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City Universities Providing ISD With Addresses of Student Apartments

In the coming weeks, some Boston college students living off-campus and their landlords may be greeted by city inspection officers at their doors. Shrugging off privacy concerns, pursuant to a new city ordinance, the city’s 31 local colleges and universities have sent the city’s Inspection Services Department the addresses of their students who live off-campus. Of the 25,000 addresses it received, ISD will pay visits to the 580 it deems to be suspect of violating zoning codes. Boston.com reporter Julie Xie in her article “City Will Inspect Off-Campus Student Apartments, And It’s Legal” reported this new development.

They’ll primarily be looking for issues related to overcrowding. There are over 45,000 undergraduate and graduate students living off-campus in Boston, according to The Boston Globe . A 2008 city ordinance prohibits more than four undergraduates living together in one apartment.

The city’s crackdown comes in the wake of BU senior Binland Lee’s tragic death in 2013 from a fire in her overcrowded Allston apartment. Flames blocked the staircase from the third floor — her only egress. Scofflaw landlords and poorly managed units unsafe for students were the subject of the Globe’s “Shadow Campus” investigation last year. Now, an ordinance requires colleges to provide a list of where students live off-campus every semester. Another requires private rental units to register their properties annually, and inspections are performed every five years.

There is no question that some Boston landlords catering to the huge undergraduate population have skirted the law, creating dangerous living spaces for far too long. Regardless of the issue of occupancy limits, landlords need to comply with the sanitary and building codes so they don’t create fire traps for housing.

However, I have always had issues with the legality of the 4 undergraduate rule. I’m quoted in the article as saying that the no-more-than-four rule has always been somewhat suspect, arbitrary, and tough to enforce. Though neighbors do complain about late-night parties and loud college students, not all undergrads are troublemakers.” “Undergrads are not a protected class under any discrimination laws, and they’re transient, so it’s not like they’re going to come up with a lobbyist or fight for their rights in that way,” I’m quoted. “Colleges don’t want to get in trouble and they know they won’t get much pushback from Boston’s student body.”

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1__1263399571_0444-300x199One of Largest Verdicts In A Condominium Dispute

In a David vs. Goliath case pitting a Demoulas family heir against an elderly Brandeis professor over a tony Back Bay townhouse, the Appeals Court has let stand a $1.85 Million jury verdict — one of the largest awards in a private condominium governance dispute. The case is also one of the first to successfully employ the Massachusetts Civil Rights Act in a private real estate dispute. With interest and an award attorneys fees of $1.9 Million, the judgment will swell close to $4 Million — providing a cautionary tale to condominium trustees who abuse their power for ulterior purposes. The case is Kettenbach v. Wodinsky, Mass. Appeals Court (Jan. 6, 2015), embedded below.

A Classic David vs. Goliath Tale

In 1996, Michael and Frances (Demoulas) Kettenbach bought a unit in the 5 unit townhouse located at 303 Commonwealth Avenue in the Back Bay. (Frances is the sister of Arthur T. Demoulas who was recently reinstated as CEO of Market Basket after a publicized family fight). With the goal to acquire all of the units and convert the building to a grand single family Back Bay residence, Kettenbach purchased three more units, leaving only the top floor unit owned by Jerome and Bernadette Wodinsky. The Wodinskys, who had owned their the fourth floor unit for over 30 years, didn’t want to sell.

According to the court’s ruling, Kettenbach enlisted Gary Crossen, a former prominent Boston attorney who was the Demoulas family’s trial lawyer in their epic family litigation in the 1990’s. When the Wodinsky’s made it clear they were not selling, Kettenbach and Crossen began to put the proverbial “squeeze” on them. Armed with the controlling interest in the condominium association, they summoned state inspectors to condemn the building elevator, leaving the 82 year old Wodinsky, who suffers emphysema, to make the daily climb up 86 stairs to his fourth floor unit. Instead of repairing the elevator, Kettenbach voted to replace it at a $275,000 price tag. When the roof leaked, rather than repair it, Kettenbach insisted on installing a new one – even though it was only 10 years old. He also completely replaced the building’s heating system and did a massive overhaul of the electrical system. The result was a $1 million special assessment, 20% of which Kettenbach attempted to impose on Wodinskys. Kettenbach also hired a private investigator who showed up at Mrs. Wodinsky’s workplace and threatened her with bankruptcy.

Staggering Jury Verdict

Not backing down, the Wodinskys sued, asserting claims under the little used Massachusetts Civil Rights Act, abuse of process, civil conspiracy, and the Consumer Protection Act, Chapter 93A. They won an early victory when a trial judge issued an injunction forcing Kettenbach to fix the elevator. The case went to trial in 2011 over 19 days, and the jury returned a whopping $1.85 Million verdict in the Wodinsky’s favor. Although the trial judge vacated the judgment on the Chapter 93A count, which would have given the Wodinsky’s triple damages, he left the judgment intact on all other claims. Both parties appealed.

Jury Verdict Upheld on Appeal

On appeal, Appeals Court Justice William Meade upheld the entire jury verdict and judgment, and awarded the Wodinsky’s their appellate attorneys’ fees and costs, which will balloon the judgment against Kettenbach to well over $4 Million and change. The justice held that there was ample evidence that:

Kettenbach and Crossen coerced, intimidated, and threatened the Wodinskys in an effort to force them out of their home. This evidence includes: the Kettenbachs’ active attempts to condemn and decommission the building’s only elevator; the excessive period of time during which the elevator was unusable, which forced the elderly Wodinskys to walk up and down four flights of stairs; Crossen and the Kettenbachs’ manipulation of the board’s voting process to the Wodinskys’ detriment; the Kettenbachs’ demand that the Wodinskys pay twenty percent of expensive, unneeded projects that were not lawfully voted upon by the board; the Kettenbachs’ instituting litigation against the Wodinskys to collect such payments while simultaneously forgiving the assessments of another owner who agreed to sell her unit; and the Kettenbachs’ hiring of a private investigator to visit Bernadette at her work place for the specific purpose of threatening the Wodinskys with bankruptcy.

Since a member of the Demoulas family is involved, you can bet that this case isn’t over yet, and that he will try to get the Supreme Judicial Court to hear this case. And he might be successful as this is a huge jury verdict and, as mentioned earlier, one of the largest involving the Massachusetts Civil Rights Act.

Expansion of Condominium Trustee Liability?

Although this was a particularly unique and egregious case, this ruling could be used to expand liability against condominium trustees to for state civil rights violations arising out of contentious governance and assessment disputes. I’m not so sure that the Mass. Civil Rights Act is the appropriate vehicle to address this sort of private claim, because I don’t see how it invokes traditional constitutional rights which the Act was intended to protect. The SJC will have to sort this out but if they don’t take this case, this ruling will be the law of the land. Either way, I will bet that we haven’t heard the end of this dispute.

Kettenbach v. Wodinsky

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massachusetts condominium super lienWe had another interesting year in Massachusetts real estate law. From that controversial $60,000 discrimination penalty for asking a prospective renter “where are you from?”, to the influx of Airbnb rentals, to the tragic murder of Realtor Beverly Carter during a showing, and finally Gov. Patrick’s disappointing scuttling of the title clearance bill.

With pro-business Charlie Baker in the Governor’s Office, the fate of the independent brokerage model with the Supreme Judicial Court, and significant regulatory changes to title and closing services, we should expect another eventful year in 2015. Without further ado, I give you my outlook for 2015:

The Charlie Baker Effect

Gov. Deval Patrick was no friend to the real estate industry, often kowtowing to ultra-liberal activists. Case in point was when he killed the title clearance bill which had broad support within the Legislature and would have helped hundreds of homeowners get out of toxic titles. A new era is here with Republican and former CEO, Charlie Baker. Hopefully the Governor Elect will be more supportive of homeowners, developers, real estate agents, lenders and others in the industry. On the legislative table this year will be comprehensive “smart” zoning reform (including 40B affordable housing development reform), another effort at the title clearance bill and maybe even landlord-tenant legal reform.

Will Realtors Be Treated As Employees or Remain Independent Contractors?

The SJC should decide the closely watched case of Monell v. Boston Padsa class action brought by a group of disgruntled real estate agents at Jacob Realty claiming they should be treated as employees instead of independent contractors. Hanging in the balance is the fate of the historically independent, commission based real estate brokerage office model. An unfavorable result at the SJC would essentially turn this model upside-down, requiring brokerages to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees. The real estate office as we know it today would likely cease to exist.

CFPB Compliance: New HUD-1 Statement, GFE, TIL, Back Office Procedures

The new Consumer Financial Protection Bureau rules, which go into effect this summer, have the potential to drastically change how loans are disclosed and transactions closed, affecting loan officers, Realtors and closing attorneys alike. Gone are the Good Faith Estimate, Truth in Lending Statement (TIL) and HUD-1 Settlement Statement, replaced with a longer Loan Estimate and Closing Disclosure. The disclosure timetables will be much, much stricter — the final Closing Statement must be given to the borrower no later than three business days before closing. Lenders and closing attorneys will have to work more efficiently and quicker to meet these new deadlines. Closing attorneys who are ALTA Best Practices Certified will have a competitive advantage over those who aren’t. Smaller firms could fall by the wayside.

Housing Court Expansion

This year will likely see the expansion of Housing Court jursidiction state-wide including in Middlesex, Norfolk and Barnstable counties. The Housing Court will be available in high density rental towns including Cambridge, Framingham, Brookline, Waltham, Dedham, Malden and Somerville.

I hope you all have a happy, healthy and prosperous New Year!

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computer-searchLandlords Get Useful Tenant Screening Tool for Massachusetts District Court Records

In a much anticipated announcement, expanded online court docket information is now available for all district courts in Massachusetts including records on evictions, small claims, civil, and supplementary process (collection actions) cases. The website is Masscourts.org. It is free to use.

Using this site, landlords can check to see if prospective tenants have been involved in any prior evictions or have been sued by creditors. Housing Court dockets have already been available for about a year.

The only downside to the site is that users must search each individual court separately. My advice for landlords is to match the court with the prospective tenant’s former address and check to see if they were previously involved in any summary process or debt collection lawsuits.

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christmasFeds Hope New Low Down Payment Will Boost Housing Market

Ho, ho, ho, early Christmas and holiday presents are coming to first time home buyers courtesy of Fannie Mae! Hoping to broaden the pool of home buyers and boost the real estate market, Fannie Mae and Freddie Mac are launching mortgage programs with down payments as low as 3%. The new loan program, unveiled Monday, reverse a trend of tighter lending standards by the government-sponsored mortgage giants since their taxpayer-financed bailouts. To qualify, at least one of the borrowers (if a couple) must be a first time home buyer.

This is great news for the 2015 real estate market!

Like the holiday gift flyers, expect to see mortgage professionals waiving the 3% down payment banner in the months to come.

Up until now, the only game in town for low downpayment loans has been FHA. But FHA mortgage insurance (MIP) costs have risen to dizzying heights in the last few years, so first time buyers have stepped back to assemble more down payment and qualifying virtues to secure conventional financing.

Enter 3% down payment conventional mortgage financing and the landscape changes dramatically. Conventional financing does not handcuff borrowers to mortgage insurance forever like FHA loan programs. Once equity targets (20% – 22%) are reached, current appraisal supported value can eliminate conventional PMI (Private Mortgage Insurance). Not so with FHA, once you get it, the only way to get rid of it is to refinance out of the FHA loan or sell the house.

In other words, boom does the dynamite for first time buyers! If you are interested in how you can obtain a 3% down payment loan, send me an email to rvetstein@vetsteinlawgroup.com and I can put you in touch with a great mortgage banker.

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Massachusetts-Short-Sales.jpgShort Sale Sellers In 2014 Would Get Key Tax Break

A bill that would extend a key tax break to tens of thousands of short sale sellers who sold their homes in 2014 for less than they owed on their mortgages passed the U.S. House on Wednesday and is headed to the Senate for consideration.

A one-year extension of the Mortgage Debt Forgiveness Act, which expired Dec. 31, 2013, was included in the Tax Increase Prevention Act of 2014 and passed the House on Wednesday on a 378-46 vote. Short sale advocates and real estate groups have been lobbying hard all year to help homeowners sold their home through a short sale avoid a devastating tax bill which they likely could not afford.

Traditionally, if a lender allows a homeowner to sell a property for less than the amount owed on the mortgage, the homeowner has to report that forgiven debt as taxable income to the Internal Revenue Service. The Mortgage Debt Forgiveness Act of 2007, which had been extended multiple times, allowed taxpayers to exclude that forgiven debt from their annual income calculations.

The tax break lapsed in 2013, forcing homeowners to either gamble that it would be revived and proceed with a short sale or remain in homes that they either couldn’t afford or couldn’t sell because the mortgages were underwater.

If the bill does not pass, all is not lost. According to some experts, there are other ways under the IRS Code for insolvency to exclude a short sale tax forgiveness from income. Consult a qualified tax attorney or CPA for guidance.

An analysis earlier this year by the Urban Institute concluded that uncertainty over whether the tax break would be renewed could affect up to 2 million seriously underwater borrowers, including some who would eventually fall into foreclosure.

I’ll be keeping tabs on this important issue.

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South_Boston_Ma.jpgSorry for the late notice, but I will be giving a presentation on Massachusetts landlord-tenant law to the Waltham Rental Housing Association, December 2, 2014, starting at 7PM at the Waltham Public Library, 735 Main Street, Waltham, MA, Trustee’s Room on the third floor. All are welcome. No charge.

Topics I will cover include:

  • Legislative Updates
  • Medical Marijuana
  • Housing Court Expansion Proposal
  • Rental discrimination
  • Best practices for tenant screening
  • Evictions
  • Up Front Fees

My talk will be about 45 minutes long, after which I will have a question and answer session. Light refreshments will be served. Look forward to seeing you!

Update:  I’ve embedded my slideshow handout below. Please contact me if your organization would like to host a Free Landlord Tenant Law or Other Real Estate Legal Presentation!

Waltham Landlords 12.2.14 Handout Version No Images by Richard Vetstein

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massachusetts condominium super lienRuling Hurts Condominium Associations’ Collection Efforts

The Massachusetts Condominium Act gives condominium associations the ability to file a “super-lien” for unpaid monthly condominium fees, six months of which is given priority over a first mortgage against the unit. The super-lien has proven to be a very effective method for condominiums to collect delinquent fees because lenders will often pay off the super-priority amount so as not to affect their mortgage priority.

But what happens when a unit owner owes more than six month’s worth of condo fees? In that situation, innovative condominium attorneys have developed a practice of filing multiple lien lawsuits to create a “rolling” lien for successive 6 month periods. Unfortunately for condominium associations, the Appeals Court recently put the kibosh on this practice in the case of Drummer Boy Homes Association v. Britton (Nov. 7, 2014).

Rolling Lien Practice

In the Drummer Boy case, the unit owner withheld payment of condo fees in a dispute with the condominium trustees over parking rights and fines. (Note, this is a big “no-no” as the law provides that a disgruntled unit owner must pay fees under protest). The condominium lawyers filed three separate and successive lawsuits asserting a super-lien over 18 months worth of unpaid fees. The lawsuits were all consolidated. A district court judge ruled, however, that the association had a super-priority lien over only the first 6 months before the first lawsuit, not the 18 months’ worth claimed.

Court: Super-lien Limited To 6 Months Of Fees

On appeal, the Appeals Court likewise held that the association’s super-lien only covered the initial 6 month period, not the 18 month period claimed. The Court reasoned that the Mass. Condominium Act was modeled after the Uniform Condominium Act which clearly provided that the maximum amount of a super-priority lien was 6 months worth of fees, and that this was a fair balance between the interests of lenders and condominium associations. Of course, the condominium association is free to collect all of the outstanding fees from the unit owner and sell the unit at auction, but the first mortgage will have priority over all of the fees except for 6 months plus attorneys’ fees, so it’s essentially a Pyrrhic victory.

As the condominium attorneys over at Perkins|Ancil are saying, this ruling may be appealed to the SJC and going forward associations will likely be forced to avail themselves of the remedy of foreclosure sooner rather than later in order to fully protect their financial interests. Failing that, condominium associations will have to lobby the Legislature for a change in the super-priority lien amount over above the 6 month cap. This remains a case to watch!

 

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Distressed Homeowners Take Another Hit

In another court ruling against embattled homeowners facing foreclosure, the Massachusetts Appeals Court has ruled that a defective 150 day cure notice is not a valid defense to a foreclosure sale. The case is Haskins v. Deutsche Bank (click for link to case). The ruling will make it more difficult for distressed homeowners to challenge foreclosure and could accelerate the pace of pending foreclosures.

150 Day Cure Notice

The 2010 Foreclosure Prevention Act requires that foreclosing lenders provide a borrower with a 150 day right to cure prior to starting a foreclosure proceeding. The notice must identify the current “holder” of the mortgage. Before this ruling, some trial courts had ruled that a bank’s failure to strictly comply with those requirements was sufficient grounds to halt a foreclosure sale.

In the Haskins case, the borrower challenged his foreclosure on technical grounds because the cure notice incorrectly identified the holder of the mortgage as IndyMac Mortgage Services. IndyMac was the mortgage servicer and mortgage was legally held in a securitized trust operated by Deutsche Bank.

Justice Mark Green, a former Land Court judge and former banking general counsel, recognized that today the vast majority of residential mortgages are serviced by large mortgage servicers while owned and held in securitized trusts. Rejecting the borrower’s form-over-substance argument, Justice Green ruled that as long as the borrower receives an accurate cure notice with the correct loan balance information and payment address so the borrower can pay up and cure, an erroneous identification of the actual mortgage holder should not affect the validity of the pending foreclosure.

Massachusetts foreclosure defense attorney Adam Sherwin, who represented the borrower, put up a valiant fight in this case. However, with this ruling and several recent decisions before it, foreclosure defense attorneys have suffered several setbacks in the courts, making it more difficult for distressed homeowners to challenge and stop foreclosures.

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80140012Legislation Set To Expand Housing Court Statewide

About 30% of people in Massachusetts do not have access to the state’s Housing Court — one of Massachusetts’ specialized courts handling landlord-tenant disputes, evictions and sanitary code enforcement. The unserved areas include the largest county in the state, Middlesex County and most of Norfolk County, with high density rental towns including Cambridge, Framingham, Brookline, Waltham, Dedham, Malden and Somerville. Also unserved by a Housing Court is all of Cape Cod and the Islands and Chelsea.

Under a plan touted by Supreme Judicial Court Justice Ralph Gants, the Housing Court would be expanded to cover the entire state by July 1, 2015. “We believe that all residents of the Commonwealth, regardless of where they live, should have the opportunity to have their housing case heard by a Housing Court, and benefit from its specialized expertise in residential housing matters,” Gants said in a statement.

As an eviction and landlord-tenant attorney who practices quite a bit in both Middlesex County and in the Housing Court, I can say positively that this is a great idea. In Framingham District Court, for example, the Thursday eviction session can be standing room only with landlords and tenants often spilling outside into the hallway. The busy court is already swamped with criminal matters, and getting a trial date in an eviction case can take upwards of several months — certainly not “just, speedy and inexpensive” as mandated by the Uniform Summary Process Rules.

The Housing Court would be able to take the burden off the local, overworked district courts. With a few more full time judges and already with one of the lowest cost-per-case ratios of any court, they should be able to handle the increase in cases. The “X-factor” will be the overall cost, of course.

The Legislature is set to take up the proposal in early 2015. I’ll keep tabs on any developments.

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Electronic-signature1.jpgThis is a summary of the Boston Bar Association’s recent seminar, E-Recording: Practices and Pitfalls, a Roundtable Discussion, which I moderated last week. The speakers were:

Current Statistics

Electronic recording (e-recording) of deeds, mortgages and other title instruments has been available in Massachusetts registries since 2007. E-recording capabilities are now fully operational in every Massachusetts registry of deeds except for Bristol South (Fall River/New Bedford). E-recording is proving to be less expensive and faster than the traditional method of recording by sending a title examiner down to the registry of deeds to wait in line. In most cases, a transaction can be “on record” within 30 minutes of an in-office closing. It also eliminates the need to hire a courier or fight traffic and hold closings at Cambridge or other hard-to-get-to registries. E-recording is legal and binding, and accepted by Fannie Mae, Freddie Mac and virtually every major lender.

Middlesex South District Registry in Cambridge (which happens to be the 6th largest registry of deeds in the U.S.) leads the state in total number of documents electronically recorded and also has the lowest average recording time in the United States. Very impressive!

Electronic recording adoption rates have steadily increased with Middlesex (Cambridge and Lowell) leading the way at 40% of all recorded documents. That means, however, that 60% plus of registry business is still done through the traditional in person recording method.

E-Recording Process

As outlined by Brian Kilfoyle of Simplifile, one of the approved vendors for Massachusetts e-recording, the process of e-recording a document is relatively straight-forward:

  • Sign up with one of the registry’s authorized electronic recording vendors (SimplifileErxchange,Ingeo/CSC, or New England Title/Escrow). There is a $350 annual fee.
  • Scan original document to create an electronic image (pdf)
  • Log on to the secure website and enter data about the document and upload the document image
  • Perform a quick online title run-down to ensure no title issues have arisen since the first title exam
  • Press “send to the registry” button
  • The registry verifies the quality of the image and the accuracy of your data
  • Once accepted by the registry, the document is officially “on record” with recording data and document image immediately available on the registry website
  • The filer immediately gets an electronic receipt with all recording information along with an electronic copy of the recorded document.
  • Fees are paid by electronic funds transfer from the closing attorney’s bank account. There is a $5.00 surcharge for every e-recorded document which is typically passed along to the responsible buyer or seller.

Title Insurance and Gap Coverage

One of the earlier concerns about e-recording is the so-called “gap coverage” — dealing with the risk of an attachment or other lien recorded on your title while you are in the process of e-recording. As confirmed by Sarah Supple of Chicago Title, all Massachusetts owner’s title insurance policies will automatically protect the title agent (attorney) and the owner from any intervening liens recorded during the electronic recording process. Ms. Supple noted that the risk of an intervening lien was just as high when the title examiner is physically waiting in line as opposed to online.

Practice Pointer: Ms. Supple recommends that closing attorneys perform one run-down right before submitting the document into the e-recording “queue” and also a “mini-run down” right before disbursement of funds.

Fortunately, a survey of participants at the seminar revealed zero instances of an intervening lien/attachment filed in an e-recording situation.

What’s Next?

Hugh Fitzpatrick updated the audience on recent and future developments. As a member of the Registry Technology Commission and advocate, he is working with the Registries, Legislature and Governor’s Council on electronic notarization so documents can be signed and witnessed virtually in a secure system like DotLoop or Docusign. Another goal is to have all of the registries unified in their document search portals like masslandrecords.com. Right now, several registries have their own systems. Hugh also noted that the new CFPB rules are strongly encouraging electronic signing and recording.

Electronic recording is a very exciting development in the real estate title industry, proving to be cost-efficient, accurate and convenient for all parties to the transaction. My Needham office is fully e-recording capable, and we often have the documents recorded within 30 minutes of the closing.

Please note that the BBA Real Estate Section’s Next CLE is Real Estate Attorneys, Are You Ready for CFPB Compliance? Nov. 18, 2014, 3pm at Boston Bar Association. Click here for more info and to register.

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Tax-Information-about-Employees-and-ContractorsSJC To Hear Important Employment Classification Case

The critical question of whether real estate agents are governed by the state’s strict independent contractor law is now headed to the Supreme Judicial Court, the highest appellate court in Massachusetts. The SJC will hear arguments in December, and a decision is expected in the Spring of 2015.

Hanging in the balance is the fate of the historically independent, commission based real estate brokerage office model. An unfavorable result at the SJC would essentially turn this model upside-down, requiring brokerages to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees. The real estate office as we know it today would likely cease to exist.

The case is Monell v. Boston Pads, LLC, a class action brought by a group of disgruntled real estate agents at Jacob Realty, one of the largest real estate offices in Boston. As I wrote about in this post, Judge Robert Cosgrove ruled last year that the agents should be considered independent contractors and not employees. Given the importance of the case, the SJC granted direct appellate review.

The Massachusetts Association of Realtors has filed a friend of the court brief, in support of classifying agents as independent contractors. I agree with the MAR that real estate agents should be classified as independent contractors given its unique and historically independent business model.

However, this is a very difficult case to handicap. The problem arises when brokerages, such as Jacob Realty, ask its agents to do many of the things traditional employees must adhere to, such as required office hours, dress code, and performance benchmarks. This is especially so where courts have, in the last few years, strictly interpreted the independent contractor and wage laws in other industries. The more requirements imposed on agent, the more likely they should be treated as employees and not independent contractors, the argument goes.

Also likely to play a large role is that in 2008 the Legislature tried — and failed — to amend the law to make real estate agents exempt from the independent contractor law. Governor Patrick vetoed the legislation. This legislative history hurts the brokers.

There is a decent chance this case could go against the industry. In that event, I hope the MAR has legislation ready to preserve the existing office model so there will be no adverse effect on Realtors. And by then, Gov. Patrick — who’s been no friend of the real estate and title business — will be long gone from office.

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Parking Lot Owner Allowed To Introduce Evidence of Future Development Potential

8397753417_6c894cfcef_zI have not written about eminent domain on this blog. This isn’t intentional because the topic is one of the most interesting aspects of real estate law, although it does not come up very much in the residential context.

Eminent domain, or a “taking,” as it’s also called, is a power vested in the state (or federal government) to appropriate private property for public or other permissible use. The government, however, must pay the landowner “just compensation” for the land.

Massachusetts city planners have historically made judicious use of eminent domain power to construct some of the largest projects in Boston and beyond, including the Big Dig, the new Boston Convention Center, and the new Greenbush commuter rail line. Eminent domain trials are often high stakes, big money cases. In 2009, a jury awarded a Medford family $4 Million in connection with the Mystic River’s Edge Project. In 2011, a Cape Cod jury awarded Sagamore property owners $2.1 Million for takings in connection with the Sagamore “Flyover” Highway Project.

The battleground in eminent domain cases almost always centers on how much the land is worth, i.e, how much money the state should pay the landowner. The recent Appeals Court case of Rodman v. Commonwealth, Mass. Appeals Court (Oct. 7, 2014) gives an interesting glimpse into the complicated and difficult task of an eminent domain attorney. Often, the land taken by the state is either vacant or underutilized, and the attorney’s objective is to show the development potential of the land. There is a limit on how far the attorney can go, and the Rodman case illustrates that tension.

In the Rodman case, the Mass. Highway Dept. took by eminent domain 5 acres of a parking lot property in connection with highway improvements around Patriot Place/Gillette Stadium. As is common in these cases, the landowner’s engineering expert planned to testify that the takings made the property less valuable by some $2 million dollars based on a potential hotel/office/retail development on the land. However, the judge refused to allow the expert to proceed on that theory which was based on a hypothetical development and subdivision plan, as the property was merely used as a temporary parking lot at the time of the taking and no formal plans had been filed. This ruling essentially torpedoed the landowner’s case, and not surprisingly, the jury awarded him only $600,800.

On appeal, the Appeals Court sided with the landowner and granted him a new trial to put forth his $2M development plan theory. The Court reaffirmed that property owners in eminent domain cases are entitled to submit the “highest and best use” of the property which is “physically possible, legally permissible, and financially practicable” even if the land was vacant and undeveloped at the time of the taking. With a prime piece of real estate directly abutting Gillette Stadium and the new Patriot Place in a new economic development zone, the court agreed that the owner may have the opportunity to show a jury that the land could have been used for a hotel/office/retail development. This is true even though special permits and other zoning relief would be necessary. This is a huge victory for the landowner and his attorney.

If you are faced with an eminent domain situation, please contact me at rvetstein@vetsteinlawgroup.com. I can put you in touch with some of the best Massachusetts eminent domain attorneys in the state.

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Beverly-Carter-jpgShould The Real Estate Industry Change The Way Agents Do Showings and Open Houses?

What other industry requires unaccompanied female (and male) agents to meet perfect strangers in empty houses? None. One would think this is a recipe for disaster. It is.

Last night, authorities found the body of Arkansas real estate agent Beverly Carter, days after she vanished while showing a house to a prospective customer. Aaron Lewis, 33, has been apprehended and admitted to the kidnapping after being questioned by police, ABC News said.

This is not the first time an agent has been murdered, raped or assaulted while on the job. According to the latest Bureau of Labor study, the real estate industry experiences about a 40% higher rate of on-the-job crime than the average profession. Indeed, one my close Mass. Realtor friends was accosted several months ago and was very shook up about it.

My mother was a long time Realtor. My father recalls how nervous he was that some stalker would do something terrible at an open house or showing. Thankfully that never happened.

There must be a better way. I think the time has come for a change. What can be done?

Should open houses be outlawed? Should open houses be allowed only if there are two agents present? Most Realtors say they are a waste of time anyways. Should Realtors have a special exemption under the law to carry mace, a taser or even a handgun? What about a new lockbox system so prospective home buyers can peek into a home themselves without an agent present? What about some type of panic button device or other technology? Here is a great article on Using Technology for Realtor Safety.

What is your office doing to protect your personal safety? What is the National Association of Realtors and local chapters doing about this issue?

Regrettably, the NAR issued a rather weak statement on the Beverly Carter tragedy:

“As both a REALTOR® and an Arkansan, I am saddened by this morning’s news of Beverly Carter’s untimely death. My heart goes out to her family, her friends, her co-workers, and everyone whose life Beverly touched in her 49 years with us.

Working in real estate involves risk and, unfortunately, that risk takes many forms. As an industry, we collectively work very hard to promote safety awareness among our members. We are fully committed to educating REALTORS® about potential threats and providing them with resources to protect themselves.

I urge all REALTORS® to honor Beverly Carter by keeping safe and looking out for each other.”

“Keeping safe and looking out for each other” frankly isn’t going to cut the mustard in my humble opinion. The NAR should be at the forefront of this issue, and doing a lot more than telling agents to “keep safe.” That doesn’t help anyone. 

How about paying for some of the personal safety devices for agents as part of the membership dues? How about lobbying Congress and state legislatures for exemptions for personal defense weapons like mace, tasers and firearms? How about lobby for increased criminal penalties for crimes against Realtors? Anything but telling agents to “keep safe”….

For its part, the Massachusetts Association of Realtors has issued its own Realtor Safety Tips.

There has to be a better way.

As always, I’m here to support real estate agents anyway I can.

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100316_photo_vetstein-2.pngRichard D. Vetstein, Esq. is a Massachusetts real estate attorney who works with Realtors every day. He can be reached at rvetstein@vetsteinlawgroup.com.

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I have a great FREE SEMINAR to announce for new and returning home buyers! A Home Buyer Boot Camp Seminar BBQ on October 14, 2014 at Firefly’s BBQ Restaurant in Marlboro, 350 E. Main St (Rt. 20). Sponsored by the Vetstein Law Group, David Gaffin of Mortgage Master and Amy Uliss and Heidi Zizza of mdm Realty in Framingham. Ribs, pulled pork and BBQ + great local real estate experts = AWESOME EVENT! Please RSVP to dgaffin@mortgagemaster.com.

boot camp flyer copy

 

 

 

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vote_today

I endorse Charlie Shapiro and Robert Jubinville

Today is the Massachusetts Primary Election. In Democrat-dominated Massachusetts, today’s election is often more important than the general election in November. Please take the time to exercise your civic duty and vote today.

As far as this real estate law is concerned, the Governor’s Council race is important as it will shape the future of the Massachusetts judiciary. The Governor’s Council has the final say on all judicial nominations. There are two races which I will comment on.

District 3 (Sudbury, Concord, Marlboro, Watertown, Newton, Brookline Weston, Waltham, much of Wellesley): Marilyn Petitto Devaney (Incumbent) faces a challenge from Charlie Shapiro of Newton. As you may recall from reading this Blog, Ms. Devaney was one of the leaders of the shameful opposition to Jewish nominee Joseph Berman stemming from his affiliation with the Anti-Defamation League and its position on Armenian Genocide recognition.

Devaney is certainly a colorful character, but in my opinion, Charlie Shapiro has a much better background and temperament to be trusted to select the next generation of Massachusetts judges. A former teacher and broadcaster, he is a former Newton City Alderman, and created the Alzheimer’s Silver Alert Program which tracks down missing elderly folks. Mr. Shapiro has garnered an impressive list of endorsements including Rep. John Lawn, Rep. Alice Peisch, Rep. Jay Kaufman and current Councillor Mike Albano. Going forward, we need less drama and more competency on the Council. Vote Shapiro. 

My Endorsement: Charlie Shapiro

District 2 (Milton, Sharon, and southern metro) Robert L. Jubinville (Incumbent) faces a challenge from Bart Timilty. Although Bob Jubinville ultimately voted against Joe Berman, I still think he’s a great Governor’s Councillor and actually one of the best on the panel. He’s a long time practicing litigator with decades of real life experience before judges. His advocacy for addiction and heroin treatment is also extremely impressive. He is also a former State Police Detective. Bob is really an ideal fit for the position. 

My Endorsement: Robert Jubinville

Don’t complain, vote!

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20b0e63Perry v. Equity Residential: Application Fee, Amenity-Community Fee, Move-In Fee and Upfront Pet Fee Held Illegal

In a stinging class action ruling on August 26, 2014, Boston federal district court judge Rya Zobel ruled that Equity Residential’s up front apartment fees are illegal under Massachusetts law. Even worse for the national apartment owner, the judge found the fees also violate the Massachusetts Consumer Protection Act which imposes up to triple damages and attorneys’ fees. With potentially thousands of affected tenants, Equity Residential could be faced with a sizable legal tab for this policy.

The class action was brought by Brian and Kim Perry, former tenants at Longview Place in Waltham, and Cheryl Miller, who lived at Emerson Place in Boston. The Perrys paid Equity an upfront $100 application fee and a $99 amenity or move-in fee, while Miller paid $50 application and $500 amenity fees, according to the lawsuit. Equity also allegedly charged a $250 pet fee and $500 “community” fee.

Judge Zobel held that the application fee, amenity/move in fee, the community fee and the upfront pet fee was unlawful under the Massachusetts Security Deposit Law which prohibits landlords from charging any upfront fees except for first, last months rent, security deposit and a lost key fee. The judge also found that Equity attempted to do an unlawful end-around the law by charging some of the fees in the second month of the tenancy.

The judge also ruled that the case can be consolidated with another federal lawsuit pending against Equity and granted it class-action status. The potential number of Massachusetts tenants impacted is unclear. Chicago’s Equity leases some 31 apartment complexes in the Bay State with about 6,680 units.

This ruling comes in the wake of a similar federal court ruling against Archstone Properties in 2012.

This case is yet another big wake up call for Massachusetts landlords, both large and small, to be extremely careful about up-front move in charges imposed upon tenants. This is also one of the first publicized cases calling into question the practice of charging an upfront application fee. Application fees are very much widespread, and I would counsel landlords and property managers to think twice about charging them under any circumstance. This ruling may also call into question the legality of charging prospective and actual tenants credit report and background check fees.

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RDV-profile-picture.jpgIf you have any questions about this ruling or your policy for upfront fees, please contact Attorney Richard Vetstein at rvetstein@vetsteinlawgroup.com.

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Beacon Hill MAIt’s a classic Boston neighborhood turf battle. Mayor Martin Walsh, the Irishman from Savin Hill vs. the Brahmins of Beacon Hill. The nature of the dispute:  sidewalk ramps in Beacon Hill for the disabled.

Boston Mayor Marty Walsh is fed up with some of Beacon Hill residents’ long time opposition to the installation of disability sidewalk ramps and other accommodations for the disabled under the Americans With Disabilities Act. Always up for a fight to preserve the historical character of “the Hill,” the Beacon Hill Civic Association and its members are upset because they feel that Mayor Walsh is not willing to consider what they feel is more historically appropriate materials and designs for Beacon Hill sidewalks and streets. They also accuse Mayor Walsh of exacting political revenge for not getting any votes in the recent mayoral election — he was decimated in Beacon Hill voting by a 70% margin over challenger, Harvard trained John Connolly. Hogwash, says the Mayor. Caught in the middle of this unfortunate fight are disabled folks who have a hard time navigating Beacon Hill’s narrow, winding, cobblestoned thoroughfares.

20140717_142510-1200x675The brouhaha has now moved to Suffolk Superior Court where the BHCA has filed an interesting lawsuit against the City, claiming that the Beacon Hill Architectural Commission has the final legal say in what type of materials and design are used for the accessibility project. Some interesting legal issues will be decided in this case, the most important of which would be whether the federal ADA trumps local and state regulations on historical design where a district or building is listed on the National Registry of Historical Places.

The streets of Beacon Hill are lined with red brick sidewalks, giving it a warm, welcoming feel. The proposed disabled ramps are grey concrete, topped with bright red panel inserts. Yes, these ramps didn’t exist during the times of John Hancock, but Charles Street was also lined with horse dung for all to step on. Let’s hope Mayor Walsh and Beacon Hill residents can put the emotion and rhetoric aside to do what’s right for the disabled. After all, they have every right to enjoy Charles Street, with or without horse dung. 

 

 

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Cannabis-BankCourt Side-Steps Whether Sec. 8 Tenant Can Be Evicted For Possession of Under 1 Oz. of Marijuana

In the first of what should be many cases dealing with marijuana use in rental housing, the SJC ruled last week that a Section 8 tenant could be evicted for an undetermined amount of marijuana combined with allowing her live-in boyfriend to deal marijuana and possess a gun at the leased premises. The court overruled Boston Housing Court Justice Jeffrey Winik’s prior decision stopping the eviction of the tenant. Judge Winik was unconvinced that a public tenant could be evicted for marijuana possession unless it was over 1 oz. which makes it a crime in Massachusetts, whereas possession of under 1 oz. is merely a civil infraction.

The case is Figgs v. Boston Housing Authority (SJC 11532). A link to the opinion can be found here.

Based on oral arguments and briefings, court watchers were expecting the justices to address the interplay between the recent Mass. law decriminalizing the possession of under 1 oz. of marijuana and federal public housing eviction laws. The justices, however, side-stepped the weight issue, ruling instead that there was more than sufficient evidence of drug dealing at the apartment to warrant eviction based on a serious violation of the lease and criminal activity. Police found a small amount of marijuana, plastic baggies, cash and a firearm in the bedroom of the tenant’s boyfriend, charging him with possession with intent to distribute and unlawful possession of a loaded firearm.

Although the question of whether a tenant can be evicted for possession of a recreational sized amount of marijuana (and medicinal marijuana) will be left for another case, the Figgs decision can be used to hold tenants responsible for the drug and criminal activity of their household members, including boyfriends, husbands, children and guests. This should be a helpful tool to enable public housing authorities and private landlords to keep drugs and guns out of rental housing.

 

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mass ibanez titleSenate Bill 1987 Would Have Cleared Title For Innocent Homeowners

Acceding to the demands of fair housing community activists, Massachusetts Governor Deval Patrick has rejected Senate Bill 1987, An Act Clearing Titles to Foreclosed Properties. The bill would have cleared title of homes affected by defective foreclosures with a one year waiting period from enactment of the bill while giving homeowners three years to challenge wrongful foreclosures. The Governor filed an amendment to the bill, raising the statute of limitations for homeowners to challenge foreclosures from 3 years in the current bill to 10 years. The Senate and House are unlikely to agree on such an absurdly long statute of limitations, so Patrick’s action should effectively kill the bill.

This is truly devastating news for the thousands of innocent homeowners who are stuck with bad title due to botched foreclosures.

The bill had cleared the Senate and House with near unanimous support. The bill also received favorable press in the Worcester Telegram and Boston GlobeThe bill preserves the right to challenge foreclosures and sue the banks, while helping innocent homeowners stuck with bad title. Despite this, organizations such as the Massachusetts Alliance Against Predatory Lending and activist Grace Ross were successful in getting Governor Patrick on their side.

The Governor’s statement accompanying his action on the bill states as follows:

Massachusetts is emerging from a period of far too many foreclosures, on far too many families, and in far too many communities facing significant economic challenges. It is no secret that, too often, the foreclosure was not properly effectuated.  The entity purporting to foreclose did not have the legal authority to do so.  The effect of these impermissible foreclosures has been lasting.  Families were improperly removed from their homes.  Buyers who later purchased the property — or, at least, believed they had done so — are now faced with title questions.  Many of these buyers were investors, but many are now homeowners themselves. I commend the Legislature’s effort to address these problems.  But I believe the proposed three year period is insufficient.  A family improperly removed from its home deserves greater protection, and a meaningful opportunity to claim the right to the land that it still holds.  The right need not be indefinite, but it should extend for longer than three years.  Certainty of title is a good thing — it helps the real estate market function more smoothly, which ultimately can help us all.  But this certainty should not come at the expense of wrongly displaced homeowners or, at least, not until we have put this period further behind us.

As a long time supporter of this bill, I am truly disheartened at this result. I thought the bill did a great job in balancing the rights of innocent home buyers who are stuck with unsellable properties through no fault of their own with the rights of folks who are fighting foreclosures. A three year statute of limitation — which is the same length for malpractice and personal injury claims — is a reasonable amount of time to mount a challenge to a foreclosure, especially when debtors have many months prior notice before a foreclosure sale. The people who would have benefited from this bill are everyday people who bought properties out of foreclosure, put money into them and improved them. I have personally assisted several of these families. Everyone agrees that the banks are largely at fault for the mess left behind with the foreclosure crisis but why put the rights of those who don’t pay their mortgages above those who do? I will never understand this rationale. Perhaps that’s why I could never be in politics!

So where do we go from here? I honestly don’t know. Fortunately, the Land Court recently issued a ruling which may help clear some of these toxic titles. Maybe the legislation will get another chance at the next session or when Patrick leaves office at the end of the year.

 

 

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