Underwriting 101: The Conveyancer’s Guide to Massachusetts Underwriting (Video)

 

Landlords On Notice: Security Deposit Funds Do Not Cover “Reasonable Wear and Tear”

 George Georgountzos

It is often said that being a residential landlord in Massachusetts is difficult. There is a perception that statutory rules favor tenants, particularly with respect to the handling of security deposit funds. Mass. Gen. L. c. 186, §15B outlines the landlord’s responsibility with respect to security deposits. For

example, a landlord may only retain a security deposit equal to the first month’s rent, provided that the tenant is provided a statement of condition within ten (10) days of receipt of the security deposit funds. Security deposits must be held in a separate, interest-bearing account in a bank located in Massachusetts that is outside the reach of the landlord’s creditors, and provide the tenant with the bank’s name, location and account number.  Landlords must pay the tenant the yearly interest on the funds held. Landlords must return the security deposit funds within thirty (30) days after the tenancy ends, or provide a detailed itemization of damages, reasonable wear and tear excluded. Landlords who fail to adhere to these requirements are subject to a strict liability penalty of three times the security deposit funds held, 5 percent interest, plus the tenant’s reasonable attorneys’ fees in an action to recover the security deposit. Many landlords unknowingly and innocently violate provisions but nevertheless find themselves subject to the statute’s penalties.

Landlords should be careful to avoid lease provisions that conflict with the law. The Supreme Judicial Court recently answered two questions concerning provisions in a residential lease that conflicted with Massachusetts law. In Peebles v. JRK Property Holdings, Inc., the SJC addressed: (1) under what circumstances does a landlord who charges a tenant for painting, carpet repair, or similar refurbishment violate the “reasonable wear and tear” prohibitions in the statute; and (2) does a lease that includes a requirement that the tenant have the leased premises professionally cleaned or bear the costs of such professional cleaning from security deposit funds violate the statute? 

The Court confirmed that the language about “wear and tear” in the statute is clear and unambiguous, but a factual determination must be made as to which repair charges are valid and which violate the statute. A landlord needs to assess, among other things, the nature and cause of damages, the condition of the property at the lease’s commencement, and whether deterioration of the conditions are reasonable, normal wear and tear, or something more.  The Court held that the provisions of the JRK Property Holdings lease that mandated the tenant pay for professional cleaning and painting or have those charges deducted from the security deposit violate the clear language of the Massachusetts statute. The linking of the tenant’s responsibility to the security deposit was improper. The SJC did not opine whether a requirement that a tenant pay for professional cleaning, so long as there was an exemption for normal wear and tear, was permissible.

Landlords may require tenants to return the premises to the condition in which they found, but there must be an exception for reasonable wear and tear.  Clearly, in Massachusetts, a landlord who seeks to saddle a tenant with costs and tasks from security deposit funds that address reasonable wear and tear runs the risk of violating the law. 

A Co-chair of REBA’s Residential Landlord/Tenant Section, George is a lawyer at the Boston firm of Rudolph Friedmann LLP, with an active litigation practice representing landlords in disputes with tenants, bringing actions or defending against claims in business disputes, and representing buyers and sellers of commercial enterprises such as restaurants, shops and professional offices. Fluent in Greek, Russian and French, George can be contacted at ggeorgountzos@rflawyers.com.

 

Defamation Law: Recent SJC Case Reviews the Law

 Casey Sack

Defamation is a legal concept designed to protect individuals and organizations from false statements that harm reputations. It

generally refers to presenting false information as fact—whether spoken (slander) or written (libel)—that causes reputational damage. Importantly, defamation law is not meant to silence opinions or honest reporting, but to address demonstrably false claims presented as truth.

 

To qualify as defamation, several elements typically must be met. The statement must be false, communicated to others, and made without appropriate care for the truth. In many cases, context matters just as much as content: opinions, hyperbole, and clearly framed commentary are often protected, while factual assertions that are inaccurate and harmful may not be. Public figures also face a higher legal standard, requiring proof that a statement was made with actual malice.

 

Defamation recently took center stage in the SJC, where the court clarified when a defamation claim cannot survive the beginning stages of a lawsuit. In that matter, one individual insulted another on a social media website. The statements at issue, however, were not statements of fact but rather rhetorical hyperbole containing obvious sarcasm. The statements included wondering whether the alleged defamed individual knew how to read, and whether he had passed the bar exam or whether it was taken by another individual for him.

 

The Court found that these comments were “not the stuff of a defamation claim.” Instead, such statements were designed to be sarcasm, and the court determined that these comments could not be confused for factual assertions. The analysis turned on whether a reasonable person would understand the social media posts to be facts and the court determined that no reasonable person would make that determination. As a result, the SJC upheld dismissal of the defamation claim.

 

Ultimately, defamation law exists to strike a careful balance between protecting reputations and preserving free expression. It reminds us that words carry weight, particularly when presented as fact, and that accuracy is not just a best practice but a responsibility. At the same time, the law recognizes that open discussion, criticism, and differing viewpoints are essential to a healthy public dialogue. Not every error, disagreement, or uncomfortable statement rises to the level of defamation. Context, intent, and evidence all matter.

 

Casey, a lawyer with Rudolph Friedman LLP, handles high-stakes commercial litigation for individuals and businesses in state and federal courts. Her practice encompasses a wide range of disputes, including sophisticated commercial and civil actions, construction litigation, shareholder and stockholder disputes, employment matters, and appellate proceedings. She regularly guides clients through mediation, arbitration, and other forms of alternative dispute resolution, providing strategic and dynamic advice and representation. Casey can be contacted at csack@rflawyers.com.

 

Construction Law in the Condominium Context Part 1

 

An Introduction to Updated Homestead Protection

 Alvin S. Nathanson

Homestead protection shields a primary residence by requiring certain creditors to wait for the payment of their debts, after taxes

and mortgages are satisfied, and after receipt of the equity in a home up to the homestead exemption amount. Note that the new legislation does not impact the automatic homestead exemption; and if one does not record a homestead declaration, the protection is up to $125,000.

In 2024, the Legislature increased the declared exemption limit for primary residences protected from $500,000 to $1,000,000 for those who had filed a declaration of homestead. Homeowners who previously filed a homestead declaration do not need to re-file to take advantage of the increased protection amount, as they automatically benefit from the $1,000,000 protection.

The new law also increased the homestead protection for elderly or disabled persons, from $500,000 per person in a primary residence, to $1,000,000 per person. Individuals who are disabled or aged 62 or older, regardless of marital status, can file a separate declaration to obtain this personal homestead protection. Multiple exemptions can be combined to protect a single primary residence over the ordinary homestead limit of $1,000,000.

All owners living at the residence are eligible to the Section 3 Declaration protection up to the $1,000,000 limit. In the case of multiple owners, the $1,000,000 exemption is divided between them. A Section 3 Declaration continues to protect the declarant’s family members who reside in the same house even after the declarant dies. A homestead declaration protects the homeowner’s primary residence from certain creditor claims during bankruptcy except as follows that are not affected by homestead protection:

 

1)              A sale for federal, state and local taxes, assessments, claims, and liens;

 

2)              Prior liens, municipal taxes and a mortgage on the home;

 

3)              An execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse, former spouse or minor children; and.

 

4)       An execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, duress, undue influence or lack of capacity.

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Senior Homestead Protection for Persons 62 or Older

The Homestead Act allows people 62 years or older to individually declare a $1,000,000 exemption per person in their primary residence under Section 2. If the home is co-owned by two seniors, then they each can declare the $1,000,000 exemption; and do not need to share that amount. The Act also addresses the same homestead protection for disabled persons.

A senior homestead declaration can be terminated by death of the declarant, leaving any heirs who lives in the home with no protection. If the spouse inherits the home, and lives there, then a Senior Section 2 Declaration will be converted into a Section 3 Declaration for the benefit of the spouse.  The spouse can declare under Section 2 if over 62. If owned by tenants in common, and over 62, but the other is not, the over 62 can file a Section 2 Declaration and the other can file a Section 3 Declaration and have a total of $1,500,000 homestead protection.

Jointly owned property by a married couple if over 62 years old can protect the residence for up to $2,000,000 as a family by each filing a Section 2 Declaration. But each individually is entitled to only $1,000,000 of protection.

If a home is owned by a Trust, only the Trustee can sign the declaration of homestead on behalf of the beneficiaries. The rules regarding homestead exemptions are technical and the filing requirements must be complied with, failing which the full homestead exemption to which someone is entitled, may not be realized.

A partner in the Boston law firm of Rudolph Friedman LLP, Alvin is a longtime member of the Real Estate Bar Association.  He practices in all areas of general law with his principal area of concentration being civil litigation. Alvin possesses extensive experience in civil litigation, government contract litigation, foreclosures, commercial lease drafting, federal and state construction litigation, summary process matters and complex real estate matters.  He can be contacted at anathanson@rflawyers.com

The Good, the Bad and the Horrid in Community Association Contracts

 Jonathan Klein

There are many things that make lawyers cringe, but there is one phrase that makes them want to pull the covers over their heads: “After I signed the contract….”  That’s like saying, “After I jumped

in the pond, I realized it was infested with snakes.”  There’s not much a lawyer can do for you at that point, except call an ambulance or an undertaker. 

Poorly drafted contracts, unlike snake bites, aren’t going to be fatal for a condominium association, but they may contain conditions that could be expensive and harmful.  That’s why the association’s lawyer should always review contracts before you sign them.  (You knew I was going to say that!) It is also why I’m going to concentrate here on the provisions boards either want to include or want to avoid in construction contracts and contracts with their vendors. 

But first, this key question: Do you need a contract for small projects or services that aren’t complicated and don’t involve much money.  The answer (unsurprising from a lawyer) is yes -- because even small projects can create huge liability risks, with the potential for legal costs and adverse judgments that could far exceed the cost of the work.

A maintenance contract won’t have the same level of detail as a construction contract, but their purpose is the same: To protect the association’s interests and ensure recourse if the contractor doesn’t deliver the product, service or performance the association expects and the contractor has agreed to provide.   It is better to have a contract you don’t need than to need a contract you don’t have.  

Contracts differ in their complexity and their details, but all should deal in some way with: Insurance, termination, and duration.

Insurance.  Contracts should require a service provider to have the appropriate type and amount of insurance.  In a construction contract, the coverage should exceed the cost of the project. For most projects costing between $200,000 and $1 million, this would mean a policy limit of $1 million per incident and $2 million in aggregate. For larger projects, you would want an “umbrella” providing excess coverage above the policy limit.  You want the vendor to insure not against the most likely risks but against the worst possible outcomes. 

The contract should also require the contractor to “indemnify” the association against claims resulting from the project.  This invariably complicated language addresses whose insurer will pay the litigation costs and damages if something goes wrong.  To secure the broadest protection possible for my clients, I prefer language requiring the contractor to defend and “hold harmless” the association, the manager, and the trustees from any damages arising from the project or any breach of the contract. 

This is a bit one-sided, and I will modify the language somewhat if contractors push back on it. A contract is a negotiation, after all, and the goal is to find language on which both parties agree. 

I also reject language that seeks to limit a vendor’s potential liability to a set amount, or to the amount paid by the association under the contract.  Under this language, an engineer’s liability would be limited to his/her fee, even though a claim resulting from a flawed study could be several times that amount. 

In addition to requiring service providers to have appropriate insurance, the contract should require them to provide proof that they have the insurance required. A certificate of insurance isn’t enough.  It simply documents the type and amount of insurance the contractor has.  The contract should require evidence that the service provider’s insurance policy names the association as an “additional insured.”  This endorsement provides, at least in theory, that in the event of litigation, the provider’s insurer will cover the association’s defense costs, potentially avoiding the need to tap the association’s liability policy for that coverage. 

Termination Clauses.  No one thinks about terminating a contract the day they sign it – if you do, you probably should be having second thoughts.  But you can’t predict the future. Good relationships can go south. Conditions, priorities and needs can change. A termination clause protects both the association and the vendor from the unexpected. In a vendor contract, I try to insert language specifying that either party has the right to terminate “for cause or convenience” by giving 30 days’ notice. Associations don’t often exercise this option, but it provides an exit for the association if the relationship is beyond saving, but there hasn’t been a material breach by the vendor. 

In a construction contract, I will typically accept language requiring the association to pay any costs the contractor has incurred for the project.  But I will try to exclude the penalty some contractors want to add for anticipated profits they lose as a result of the early termination. 

Duration.  The contract should state when the project or service begins and ends, which is usually fairly straightforward. However, some vendor contracts contain self-renewal provisions specifying that the contract will renew automatically unless the association (or the vendor) gives notice of non-renewal before a specified date.  These provisions are common in long-term contracts, like those with laundry service providers, which typically extend for five years or more. 

Here’s the problem: What are the odds that anyone will remember that a 10-year contract beginning in January 2020 will renew automatically, and remember to provide the non-renewal notice by October of 2030?  The manager may keep track, but managers change; so, do board members. And if they miss this renewal notice date, odds are they will miss the next one, too.   That is why they call these clauses “evergreen”- because they can lock associations forever into relationships with vendors they may want to replace. 

The best way to deal with these provisions is to reject them, which I always try to do.  Alternatively, if the vendor insists and the association likes the vendor, I want the vendor to provide written advance notice of the renewal date, giving the association ample time to opt out before the self-renewal provision is triggered.

A ‘right of first refusal’ isn’t exactly the same as ‘self-renewal’ but it has the same undesirable “flypaper” effect – sticking the association with a vendor it doesn’t want.   Under the most common form of this provision, as long as the current vendor matches a better price offered by another provider, the association must renew the contract, even if the vendor has been providing lousy service and the association has been counting the days until the current contract ends. If I can’t eliminate this provision, I will try to modify the language to specify that the association must “consider” the matching price but isn’t required to accept it.

What happens if a vendor the association likes insists on undesirable contract language, and the choices are to accept that language or find another vendor?  This is a business decision the board is free to make as long as it understands and is willing to accept the risks involved.

Automatic renewal and right of first refusal provisions are traps, and there is no easy way to escape them.  Associations will be able to terminate the contract only if:

·       The vendor commits a significant breach of its terms; or

·       The vendor agrees to waive the ‘flypaper’ provisions, which most vendors either will not do, or for which they will charge an exorbitant buy-out fee.

The association can also break the contract and dare the vendor to sue, but many vendors, especially those with in-house attorneys, will do just that.  And vendors that sue will probably win. Even if the dispute is eventually settled, the association will still incur substantial litigation costs. Fly-paper provisions may be unpalatable to associations, but they are usually enforceable.  Few things in life last forever.  A contract shouldn’t be one of them.

An associate in the Braintree firm of Marcus Errico Emmer & Brooks, PC, Jonathan has nearly 20 years of experience litigating business, construction, and personal injury disputes for both plaintiffs and defendants in Massachusetts State and Federal courts. He focuses his practice on advising clients on construction related issues, drafting and negotiating construction contracts, as well as handling a broad range of civil litigation matters.  He can be contacted at jklein@meeb.com.

 

 

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Understanding Trustee Certificates (Video)