requests that sellers need to obtain confirmatory discharges, or need to record missing trusts and cure deed descriptions. Until a few years ago, it was as if we were expected to accept anything, including discharges from the first cousin of a mortgage holder, but now that things have settled down, it seems that there is more attention to detail and a greater expectation of precision.”

I told Vinnie that I had notice the same trend, and I told him about a deed that came across my desk last week from the assignee of an assignee of a foreclosing entity, with one of those crazy long names with a “certificate series number” signed via POA, and the POA may have provided authority to execute and deliver deeds, but for some reason the drafter of the POA did not know how to type the words “and execute and deliver deeds”.

Vinnie declined an offer for a taste of some Eagle Rare bourbon and held on to his crappy beer. “It’s a conundrum.” Vinnie continued. “If three owners ago a trustee’s certificate was not perfect, and all the trustees died, but the title was buttressed with attorney’s affidavits, certificates of appointments and acceptance, a new certificate plus the passage of ten years, I suppose you can complain that the title is not perfect, but somewhere you have to apply a reasonableness standard. On the other hand, if the parties are alive and available to sign corrective documents, I will usually insist that we obtain and record corrective documents; and I usually end up drafting all the corrective documents and confirmatory deeds.”

Vinnie continued: “And, the other thing that is happening is that subdivisions that sat dormant since the Great Recession are coming back to life. But unfortunately the land owners are attempting to sell expensive lots only to discover that the septic regulations have changed, or the wetlands have migrated, or Orders of Conditions have lapsed. On more than one occasion I have seen land owners attempt to sell pricey lots, but in the course of my title exam I found conditions of approval that were long forgotten by the seller/developer, including lapsed special permits, and missing easements or restrictions that still require review by learned town counsel. Talk about delays to the closing!”

My buddy Chip told us to stop talking shop, and pay attention to the games. He had a point. There would be plenty of time to contemplate the fine details of a 2” thick title exam on Monday morning.

A former REBA president, Paul Alphen currently serves on the association’s executive committee and co-chairs the long-range planning committee.  He is a partner in the Westford firm of Alphen & Santos, P.C. and concentrates in residential and commercial real estate development, land use regulation, administrative law, real estate transnational practice and title examination .As entertaining as he finds the practice of law, Paul enjoys numerous hobbies, including messing around with his power boats and fulfilling his bucket list of visiting every Major League ballpark.  Paul can be contacted at

Monday, September 18, 2017

Short-term Rentals Create Ongoing: Concerns for Condo Associations

The short-term rental of residential property is producing long-term concerns.  Those concerns, which were just emerging when I wrote about this issue three years ago, have grown exponentially as short-term vacation rentals have ballooned, creating what is now a $34 billion business and triggering an
avalanche of conflicts and complaints to which the governing boards of condominiums, municipal officials, and lawmakers are all beginning to respond.

At the federal level, a group of senators concerned about the issue have asked the Federal Trade Commission to investigate the impact short-term rental companies are having on local housing markets.

Closer to home, the Cambridge City Council recently approved an ordinance requiring condominium owners and tenants who rent their units on line to register the property with the city, and to obtain permission from their condominium association or landlord before doing so.  The ordinance also requires “hosts” to live in the same building or a building adjacent to the one in which they are offering a short-term rental unit. 

Other communities have also been eyeing regulations to deal with the business.  The Massachusetts Department of Health and Human Services has suggested that short-term rentals should be regulated like bed and breakfasts; Boston officials have been studying that idea for some time, but haven’t yet acted on it. 

Legislative Action
The state Legislature also hasn’t addressed the issue yet, but is being urged to do so.  Gov. Charlie Baker has proposed legislation that would impose a tax on short-term rentals.  A measure introduced by Rep. Aaron Michlewitz, who chairs the Committee on Financial Services, would also tax rental income and would, in addition, require owners to  obtain a state license and comply with a number of health, safety, and insurance requirements.
While hotels are concerned about the impact on their business, condominium owners are concerned about the impact on their communities when residences become hotel rooms and their neighbors become an ever-changing parade of hotel guests. 

Security, wear and tear on common area spaces and amenities, rowdy behavior, and the vacation atmosphere created by transient residents are the major complaints.  Not surprisingly, these complaints have ended up in the courts, which, also not surprisingly, have differed in their responses. 

Commercial or Residential Use?
The key legal question in most of these disputes has been whether short-term rentals represent residential or commercial use of residential property.

The Massachusetts Land Court concluded in a recent decision (Robert S. Lytle vs. Alana Swiec, et. al.) that the short-term rental of a summer cottage in Hull violated zoning regulations barring commercial uses in neighborhoods zoned for single-family properties.  The court upheld the Zoning Board’s ruling that the rental did not constitute an authorized “accessory use” of a residential property.

A Kentucky appeals court concluded similarly (in Vonderhair v. Lakeside Place HOA) that short-term rentals of units in the condominium community violated residential use restrictions in the HOA’s covenants.

But the Washington State Supreme Court reached the opposite conclusion, ruling (in Wilkinson v. Chiwawa Communities Association) that the determining factor was not how long a property was rented to tenants, but how the tenants used it.  According to the court, the tenants were using the property for eating, sleeping and other purposes, consistent with its residential use.

A Florida Appeals Court used similar reasoning in a decision earlier this year (Santa Monica Beach Property Owners Association, Inc. v. Acord) rejecting a condo association’s effort to prohibit short-term rentals. The association argued that language in the covenants mandating residential use precluded the rentals.  But the court said:  “The critical inquiry is not the duration of the tenancy, but the character of the actual use of the property by those residing thereon.”

Significantly, the Florida court also noted the absence of language in the covenants specifically barring short-term rentals.  “The need for explicit language in the covenants is particularly important,” the court said, “where the use in question is common and predictable, as is the case with short-term rentals of houses near the beach to vacationers.”

Words Matter
The court’s admonition underscores the advice we offer our condominium association clients:  If you want to prohibit short-term rentals in your community, do so specifically and explicitly through language in your governing documents.  If your documents don’t contain that language, persuade owners to amend the master deed or the bylaws to add it.

As the court decisions quoted earlier indicate, restricting the property to residential uses may not be sufficient; the restrictive language should specify a minimum acceptable rental period. We suggest no less than 30 days.  We also recommend requiring owners to rent the entire unit – not just a portion of it.  This would preclude an owner with a three-bedroom unit from renting the two extra rooms to paying guests. 

Regulating Rentals
It is also possible that many owners – and possibly a sizable number of them – are already renting their units to vacationers or want to preserve the option to do so.  Before taking or recommending any action, condominium boards should assess owners’ preferences.  If owners don’t want to prohibit short-term rentals, the board should establish policies and/or amend the condominium documents to adopt provisions which ease some of the negative impacts involved. We suggest, among others:

*  Require owners (or an owner’s agent) to meet renters personally at the property for each rental.

*  Require owners to explain association rules to tenants and to verify that they have done so.

*  Require owners to have insurance that will cover their guests.  Check with the master insurance             carrier to make sure the use does not constitute a commercial use.

*  Have written policies describing the obligations of owners who rent their units.  

(Mark S. Einhorn is a Partner with Marcus Errico Emmer & Brooks which specializes in condominium law, representing clients in Massachusetts, Rhode Island and New Hampshire.)

Friday, September 15, 2017

Common Title Problems

Guest speakers Susan B. LaRose, VP and New England Underwriting Counsel at WFG National Title Insurance Company, and Michael E. Powers, Title Counsel at CATIC,  discuss 184-35 Trustee Certificates, docs that need to be executed under oath (184-35's and 65C's), missing tenancy in grantee clause of deed, reliance on MLC's to release tax takings, assessments, etc., rights of first refusals & other caveats hidden in condo docs, what you need to see in a deed regarding release of homesteads, wrong recitation in grantor/grantee clauses involving Trusts and entities, how a Deed should be drafted and executed when being signed under POA, etc.

Wednesday, September 6, 2017

“Still a Free Act and Deed”

By Edward J. Smith

It is elementary under Massachusetts law that the grantor of a deed must acknowledge that he has executed the instrument as his free act and deed, or in the words of the statutory form in MGL c. 222,
Section 15 (as appearing in St. 2016, c. 289, sect. 6), “that (he) (she) signed it voluntarily for its stated purpose.”  In order that notice of the conveyance shall be given to all the world, a certificate reciting that the grantor appeared before a notary and made such acknowledgment must be attached to the instrument in order to entitle it to be recorded. M.G.L. c. 183, § 29.  The certificate of acknowledgment furnishes formal proof of the authenticity of the execution of the instrument when presented for recording.  McOuatt v. McOuatt, 320 Mass. 410, 413 (1946)

Some of the most important jurisdictions for commercial and consumer transactions do not require the same statement of voluntariness in the notary clause that is part of the certificate that is prescribed in M.G.L. c. 183, § 29.  For most jurisdictions the obvious purpose of a notary clause has long been to confirm the identity of the party signing the document – most often by production of a valid driver’s license, in the presence of the notary.  However, a failure to have included a specific recital of a “voluntary act,” for a Massachusetts-related document executed in another jurisdiction can be fatal if challenged in MassachusettsSee In re Shubert, 14-01220-JNF (Bankr. D. Mass., Aug. 19, 2015); and In re Resnikov, No. 14-10589-FJB (Bankr. D. Mass., Mar. 29, 2016).  Moreover, some lenders prohibit revisions of any kind in their printed documents.  Thus, it can be problematic to change a notary clause in a lender’s printed document in order to include a voluntariness statement, even if the document is to be executed in Massachusetts.    

One suggestion has been to legislatively give full faith and credit to a document in which the form of acknowledgement in a notary clause complies with the law of the jurisdiction in which it is executed.  Would Massachusetts attorneys and title examiners need to be familiar with the requirements for notary clauses in other states?  Would such a recognition provision create a burden for personnel at the Registry counters to police acknowledgements from other jurisdictions?  The answer to both questions is probably “No.” 

Still, REBA’s Legislation Section opted to propose legislation that would simply remove the requirement to use the voluntariness language (or “free act and deed”) in an acknowledgement, but would retain the recital in the notary clause that confirms the identity of the signatory on the instrument.  In effect, this legislation would also validate notarial acts in other jurisdictions that do not include the recital of a voluntary act in the prescribed notary clause.  It would not weaken the requirement in Massachusetts that the notary must ascertain that the person signing the instrument or document was doing so as his/ her voluntary act and not under duress of any kind.  M.G.L. c. 222, sect. 16(a)(iv) prohibits a notary from performing a notarial act if, “in the notary public’s judgment, the principal is not acting of the principal’s own free will.”  That section would be unaffected by the proposed legislation. 

No fewer than 40 states have adopted the practice in the Uniform Law on Notarial Acts that does not include a reference to voluntariness in a notary clause.  Research that was available to the Legislation Section revealed that virtually all of the jurisdictions that do not require the notary affirmatively to confirm voluntariness have a statutory prohibition, similar or identical to ours, that prohibits the notarization of a signature that the notary believes is made under duress. 

This legislation, Senate Bill 811, would not make it more difficult to challenge in court the voluntariness of the act of a person who has signed an instrument or document.  The recital of “voluntary act” is no more than prima facie evidence, rebuttable by evidence to the contrary.  The most salutary effect for Massachusetts from passage of the proposed legislation would be to validate the acknowledgement in a deed that occurred in a state that did not include the recital of a voluntary act in that state’s prescribed notary clause.   

S.811 was filed by Senator Cynthia S. Creem.  A public hearing on the legislation will be held by the Joint Committee on the Judiciary at the State House on September 12, 2017.  Letters of support may be sent at any time to the Committee’s co-chairs, Senator William N. Brownsberger (D-Belmont) and Representative Claire D. Cronin (D-Easton). 

Edward Smith represents clients, including REBA, as lobbyist and legislative counsel on Beacon Hill. Ed can be contacted by email at

Thursday, August 31, 2017

Waivers of Subrogation: Button them up in the Policy

The typical set of condominium governing documents includes a provision which requires a waiver of subrogation to be included in one or more of the condominium association’s insurance policies.
There may be also a provision in the governing documents which requires an owner or tenant to include a waiver of subrogation in any insurance policy, including a policy insuring the furnishing and personal property in a unit. The inclusion of such requirement in the governing documents, however, does not guarantee that subrogation has actually been waived in the policies obtained by any of those parties. The key to certainty in this circumstance - despite the logistical complications - is to ensure that the policies, as issued, contain the required waivers of subrogation and that they are broad enough to comply with the directives of the governing documents.

The key to certainty in this circumstance - despite the logistical complications - is to ensure that the policies, as issued, contain the required waivers of subrogation and that they are broad enough to comply with the directives of the governing documents.

Before we get to waiver … what is subrogation?

Subrogation allows an insurance carrier that pays a claim to its insured to file a lawsuit against the person or entity that caused the harm to its insured. The insurance carrier effectively steps into the shoes of its insured to pursue a claim against the negligent party. An example of subrogation in this context would be if the owner of Unit A let its sink overflow and that water caused damage to Unit B, which damage was covered by insurance, the insurer of Unit B could sue the owner of Unit A for the money it paid to repair Unit B. The principle has a sound basis in equity, as it increases the likelihood that the person or entity that caused the harm will actually bear the financial responsibility for that harm. However, despite this sound basis, there are good reasons that condominium associations would want to require an insurer to waive subrogation in various circumstances. In the first instance, in order for the governing documents to comply with Fannie Mae and Freddie Mac requirements, there must be a waiver of subrogation in the association’s master insurance policy. Furthermore, requiring a waiver of subrogation in a unit owner or tenant’s policy may protect the association from a liability claim advanced by the unit owner or tenant’s carrier after it pays out on an insured loss. Finally, waivers of subrogation decrease the likelihood of conflict and litigation between and among condominium boards and unit owners, and that is a legitimate end in itself.
A provision requiring waiver in the governing documents is not enough.

Despite a tendency to get mired in “legalese,” sometimes contracts, and the court decisions interpreting same, mean what they say and say what they mean.

The mere fact that the governing documents of a condominium require the association to obtain an insurance policy waiving subrogation does not mean that the policy obtained by the association actually waives subrogation. The question in such circumstance is whether an insurer, that is not a party to the condominium governing documents issues a policy of insurance without a waiver of subrogation, is somehow bound by the waiver requirement contained in the governing documents. More than one court presented with this question has held that it is the language of the insurance policy, and not the governing documents, which controls whether the carrier has waived subrogation. In a New Jersey case, Community AssociationUnderwriters of America, Inc v. McGillick, the court concluded, that despite a clear mandate in the governing documents that all policies of physical damage insurance contain a waiver of subrogation, the actual policy of insurance contained no such waiver and the carrier’s suit could proceed. See also Skulkie v.Ceparis, 962 A.2d 589, 591 (N.J. Superior Ct App. Div.2009) (insurer’s claim barred where the condominium association’s insurance policy actually contained a waiver of subrogation).

In a more recent Massachusetts case, Pacific Indemnity Company v. Deming, 828 F.3d 19 (2016), the court took the same view on a related question. In Deming, the condominium declaration of trust contained a provision that provided unit owners “shall carry insurance” and that “all such policies shall contain waivers of subrogation.” Despite this clear mandate in the trust instrument, the court looked to the language of the policy to determine if the policy actually waived subrogation. The court concluded that the insurance policy in question did not, in fact, contain a waiver of subrogation and that policy was controlling and, at most, the unit owner breached its obligations under the trust instrument.

The lesson from these cases – even if there are arguments to be made to the contrary – is that an Association cannot and should not rely on the obligation imposed in the governing documents to include a waiver of subrogation in any relevant policy of insurance if it wants to insure such waivers are in place. An association must ensure that the policy itself contains the waiver of subrogation.

The waiver of subrogation should be clearly expressed in the insurance policy.

A condominium association that intends to include a waiver of subrogation should make sure the waiver is clearly stated.

For those readers who have ever attempted to read an insurance policy, the suggestion that anything can be “clearly stated” therein may seem oxymoronic, but it is possible. The Massachusetts case of Greater New York National Insurance Co. v. Lavelle Industries, is both an example of language which could have been “clearly stated” and of what can occur when the language of a policy is less than precise. In Lavelle Industries, the insurance policy provided that GNY waived its “right to recover payment from any unit-owner of the condominium that is shown in the Declarations.” Had the sentence stopped after “condominium” the parties might have avoided significant costs, years of aggravation and the risk of an adverse ruling. The problem is that, not surprisingly, no unit owners were specifically listed or “shown” in the trusts “Declarations." While the court ultimately got it right (by finding the carrier had waived subrogation) the language of the policy could have been more specific.

The association’s governing documents should require the association’s master policy to include a waiver of subrogation as to the unit owners. So too should the association’s governing documents include a requirement that owners or tenants obtain insurance policies that actually include waivers of subrogation. The reality, however, is that including language in the governing documents is not enough. The waiver of subrogation must make its way into the policy itself.

Originally posted August 24, 2017 at

Tom is a former REBA President (2010), Co-Chair of both REBA’s Residential Conveyancing and Unauthorized Practice of Law Committees, and a founding partner of Moriarty Troyer & Malloy, LLC.

Wednesday, August 30, 2017


So, you are buying a house. Of course, you will have a thorough home inspection completed to determine if the home appears structurally sound and to try to avoid purchasing a “money pit” with a roof and a heating system on their last legs. But careful buyers should consider performing additional homework.

Consider spending time in the neighborhood and at the Town or City Hall to examine the existing and potential abutting and nearby uses of land which could impact the property in the long term. A
buyer should examine the zoning maps and inquire about past, present and future uses and development plans of nearby areas. Sometimes owners are surprised to find that their home is situated near an industrial use that has the potential to generate traffic, noise or vibration, or that the home is adjacent to the site of a future ball field or subdivision.
While you are at Town Hall, inquire about the history of all permits issued for the home you are considering purchasing and determine if all of the permits have been closed out with a final inspection.

Take a look at the town or city’s wetlands maps (typically available online) to see if there are wetlands within 100 feet of the property, or if the property is within 200 feet of a river front. If you plan on performing any work on the property, wetlands regulations can impact your plans, even if the wetlands are not on your lot. Likewise check the maps of the Massachusetts Natural Heritage & Endangered Species Program to see if there are any priority habitat areas on the property.
A significant number of homes in Massachusetts are so called “pre-existing non-conforming” which means that the lots or the buildings do not comply with present zoning requirements; which is commonly referred to a “grandfathering”. However, without doing some homework it is difficult to tell if you will have the ability to construct any additions in the future. If you plan on constructing an addition, it would be worthwhile to determine what steps may be necessary before you proceed. A house that was built, or expanded, with  a zoning variance usually cannot be further altered without a new variance decision. And don’t be lulled into a false sense of security if somebody tells you that you “just have to get a variance” or that you “just have to get a special permit”; as the permitting process is somewhat complicated and is it not always easy to meet the established criteria required for such permits.

Owning a home can be a fabulous experience. A home is a place where families come together and share the good times and the bad, learn from one another and create lifelong memories. It provides handymen and women opportunities to learn new skills ranging from how to remove wallpaper, to house painting, to fence installation, to finding a reliable electrician. Take the time to research the applicable local regulations that will apply to your home, or ask your real estate attorney to help you. An ounce of prevention is worth a pound of cure. 

A former REBA president, Paul Alphen currently serves on the association’s executive committee and co-chairs the long-range planning committee.  He is a partner in the Westford firm of Alphen & Santos, P.C. and concentrates in residential and commercial real estate development, land use regulation, administrative law, real estate transactional practice and title examination .As entertaining as he finds the practice of law, Paul enjoys numerous hobbies, including messing around with his power boats and fulfilling his bucket list of visiting every Major League ballpark.  Paul can be contacted at

Tuesday, August 29, 2017

Lenders Beware: SCOTUS Decision in City of Miami v. Bank of America Opens the Door for Predatory Lending Claims by Municipalities under the FHA

On May 1, 2017, the Supreme Court of the United States issued a
partial, but significant, victory to municipalities in the consolidated cases of Bank of America Corp. v. City of Miami and WellsFargo & Co. et al. v. City of Miami, Florida, holding that the City of Miami has standing as an “aggrieved person” to assert claims under the FairHousing Act (“”). 

In 2013, the City of Miami filed suit against Bank of America and Wells Fargo, asserting that the lenders had violated the provisions of the FHA and engaged in predatory lending practices by granting loans to minority borrowers that, among other things, contained “excessively high interest rates, unjustified fees, teaser low-rate lows . . . and . . . unjustified refusals to refinance or modify the loans.”  The City of Miami asserted that these practices resulted in higher default and foreclosure rates for these borrowers, which, in turn, led to a decrease in property values and a suppression of Miami’s tax revenue.  Furthermore, the City of Miami asserted that these practices increased the demand for municipal services in the affected neighborhoods, including an increased demand for police, fire, and building code enforcement services, which resulted in increased costs to the City of Miami.

Bank of America and Wells Fargo moved to dismiss the suits, contending that the City of Miami did not have standing to assert claims under the FHA.  Specifically, the lenders argued that municipalities, like the City of Miami, did not fall into the “zone of interests” that Congress intended the provisions of the FHA to protect.  In a 5-3 decision, the Supreme Court disagreed.

In determining that Miami had standing, the Court looked first to the FHA’s definition of “aggrieved person.”  The FHA very broadly defines “aggrieved person” as “any person who . . . claims to have been injured by a discriminatory housing practice” or believes that such an injury “is about to occur.”  In interpreting this definition, the Court noted that it had consistently ruled in the past that this definition indicated “a Congressional intention to define standing as broadly as is permitted by Article III of the Constitution.” 

Justice Breyer, writing for the majority, pointed to similar lawsuits that the Court had allowed to proceed it the past, including a village that was granted standing when it sought recovery under the FHA for “racial-steering practices” that resulted in lost tax revenue and undermined the racial balance of its community.  Although the FHA was amended after those cases, the Court noted that Congress made no significant changes to the definition of “aggrieved person.”  This lack of significant change showed an intent by Congress to “retain the relevant statutory text” and embrace the Court’s expansive interpretation of standing under the FHA.  As a result, the Court was compelled to find that the City of Miami had standing under the FHA. 

Bank of America and Wells Fargo next argued that, even if the City of Miami had standing to sue, the City of Miami could not show that the damages claimed were sufficiently related to the claimed FHA violations such that they were proximately caused by the alleged violations of the FHA.  In this regard, Bank of America and Wells Fargo found more success. 

The United States Court of Appeals for the Eleventh Circuit had ruled that the City of Miami could make a showing of proximate causation because the result of the lenders’ allegedly predatory or discriminatory lending practices were foreseeable.  In a victory for the lenders, the Supreme Court rejected the Eleventh Circuit’s ruling that foreseeability alone is sufficient to establish proximate cause under the FHA.  Noting that the housing market is interconnected with economic and social life and that a violation under the FHA might “be expected to cause ripples of harm to flow far beyond the defendant’s misconduct,” the Court observed that “[n]othing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel.”  The Court also noted that “entertaining suits to recover damages for any foreseeable result of an FHA violation would risk massive and complex damages litigation.”  As a result, the Supreme Court noted that a claim for damages under the FHA was akin to a tort action and subject to the “traditional requirement” of proximate cause which bars suits for harm that is “too remote” from the unlawful conduct. 

Accordingly, the Supreme Court held that the City of Miami, and those following its blueprint, were required to show a direct connection between the alleged violation of the FHA and the claimed injury.  The Court, declined, however to establish the particular limits of proximate cause.  Rather, the Supreme Court directed the lower courts to “define, in the first instance, the contours of proximate cause under the FHA” and further to determine how that standard would apply to the City of Miami’s allegations of lost tax revenue and increased expenses. 

Although the majority declined to offer an opinion as to whether such damages could meet the identified proximate cause test, Justice Thomas opined, in his dissent, that the majority’s opinion left “little doubt that neither Miami nor any similarly situated plaintiff can satisfy the rigorous standard” where “the link between the alleged FHA violation and its asserted injuries is exceedingly attenuated.”  Nevertheless, despite Justice Thomas’ caution, the Court’s decision allows the City of Miami, and other municipalities, to go forward, but how far? 

Notably, about two weeks after the Court issued its decision, the City of Philadelphia filed suit against Wells Fargo, alleging violations of the FHA and seeking unspecified damages.  Although it is unlikely that the City of Philadelphia will be the last municipality to assert these claims, it is still unclear whether these claims can be successful. 

This is a development that lenders in Massachusetts, and across the nation, will watch carefully.  Massachusetts is not far removed from its own mortgage and foreclosure battleground.  Although there has been no public progress in these cases in the lower court, other municipalities are bringing similar claims against lenders in other jurisdictions.  For example, the City of Providence filed suit against Santander Bank in the federal court in Rhode Island a years ago for violations of the FHA and the Equal Credit Opportunity Act, claiming the same type of injuries as the City of Miami.  That action was quickly settled and dismissed.  The issue of proximate cause will likely work its way back to the Supreme Court, which appears to have already set a high bar for damages. 

Kendra Berardi, ChrisBergan and Larry Heffernan all practice in the Boston office of Robinson + Cole LLP.   Kendra Berardi co-chairs REBA’s continuing education committee and serves on the association’s executive committee.  She can be contacted by email at   Chris can be reached at and Larry can be contacted at