My Cousin Vinnie is an Expert

Paul F. Alphen

My cousin Vinnie, the retiring suburban real estate attorney, was on the Cape for a family wedding, so we made a point of getting together at my place after

the festivities.  Vinnie had, perhaps, recently completed his final function as a practicing attorney, as an expert witness in a land use case. I took him for a boat ride around Waquoit Bay, to tear him away from my bourbon collection.

“Paulie”, Vinnie bellowed, “I was on the stand for the better part of four hours. I loved every second. You reach a point in your career when nobody can throw a fast ball past you.” I knew of which he spoke. We slowly dieseled past the oyster farms and I told Vinnie that we would sample some of the harvest upon our return to the dock. Vinnie continued, “I had to explain the differences between a pre-existing non-conforming use, and a pre-existing non-conforming structure. I explained how Chapter 40A Section 7 can treat unlawful structures in place for at least ten years as pre-existing non-conforming structures, but unlawful uses inside a structure are only protected if they were used in accordance with a building permit for over six years. I spent almost two hours explaining in the ins and outs of Chapter 40A Section 6, including how you can lose the protections of the first paragraph unless construction is commenced within twelve months, and construction is continued through to completion as continuously and expeditiously as is reasonable; plus the case law on what that all means.”

I spun up the turbochargers, and we flew across the Bay. Once we slowed down, I asked Vinnie if anyone else in the courtroom knew what he was talking about.  “Paulie, only Plaintiff’s counsel.  Defense counsel was as baffled as I am when I have conversation with a bankruptcy attorney. Of course, usually the bankruptcy attorney is attempting to make me feel like an idiot. On the stand, I try to be professorial, and I try to teach everyone in the room how zoning works. It was like trying to teach a stranger about rock and roll.  Defense counsel would ask me the same questions over and over again, as if he didn’t hear me the first four times!”

As I have written in the past, each time I read each new mindless John Grisham novel, I anxiously await for him to write something unflattering about a real estate attorney, as if real estate attorneys are not real lawyers, because they don’t spar with court clerks and judges. I would like to see Grisham explain one sentence out of Section 7 to the non-lawyer, volunteer members of the Podunk Zoning Board of Appeals.

Vinnie made a career out of it.

Paul Alphen is former REBA President and current Co-chair of the Association’s Long-term Planning Committee. He is also President of an obscure organization known as The Abstract Club.  On most summer days Paul Alphen can be found on his boat in Waqouit Bay.  His “My Cousin Vinnie” stories are a longstanding feature of REBA News.  Paul can be contacted at palphen@alphensantos.com. 

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REBA Letter

The Impact of Bonds on Preliminary Injunctions

 Stephen Wiseman

What is a preliminary injunction?

A preliminary injunction is a tool used by litigants to obtain relief from the

court prior to the resolution of a case on the merits. They are only appropriate in certain circumstances, where a party may be irreparably harmed if an injunction is not granted while the case is pending. Rule 65 of the Massachusetts Rules of Civil Procedure provides specific requirements governing the issuance of injunctions, including that the party seeking an injunction must establish a likelihood of success on the merits, immediate and irreparable harm, and that the balance of harms weighs in their favor. Those requirements are well-established and well-known by litigators.

However, there is also another, less cited provision of Rule 65(c), which states that Unless the court, for good cause shown, shall otherwise order, no restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.

While, on its face, this language provides that, every time a party files a motion for preliminary injunction, courts are required to consider whether a bond should be posted, in our experience, courts rarely impose such obligation. However, we have recently seen courts request briefing on whether a bond should be required, and there may be a trend towards giving due consideration to such question. The bond requirement can shape a party’s decision to seek a preliminary injunction in the first place and can have a significant impact if an injunction is ultimately granted.

The Purpose of the Bond Requirement

The bond requirement in Rule 65(c) serves to protect a party against whom an injunction has issued from suffering uncompensated losses. Because injunctions are often granted early in litigation, before discovery is complete and before the merits of the claim have been fully adjudicated, there is an inherent risk that an injunction could later prove to have been improperly granted. The bond requirement provides a way to mitigate that risk and for the party against whom the injunction was wrongfully issued to be made whole.

Courts exercise broad discretion in deciding whether to require a bond and, if so, in what amount. Although there is limited case law on the issuance of bonds as they relate to preliminary injunctions, the factors courts consider in determining whether to issue a bond in similar circumstances are instructive:

1.    Likelihood of damages. The central consideration is whether the party opposing the injunction has shown that it may suffer damages if the injunction later proves wrongful. Courts generally require the damages to be adequately supported beyond mere conclusions.

2.    Amount of damages. If damages are determined to be possible, the court assesses the potential magnitude of damages. As with the likelihood of damages, the party opposing the injunction must provide support for the amount of damages claimed. The bond that issues should be commensurate with the amount of damages claimed and supported. Minimal or speculative damages may justify a nominal bond or no bond at all, while substantial damages that are properly supported may warrant a higher bond.

3.    Financial hardship. Courts may take into account the movant’s ability to post a bond. Requiring a prohibitively large bond could effectively deny injunctive relief, even where the moving party has shown irreparable harm and likelihood of success on the merits and would otherwise be entitled to an injunction.

4.    Balancing of harms. Ultimately, courts seek to balance the equities between the parties. The bond should provide fair protection to the party against whom the injunction issues, without effectively prohibiting the moving party from obtaining an injunction they would otherwise be entitled to.

Impact on Parties

The possibility of having to post a bond in connection with obtaining a preliminary injunction has significant strategic implications for parties considering moving for a preliminary injunction. The moving party must evaluate not only its likelihood of success on the merits and whether they may suffer irreparable harm without an injunction, but also whether it can afford the security that may be required by the court. For parties with limited resources, the prospect of posting a substantial bond may deter them from seeking an injunction altogether.

Even where the moving party is willing to post a bond in order to obtain an injunction, the requirement adds financial risk. If the injunction is later deemed to have been improperly issued, the party against whom the injunction was issued may recover damages against the bond, and the moving party would not be entitled to reclaim that portion of the bond that it posted. Thus, parties must weigh the benefits and drawbacks of seeking a preliminary injunction carefully.

Conversely, for parties against whom an injunction is sought, raising the bond issue can serve as a strategic deterrent. By presenting evidence of potential damages, the party may persuade the court to require a significant bond, thereby discouraging the moving party from seeking an injunction at all or increasing the moving party’s financial stake in the litigation.

If a preliminary injunction issues and the court requires a bond, the moving party must promptly arrange to post the security in the required amount. This can be a logistical hurdle, especially if the bond is substantial and the moving party must secure financing. On the other hand, if the court grants an injunction without requiring a bond, the moving party obtains the full benefit of the injunction without any additional financial burdens. The absence of a bond typically reflects the court’s conclusion that the party against whom the injunction is sought failed to sufficiently prove the likelihood of damages or the amount thereof, or that there was some other equitable consideration that weighed against the issuance of a bond.

 

Conclusion

Rule 65(c) of the Massachusetts Rules of Civil Procedure reflects a balancing act that involves protecting parties from wrongfully issued injunctions while ensuring that parties are not denied the potential for equitable relief due to financial barriers. Courts exercise considerable discretion in applying the bond requirement, guided by evidence of potential harm and balancing of equities between the parties. For parties seeking a preliminary injunction, the possibility of a bond is a critical factor in deciding whether to pursue an injunction, while for parties opposing such injunctions, raising the issue can be a valuable strategic tool.

A welcome and frequent contributor to REBA News, Stephen is an associate in the litigation and real estate departments of Moriarty, Bielan & Malloy LLC.  He can be contacted at swiseman@mbmllc.com.

 

Boston’s Co-Purchasing Housing Pilot Program Considerations for Buyers Considering Co-ownership

Bridget M. Rose

Last April, the Boston launched a new Co-Purchasing Housing Pilot Program (“Program”). The Program, which is one of several initiatives adopted in

accordance with Mayor Wu’s Boston’s 2025 housing strategy, is a new loan program intended to improve homeownership opportunities by encouraging co-purchasing to permit multiple households to leverage their combined purchasing power to acquire multifamily properties. Zero-percent interest deferred loans, payable upon sale, transfer, or refinance, to help participating households cover the costs of the down payment and reasonable closing costs, will be offered for eligible households earning up to 135% of the area median income (AMI).

The Program is designed to promote co-ownership of multifamily properties in Boston, but it appears to only support participating homebuyers in the purchase of multifamily properties to be held in common ownership, as joint tenants or tenants-in-common. The Program is not designed to support groups of homebuyers who wish to purchase and own a multifamily property through a trust or corporation, and in fact, actively discourages participants from purchasing a multifamily property for ownership through the condominium form. By expressly deterring participants from using the condominium form of ownership, the Program may leave co-owners without the necessary tools for successful ownership of a multifamily property.

 

Eligibility, Requirements, & Benefits

Participants in the Program can receive zero-percent interest deferred loans, payable upon sale, transfer, or refinance, to help cover the costs of down payment (in an amount up to five percent of each household’s share of the purchase price) for the purchase of eligible multifamily properties. Eligible households earning up to 100 percent AMI (approximately $130,600 in Boston) can receive up to $50,000, and eligible households earning up to 135 percent AMI (approximately $176,300 in Boston) can receive up to $35,000. 

To be eligible for the Program, each homebuyer must:

• -       Meet the qualifying criteria for a Boston Home Center (BHC)-approved First Mortgage;
• -       Be considered a “First-Time Homebuyer”;
• -       Have an income below or equal to 135 percent AMI;
• -       Contribute at least 1.5 percent of the purchase price of their share of the property;
• -       Have less than $100,000 in liquid assets (excluding government-sponsored retirement accounts);
• -       Agree to occupy the home as their primary residence; and
• -       Enter into a “co-ownership agreement.”

Eligible properties are two- or three-family vacant homes located within the City of Boston, with as many vacant, unoccupied units as participating households listed as joint owners on the mortgage. 

In addition to these eligibility criteria, participants must also (1) sign an affidavit expressing their commitment to occupy the property as their primary residence, and (2) agree to create and execute a co-ownership agreement that specifies, at a minimum, the proportion of ownership; how expenses and property maintenance are to be handled; and agreed-upon options or procedures should one or more of the participating households agree to move out or sell.

 

Types of Ownership & the Co-Ownership Agreement  

One of the requirements of the Program is that participants agree to, and execute, a co-ownership agreement, and that a finalized, signed version of the agreement is received by the city prior to closing. The “Guide to Co-Purchasing” provides a detailed breakdown of the subjects that can (and should) be included in the co-ownership agreement, such as:

• -       Decision-making, such as consensus versus voting based on percentage shares;
• -       The collective use of the property, such as designating common areas and private space;
• -       Financial and insurance arrangements, such as initial monetary contribution, shared expenses, and major repairs and renovations;
• -       Managing home operation and upkeep;
• -       Managing co-owner misconduct, such as misuse of common funds;
• -       Dispute resolution; and
• -       What happens if someone wants to move out or sell.

Looking at these recommendations for the co-ownership agreement, one can’t help but notice that many of the suggestions—designating common areas and private space, holding money in a common account for home expenses, and consequences for violations of the co-owner agreement—are some of the basic concepts found in condominium ownership. It is easy to understand why the Program would encourage co-owners to consider these factors, as they address many of the most significant issues that arise from common ownership. However, even if participants create an ownership agreement that contemplates all of the fundamental concepts of condominium ownership, common ownership of the kinds contemplated by the Program can still fall short. 

Potential first-time homebuyers may jump at the opportunity for co-ownership, excited by the prospect of owning a home but not realizing how difficult common ownership is until real problems come home to roost. For this reason, I don’t agree with the notion that a condominium is not “the best option” for owner-occupied properties. For example, both condominiums and traditional common ownership of multifamily properties encounter the problem where one owner fails to contribute their share to the common expenses, to the detriment of all other owners; however, only a condominium has a mechanism to promptly address this delinquency and, if necessary, foreclose on the unit to collect the unpaid expenses through the statutory lien enforcement process set forth in G.L. c. 183A, § 6.

The purpose of this article is not to take the blanket position that traditional common ownership is always ill-advised, but rather, to increase awareness of the potential drawbacks of common ownership outside the condominium form and to inform readers that homebuyers interested in the Program may wish to consider the benefits of forming a condominium after closing on a multifamily property. 

Having said that, it is not entirely clear from the currently available resources on the Program whether participants can take advantage of the financial assistance offered by the Program if they transition from co-ownership to condominium ownership. The Program’s “Frequently Asked Questions” provide that co-purchasers who wish to form a condominium organization can do so “after the fact,” but does not go into detail about how or whether doing so would impact the financial assistance offered by the Program. For example, the zero-percent interest deferred loans offered by the Program are “repayable upon sale, transfer, or refinance.” Converting the property to condominium status would necessarily result in a change in ownership type, and require a transfer of the co-owners’ interest by Master Deed. To the extent that a loan granted pursuant to the Program would become repayable in this situation, it is a significant flaw that participants that could not benefit both from the financial assistance offered by the Program and the protections of condominium ownership. There are many reasons why co-purchasers may wish to create a condominium in order to benefit from certain protections that they would not have in a joint tenancy or tenancy-in-common, and it is troubling that the Program may create an ultimatum—if you want the protection of the condominium form, you can’t retain the benefits of your loan and financing.

Conclusion

Homebuyers considering the Program should be aware of the types of co-ownership that are allowed and consider the potential drawbacks of traditional co-ownership as compared to the protections afforded by condominium ownership. The fact that the Program resources appear to actively discourage ownership through the condominium form is indicative of a larger issue with the Program, which is that it apparently prioritizes the statistics of first-time homeownership at the expense of allowing for sustainable ownership structures.

As any homeowner will tell those of us who have never owned a home (I fall into the latter group), nothing prepares you for the unexpected surprises that come with owning a home for the first time. There are also unique, sometimes even more difficult surprises that come with co-owning a home. The condominium form of ownership is a unique thing, which exists as a hybrid form of property ownership—an option for people to own property in common as well as individually, protected from some of the difficulties of traditional common ownership. First-time homebuyers considering the Program should think ahead about the types of problems that may arise as a result of co-ownership, and consider how an alternative, such as transitioning to condominium ownership after closing, might be a better option for added protections down the road.

A member of REBA’s Condominium Law and Practice Section, Bridget is an associate in the litigation and real estate departments of the Quincy-based firm of Moriarty Bielan and Malloy LLC. Prior to joining MBM, Bridget clerked for the Honorable Kevin T. Smith at the Land Court.  She can be contacted at brose@mbmllc.com.

Holy Moly, Who Will Sign the Deed? An Overview of Real Property Conveyances by Religious Organizations

 Katherine Prifti

Ownership of real estate by religious organizations raises unique concerns for conveyancing attorneys. When insuring the title to property owned by a

religious organization, it is crucial you determine the various approvals required – not to mention, who should be signing the deed or mortgage. This article will discuss several types of religious organizations and outline who the authorized parties are to convey real property. 

In Massachusetts, a religious organization has the capacity to hold legal title to land for purposes consistent with its creation and existence. There are different types of religious organizations with unique requirements for each to convey or encumber property.

Roman Catholic Church

The Roman Catholic Church has the authority to “receive, hold and manage all real and personal property belonging to such church; and may sell and convey the same.” By statute, the Roman Catholic Archbishop or Bishop of the diocese may associate with themselves two layman, which creates a body corporate and allows them to act as trustees. Pursuant to statute these trustees are then authorized to convey and encumber Church property.

Religious organizations which are incorporated are one of two types: aggregate and sole. Most non-religious corporations are of the aggregate type; a separate legal entity with powers vested in various officers which change from time to time. In contrast, a corporation sole consists of one person holding a particular title (and their successors) who is incorporated by law to give certain legal capacities and rights. The Roman Catholic Church is recognized as a corporation sole, rather than a corporation aggregate (Akoury v. Roman Catholic Archbishop of Bos., 18 Mass. L. Rep. 271 (2004). If the church is structured as a corporation sole, the funds and real property will be in the custody and control of the archdiocese or diocese. The Archbishop will have the authority on behalf of the archdiocese to convey property owned by the church.

 

United Methodist Church and African Methodist Episcopal Church

Pursuant to paragraph 2501 in The Book of Discipline of The United Methodist Church, title to all local church property – real and personal, tangible and intangible – is held in trust for The United Methodist Church and subject to the provisions of the Book of Discipline. Every instrument of conveyance of real estate to the church shall contain the appropriate trust clause as set forth in paragraph 2503 in the Book of Discipline after the name of the grantee church, as follows; “In trust, that said premises shall be used, kept, and maintained as a place of divine worship of the United Methodist ministry and members of The United Methodist Church; subject to the Discipline, usage, and ministerial appointments of said Church as from time to time authorized and declared by the General Conference and by the annual conference within whose bounds the said premises are situated. This provision is solely for the benefit of the grantee, and the grantor reserves no right or interest in said premises.”

The trustees of a church, which is a member of the United Methodist Church, cannot lease, convey or mortgage property without the permission of the Annual Conference and the Charge Conference. A vote should be recorded evidencing the permission obtained and the authorized signatories.  

Not all Methodist churches follow the Book of Discipline. For example, the African Methodist Episcopal Zion Church incorporates some Methodist beliefs, but is not governed by the Book of Discipline. These churches may organize and become a corporation pursuant to M.G.L. Ch. 67 §40. The trustees of a Methodist Episcopal Church, including the African Methodist Church, have the authority to receive, hold, manage, sell and convey real and personal property. A trustee’s power to convey is consistent with the powers of a corporation, and may convey the legal title to the property.

 

Orthodox Church

An unincorporated orthodox church may apply to the appropriate hierarch, archbishop or bishop for permission to incorporate under MGL Ch. 67 §55. Once permission is granted in writing, it shall be filed along with the Certificate of Incorporation with the Secretary of State. The Certificate of Incorporation will recite the intent of the corporation and layout the authorized parties with authority to convey real estate. Once the church is incorporated, the parties listed with the Secretary of State have authority on behalf of the religious organization to convey church property.

 

Unique Title Issues Involving Churches

An incorporated church can transfer title of church property, as authorized by the church’s governing body, by means of a deed identifying the church by its corporate name and is signed by the authorized parties listed with the Secretary of State’s office.

Title into to an unincorporated church (e.g., The Church of Conveyancers), may be questioned, as it is unclear who can sign on behalf of the association which can create unique issues. If insuring a conveyance out of an unincorporated church, court action may be required to determine the parties with authority to sell.

As an additional quirk, a conveyance of Methodist church-owned property requires a certified copy of the resolution of the Annual Conference of the church which sets forth approval of the sale, sales price, and empowerment of the trustees to execute and deliver the required documents and accept the proceeds from the sale.  

A Co-chair of REBA’s Residential Conveyancing Section, Katherine Prifti is Massachusetts State Counsel for First American Title Insurance Company. Katherine routinely collaborates on complex and substantial commercial transactions with First American agents other external and internal clients.  She can be contacted at kprifti@firstam.com.

 

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[2] MGL Ch. 155 §6

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