Attorney General Healy Announces Indictments Against Allen Seymour and Ex-Wife

As I’ve written here before, I have been representing three families victimized by convicted felon, Allen Seymour, in a brazen complex real estate forgery scam. As a result of the courageous testimony from my clients, I’m happy to report that a statewide Grand Jury has just handed down a 22 count indictment against Seymour on charges of forgery, uttering, larceny, and money laundering. Seymour’s ex-wife, Tina Seymour, was also charged with conspiracy to commit forgery.

Seymour, who used the alias “Richard Chase,” targeted elderly and unsophisticated homeowners. He used forged deeds and fake notary stamps to sell their properties out from under them, flipping them to wealthy investors, and pocketing the cash. Seymour targeted properties in Cambridge, Brookline, and Somerville. As claimed in my lawsuits, Seymour also worked with a group of accomplices including Newton police lieutenant, Francis Foley III, who was not indicted but remains under investigation and on paid leave from the force.

Allen Seymour fled the state and was apprehended in South Carolina in May, and is currently being held without bail pending probation surrender hearing scheduled for a later date. He will appear in Worcester Superior Court on Jan. 7, 2019 for a hearing regarding his probation surrender. Tina Seymour will be arraigned in Hampden Superior Court at a later date.

I have filed three civil actions in Middlesex Superior Court, seeking to quiet title and restore ownership to the victims. The cases are ongoing.

First American Title Company has issued a statewide Fraud Agent Alert concerning this scheme.

Boston 25 News reported on the indictment below

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Court Challenge Puts City of Boston Short Term Rental Ordinance In Legal Limbo

Referring to new City of Boston short term rental rules as “Orwellian,” Airbnb has sued the City of Boston in federal court, challenging the legality and constitutionality of recently enacted short term rental rules passed by the City Council. The rules, set to take effect on January 1, are among the most stringent efforts in the nation to regulate the burgeoning industry. The rules would bar investors and tenants from renting their homes by the night through popular websites such as Airbnb, while allowing homeowners and owner-occupants of two- and three-family houses to continue to do so.

Airbnb is not challenging the law on those grounds. Instead, it argues that requiring online hosts to enforce the rules violates the federal Communications Decency Act, which protects online platforms from being sued over third-party content, and also infringes on the company’s First Amendment right to free speech.

Airbnb means business, as it has hired one of the best attorneys in Boston, Howard Cooper of Todd & Weld. “This is a case about a city trying to conscript home-sharing platforms into enforcing regulations on the city’s behalf,” Mr. Cooper told the Boston Globe. “The City of Boston has enacted an ordinance limiting short-term residential rentals by hosts. But it goes much further than that. The ordinance also enlists home-sharing platforms like Airbnb into enforcing those limits under threat of draconian penalties, including $300-per-violation-per-day fines and complete banishment from doing business in Boston.”

A bill on Beacon Hill that would have created the nation’s first statewide short-term registry has been in legislative limbo since August, when Governor Charlie Baker sent it back to lawmakers, requesting several key changes, after the end of the legislative session.

Airbnb is seeking an injunction to prevent the new rules from going into effect. A hearing is expected to occur sometime in the next 30 days. Check back here for more developments as they occur. A copy of the lawsuit is embedded below.

Airbnb v. City of Boston by Richard Vetstein on Scribd

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Land Court Considers Local Ban On Airbnb Rentals in Lynnfield

Over Memorial Day in 2016, a contemporary mansion in Lynnfield was the scene of a raucous Airbnb house party where neighbors described bikini clad college women prancing around to hip-hop music reverberating through the bucolic neighborhood. At 3AM, however, the party turned into a crime scene when 33-year-old Keivan Heath was shot several times and died.

The owner of the 6 bedroom, 5,545 square foot European style residence, Alexander Styller, rented the home to a group of old college roommates at over $2,000/night through the controversial short term rental platform, Airbnb. In the aftermath of the murder, the Lynnfield building inspector and Zoning Board of Appeals issued an order prohibiting the owner from using the premises for short term rentals. The case went up to the Land Court where Judge Keith Long just issued his ruling, upholding the ZBA’s interpretation of the zoning by-law prohibiting short term rentals in a residential zoning district. The decision is one of the first to consider the legality of local prohibitions against short term rentals in a residential zoning district.

Judge Long Rules In Favor of Town

Judge Long ruled that local municipalities have the power under zoning law to regulate (or prohibit) short term rental platforms like Airbnb in a residential single family zoning district, and that the local zoning board has the authority to consider it a non-“grandfathered” use. Demonstrating a solid grasp of the burgeoning technology that is Airbnb, Judge Long ruled that AirBnB-type rental arrangements are not such grandfathered uses. Rather, he reasoned “they are ever-changing technologies that produce materially-different uses as the technology changes, and AirBnB and the other platforms have reserved the right, at their sole discretion, at any time, for any reason, to change that technology and the types of rentals they make available.” The judge further noted that “zoning was created, and is justified, by the degree of certainty it provides to its various designated districts. When that certainty no longer exists, the protections of zoning no longer exist.” Nor could Airbnb be considered an allowed “accessory use” to the home like an in-law suite. “Homes are expected to be used as residences, not for profit,” Judge Long reasoned. “Continuous rentals of a primary residence are contrary to the fundamental use of the home, as it leaves its primary residents without a place to stay. For those same reasons, Mr. Styller’s rentals have become, “in effect, a conversion of the principal use of the premises to one not permitted.”

Judge Long also had some interesting comments about the very nature of Airbnb and its effect on the surrounding neighborhood —

“From the neighbors’ perspective, however, it is all downside. The owner may not be there to experience the external effects of frequent short-term rentals — a constantly-changing cast of strangers in the building or neighborhood, unknown cars on the street, and the traffic and noise from parties (a not-infrequent purpose of AirBnB-type rentals, as evidenced by the incident that led to this case). But the neighbors are there to experience those effects, and may not be pleased. These effects are likely worse in non-owner occupied properties where the owner never lives there but instead rents it out in a continuous series of short term arrangements, calculating that the rental income will be higher than that received from longer-term tenants. This has a community-wide effect as well as effects on the immediate neighbors. Short-term AirBnB-style rentals may be good for tourists, but they decrease the number of properties available for long-term rental by residents and thus, if the practice is widespread, drive up the overall cost of rentals.”

The effect of this ruling will be that towns and cities will be on stronger legal footing if they seek to regulate or even prohibit Airbnb and other short term rental platforms under their local zoning codes. Also, the state legislature has taken up the debate, with a comprehensive bill passed this summer, only to be rejected by Gov. Baker. The Airbnb issue will be receiving plenty of legal attention in the months and years to come. This case will be appealable to the Appeals Court or SJC, so check back for more updates.

Link:  Styller v. Lynnfield Board of Appeals 

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Convicted Felon, Allen Seymour of Oxford, MA Named Again In Forgery Lawsuit

As a Special Attorney General Grand Jury hears evidence of a sophisticated real estate fraud conspiracy orchestrated by convicted felon, Allen Seymour, and his alleged accomplices, my firm has filed the third lawsuit for another victim of this predatory scam. The suit, filed in Middlesex Superior Court on behalf of two Somerville homeowners, alleges that Seymour approached them with a bogus reverse mortgage plan then forged two quitclaim deeds purporting to sell their home out from under them, flipping it to well known Boston real estate investors. One of the deeds was purportedly signed by a dead woman, and the other may have been stamped with a stolen notary public seal.

As a result of the lawsuits filed by my office and cooperation with the Attorney General’s office, Seymour was recently arrested in South Carolina, and was arraigned in Brookline District Court on June 18, with bail set at $2.5 Million. Seymour’s scheme is to approach elderly or naive homeowners who are in foreclosure, and offer them a “foreclosure rescue” loan or a bogus reverse mortgage. Using the alias “Richard Chase” to hide his true identity, Seymour persuades the homeowner to sign legal paperwork, then uses forged deeds and purchase contracts to flip the properties to investors, pocketing the money. The two other lawsuits involve properties in Brookline and Cambridge, where Seymour and his associates (one allegedly including a Newton Police officer) have allegedly absconded with millions of dollars in sale proceeds. We are aware of several other transactions where Seymour and his partners were involved.

These cases are being discussed around the Greater Boston real estate bar, with several leading Massachusetts title insurance companies on the hook for insuring these fraudulent sales.

If you have any information concerning Mr. Seymour or any of these transaction, please email me confidentially at rvetstein@vetsteinlawgroup.com.

Fox 25 News Report below

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Fall is approaching and that means elections are coming up soon! I am enthusiastically endorsing Nick Carter for Governor’s Council in District 3.

The Governor’s Council is a little known political body, but it has a very important job — confirmation of all judicial nominations in the state. Nick, a Democrat, is running against long-time incumbent Marilyn Pettito Devaney (D-Watertown). The primary election is coming up on September 4.

Nick is a very experienced and talented litigator at the preeminent law firm of Todd & Weld. He’s been actively practicing in every court in the Commonwealth for over 25 years. He has the breadth and depth of experience to know who will make a good judge and who will not.

Although this is Nick’s first time running for statewide office, his talents and acumen have resulted in an impressive list of political endorsements, including Attorney General Maura Healy, Scott Harshbarger, former Middlesex DA Gerry Leone, former Treasurer Steve Grossman, the Arlington, Brookline and Newton School Boards, the Sierra Club, and many others.

Nick’s district includes Arlington, Watertown, Waltham, Sudbury, Southboro, Northboro, Acton, Burlington, Marlboro, Concord-Carlisle, Weston, Watertown and several other Metrowest towns. If you see Nick Carter on your ballot for Governor’s Council, please consider voting for him! I am confident he will do an excellent job and raise the bar for the Massachusetts judiciary.

For more information, visit Nick Carter – Democrat for Governor’s Council on the Web and Nick’s very active Facebook Page.

Here’s a video showing Nick’s human side.

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Court Declines to Cut Down Massachusetts Rule: Neighbor Not Liable for Damage Caused By Healthy Tree

I hope everyone is having a fun and relaxing summer. While you were soaking up the rays down the Cape or enjoying a delicious lobster roll at Woodman’s in Essex, the justices of the Supreme Judicial Court remained busy deciding cases.

A few weeks ago, in Shiel v. Rowell, the Court was asked to overrule centuries-old common law that a landowner may not be held liable for damage caused to a neighbor’s property from a healthy tree. In an opinion interspersed with amusing tree puns, the justices declined to uproot precedent, and reaffirmed the “Massachusetts Rule” that if a healthy tree causes damage to a neighbor’s land, there is no liability. However, the neighbor may prune or remove encroaching branches or roots.

100 Foot Sugar Oak Tree

In the case, Keli-Jo and John Rowell own residential property adjacent to Mary Shiel. On the Rowells’ property sits a 100 foot tall sugar oak tree with branches reaching over Shiel’s property. Shiel filed a complaint with claims of private nuisance and trespass against the Rowells after the tree caused algae buildup on the roof of Shiel’s home and the Rowells refused to cut it down. Shiel sought money damages for the damage to her roof and an injunction demanding that the overhanging branches be cut back. A judge in Quincy District Court dismissed Shiel’s lawsuit, citing the Massachusetts Rule above.

No Reason To Overrule Legal Precedent

The case went up on appeal, with Shiel urging the SJC to adopt the “Hawaii Rule” which allows a neighbor to require the tree owner pay for damage and cut back branches and roots if the tree causes, or there is an imminent danger of it causing, harm to the neighbor’s property. Shiel reasoned that the Massachusetts rule is outdated because today people are living in closer proximity to one another on smaller tracts of land than they were back in the 1800’s. While the justices acknowledged the recent need for changing other aspects of premises liability (eliminating distinctions between licensees, visitors, trespassers, for example), they saw no drastic change in the Massachusetts landscape to overrule over a hundred years of legal precedent. The law on tree responsibility remains the same today as it was in 1890.

Same Law, Same Questions

Now, the question I get the most from homeowners is what happens if a neighbor’s tree branches or roots are encroaching onto my property and causing damage? The SJC reaffirmed in Shiel that property owners may still legally cut encroaching branches and roots. This is true whether the tree is healthy or diseased. The SJC also restated the rule that a neighbor is always responsible for damage caused by an unhealthy tree regardless of whether it encroaches or not.

Attorney’s Advice: If you are dealing with a dispute regarding trees, especially along the property line, it’s a good idea to consult an attorney. Always get a survey or plot plan performed before you cut any trees. There is a Massachusetts law which provides a “triple damage” penalty for the malicious cutting of trees.

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Cases Subject of Attorney General and FBI Investigation, Oxford Man Under Arrest

Over the last month, I’ve been representing the victims in two significant forgery lawsuits, the likes and brazenness of which I have not seen in 20 years of practicing law. The matters are now the subject of criminal charges by the Attorney General’s Office.

As alleged in the two lawsuits, Allen J. Seymour, of Oxford, Massachusetts, is the alleged mastermind behind a sophisticated forgery scheme to defraud property owners out of their ownership to their homes. In one of the schemes involving a Brookline property, Seymour, using an alias, approached my client with a foreclosure assistance plan, getting him to execute a mortgage payoff form with an unusual second signature page. Unbeknownst to my client, that signature page was then attached to a quitclaim deed to a straw-person (an individual known as Kayla Turner, also of Oxford, MA), and recorded with the Norfolk Registry of Deeds. The straw-person then purported to sell the deal to local investors, with the sale proceeds wired to a bank account controlled by Seymour and his associates.

In another case involving a Cambridge property, a deed was forged using a fake notary public stamp, then sold to investors who took out a $2 Million mortgage loan against the property. My client found out about the scam when a locksmith arrived at his house, attempting to drill out his front door lockset. As alleged in the lawsuit and shown by records kept by the Secretary of State’s Office, the straw entity, the Dudley Group, LLC, used in the Cambridge transaction was managed by a Francis Foley III, who is a Lieutenant in the Newton, Massachusetts Police Department.

This is not Allen Seymour’s first run in with the law. He pled guilty in 2009-10 to a slew of federal and state crimes stemming from a similar foreclosure and mortgage fraud scheme in the Worcester County area whereby he defrauded homeowners out of millions of dollars. Seymour was arrested at a Florida airport in February 2008 with $1.37 million in cash hidden in his luggage. He was sentenced to six years in prison.

As a result of the lawsuits filed by my office and cooperation with the Attorney General’s office, Seymour was recently arrested in South Carolina. Seymour was arraigned in Brookline District Court on June 18, with bail set at $2.5 Million. Forgery (also known as uttering) of a deed is a felony with a maximum state prison sentence of 10 years.

I have filed a civil action in both cases to quiet title to the property, asking the court to reverse the fraudulent transactions. Under the law, a deed procured by forgery conveys no title. The cases are complicated because there are many parties involved and there have been mortgages recorded against the properties which will need to be discharged.

Early estimates are that up to $1,500,000 in sale proceeds were taken in these fraudulent transactions. The investors who purchased the properties are also pursuing Seymour and his associates.

I was recently interviewed by Fox News 25 (see video below) on these cases which are sure to attract some local media attention. There are also reports of many more potential fraudulent deals that were pending. If you have any knowledge of these, please contact me at rvetstein@vetsteinlawgroup.com.

I will keep you updated with any important developments!

Related Links:  Read the Lawsuit in Anzalone v. Dudley Group LLC, Middlesex Superior Court; Nelson v. Chandler Cazanove LLC, Middlesex Superior Court

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Bill Sent to Study Committee, Effectively Killing It

After intense lobbying on both sides by property owner groups and tenant rights activities, lawmakers sent the Jim Brooks Community Stabilization Act to study effectively killing it for this legislative session. The Act, a Home Rule Petition requiring full State House approval, would require that a landlord or foreclosing owner provide a city-approved “notice of basic rights” and a list of tenant assistance organizations simultaneously with the issuance of a notice to quit/termination or notice of lease renewal/expiration. It also provided that tenants of foreclosed properties could only be evicted for certain “just cause” reasons. The Boston City Council had originally approved the measure in November 2017, but state lawmakers had to approve it as well. Property owner groups were vehemently opposed to the measure, asserting that it was actually a return to Rent Control.

The reactions by proponents and opponents of the bill were naturally mixed on social media. Boston City Councilor Ayanna Pressley, a supporter of the measure, said that the bill “was not supported by the Judiciary Committee…but where it stands now is not promising.” The bill was vehemently opposed by property owner groups, such as Masslandlords.com and the Small Property Owners Association, which mounted a strong coordinated campaign to lobby legislators.

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New Judges to Serve Expanded Statewide Jurisdiction

In the 2018 Fiscal Year budget, the jurisdiction of the Housing Court expanded to full state-wide coverage, and with it, the Legislature created five new judgeships. Earlier this week, Governor Charlie Baker nominated five attorneys as new Associate Justices to the Housing Court:

Donna T. Salvidio of Worcester nominated as a Circuit Justice
Neil K. Sherring of Westwood nominated as a Circuit Justice
Joseph L. Michaud of Dartmouth nominated to the Metro South Division
Irene Bagdoian of Westborough nominated to the Metro South Division
Gustavo A. del Puerto of Salem nominated to the Northeastern Division

Each judge must be approved by the Governor’s Council before stepping onto the bench. While I do not know all the nominees personally, this group appears to have very solid experience and background. I look forward to seeing them before the Governor’s Council and hopefully on the bench.

Donna Salvidio currently leads the Condominium Law Practice Group within the Real Estate department at Fletcher Tilton PC in Worcester. Click here for her Firm Biography. Her work covers a full spectrum of real estate related matters, with particular emphasis on residential housing law, condominium law, property management, commercial leasing and transactional work. She has over 27 years of experience in residential housing law including landlord-tenant law and the development of affordable housing. Attorney Salvidio served as Board President of Worcester Community Housing Resources, Inc., a non-profit which creates and preserves affordable housing opportunities for low to moderate income households, and is currently a member of its Property Development and Management Committee. She also served on the Housing Court Committee of the Worcester County Bar Association and was a Commissioner of the Worcester Civic Center Commission for 10 years. Attorney Salvidio received her Bachelor’s Degree cum laude in Psychology from the University of Vermont and her Juris Doctor cum laude from Suffolk University Law School where she served as an editor of the Suffolk University Law Review. She currently resides in Worcester, Massachusetts.

Neil Sherring has 25 years of experience practicing law. Since 2001, he has been a partner in his own law firm Dakoyannis & Sherring, LLC, where he concentrates on landlord tenant and real estate related cases, personal injury claims, insurance disputes, and employment discrimination claims. Previously, he was a trial attorney at Mintz, Levin. Attorney Sherring also has a wealth of experience representing the Commonwealth as an Assistant Attorney General, Assistant District Attorney for  the Northwestern District of Massachusetts, Massachusetts Superior Court Law Clerk and Hearing Officer for the Division of Insurance. He has served as the Deputy Commissioner of the State Athletic Commission and has been a frequent lecturer at Suffolk University and Curry College. Within his community, he is a current Board Member of the Westwood Community Chest, where he has also served as President and Vice President. He earned his Bachelor’s Degree from Curry College and his Juris Doctorate from Suffolk University Law School. He resides in Westwood with his family.

Joseph Michaud has been practicing law for 25 years. He is currently an attorney partner at his own practice, the Law Offices of Joseph L. Michaud, where he specializes in residential and commercial real estate transactions and landlord-tenant matters. Attorney Michaud is also a decorated member of the United States Army, having served on active duty intermittently for the last 30 years as a Lieutenant Colonel in the Judge Advocates General Corps. He first enlisted as a Tanker in 1986, and went on to serve in both Desert Storm and Operation Noble Eagle. Attorney Michaud has earned 3 Meritorious Service Medals, 6 Army Commendations, a Joint Service Achievement Medal, a National Defense Medal, a Global War on Terrorism Medal, and an Outstanding Volunteer Medal. Attorney Michaud continues to serve his local community as Chair of the South Coast Chamber of Commerce in New Bedford and as a Board Member of the Veterans’ Transition House. He graduated with his Bachelor’s Degree from University of Massachusetts in Amherst and received a Master’s of Arts from Sam Houston State University. He earned his Juris Doctorate from the Franklin Pierce Law Center at the University of New Hampshire. Attorney Michaud is a lifelong resident of Dartmouth, MA. In his spare time, you can find him playing bass guitar in a local band.

Irene Bagdoian has practiced law in the Commonwealth for nearly thirty years. During the last decade, she has been a solo legal practitioner at her own law firm in Brockton, representing individuals and businesses in civil litigation matters related to housing, foreclosure, real estate, and consumer protection. She was one of the founders of the Brockton Housing Court Lawyer for the Day Program, which provides advice to unrepresented landlords and tenants, and has organized educational programming for volunteer lawyer programs in collaboration with the Southeastern Housing Court for the past nine years. Attorney Bagdoian is a member of the Steering Committee for the Tenancy Preservation Program and a Board Member of the Justice Center of Southeast MA. She graduated with her Bachelor’s Degree from Wheaton College in Norton, MA and received her Juris Doctorate from Boston University School of Law. She resides in Westborough with her husband, Paul Sangree.

Gustavo del Puerto has nearly 25 years practicing law in Massachusetts. He currently serves as Assistant Clerk Magistrate in the Northeast Housing Court. Prior to that, he practiced as a Senior Associate at Sassoon & Cymrot in Boston where he focused on commercial litigation, including the resolution of contract, business, and construction disputes, tort matters and the protection of creditors’ rights. Attorney del Puerto served as Counsel for the Chelsea Commission on Hispanic Affairs, Inc., where he also provided pro-bono work for immigration law. Attorney del Puerto earned his Bachelor of Arts from the College of the Holy Cross, and his Juris Doctorate from Northeastern University’s School of Law. He currently resides in Salem, MA.

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A Poem by Richard D. Vetstein, Esq. About a Real Case In Nantucket District Court

This is the true tale of a son, a mother, and a cottage.
Located in the village of Siasconset, Nantucket
For all ye interlopahs, it’s pronounced skon-set, but don’t get upset.
For I am just a simple lawyer, not a poet.
My name is Richard, but don’t call me Dick
Lest you want an Esquire’s swift kick

In this case, the wicked son misappropriated the family cottage
Turning it into an Airbnb
What’s that you ask? Something on the inter webs?
Didn’t Al Gore invent that for all the celebs?
Yes indeed, for cottage guest after guest came and went,
Lining the son’s pockets with many a cent.
Poor mother was not in favor, so enter the Life-saver,
Yes, that would be me, I must be braver!

This lawyer filed suit to evict the wicked son
Not going to let him pull a fast one
Jumped on the ferry in Brooks Bros. and tie
Of course, the one with pink whales from Vineyard Vines
Walked the cobblestones, and entered the small courthouse, ready for battle
The clerk asked is this case about personal chattel?
No, silly goose, it’s about a cottage, stolen at that!
A Freudian nightmare, a mother son coup d’etat!

Alas, the wicked son showed up late, looking awfully snobbish
Certainly didn’t look that impoverished
Wearing his best Nantucket reds and bucks
A bit of a shmuck

But after speaking with him out in the dank hallway
It turns out he was a fairly decent chap
Negotiations bridged the gap
Between mother and son
An agreement for judgment was drawn up
Hopefully avoided was a family break-up

I left the magical Island proud of a job well done
Until we meet again for another billable hour, Nantucket, I say farewell! 

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Landlord Attorneys Active In Court and In Legislature On Rent Escrow Issue

Massachusetts Lawyers Weekly Reporter Patrick Murphy just did a great write up of the current state of Rent Escrow in the Legislature and at the Housing Court. As reported by Mr. Murphy, attorneys representing residential landlords (like myself) are hopeful that this is the year the Legislature closes what is perceived to be a loophole that allows tenants to remain in possession of the premises rent-free during eviction proceedings. Bills moving through both the House and Senate would require judges to order tenants to pay rent into escrow during the pendency of a case upon motion by property owners. In the meantime, Housing Court judges including Marylou Muirhead (pictured below) are becoming more receptive to approving motions for rent escrow filed by landlord attorneys.

Free rent trickery?

As I’ve written on this Blog, the Massachusetts eviction system contains a loophole that allows tenants to avoid paying rent while a dispute is pending. Specifically, they point to G.L.c. 239, §8A, which authorizes tenants to raise defenses or counterclaims — such as those alleging the landlord’s breach of the terms of the lease or housing code violations — justifying the withholding of rent. In terms of the escrow of rent, the statute provides that the court, after hearing the case, “may” require the tenant to pay to the clerk of the court “the fair value of the use and occupation of the premises,” less any amount awarded on the tenant’s claims.

We call this the “Free Rent Trick” — where the tenant will stop paying rent and file a complaint with the local board of health over minor code violations, such as a broken window screen. Rent accrues as the landlord gets around to hiring a lawyer to file a 14-day notice to quit the premises and commence summary process. Three to five months of rent may have accrued before a case is typically heard, and tenants can extend the process another three to six months, depending on the court, by requesting a jury trial.

Rare win for landlords?

As Mr. Murphy highlighted in his article, I recently succeeded in obtaining a rare rent escrow order in Worcester Housing Court in a case in which months of back rent had accrued before I ever became involved in the matter. In Eda Ema, LLC v. Kirby, Judge MaryLou Muirhead (pictured right) ordered the tenant to begin making escrow payments of $975 a month, reflecting the terms of her lease. The tenant owed $12,675 in past due rent at the time the case was filed in January.

The case points to the plight of many landlords even if they are ultimately successful in obtaining a judgment against the tenant for back rent. Such judgments are often uncollectible. However, the escrow order I obtained in Eda Ema is a rarity in my experience, with several Housing Court judges and most District Court judges still resistant to ordering such relief.

Pending Rent Escrow Bills

Putting an end to the so-called “free rent trick” in Massachusetts is long overdue, according to my colleague Brighton landlord attorney Emil Ward who has drafted Senate Bill 778, calling for mandatory rent escrow.

Another bill, House rent escrow bill, H. 980, was filed in January 2017 by Middlesex Democrat Rep. Chris Walsh. The bill would amend G.L.c. 239, §8A, to provide that “the court after hearing shall require” the tenant to pay into escrow “the amounts due for use and occupancy, calculated according to the fair market value of the premises.”

Walsh said his bill is intended to help small landlords, many who have complained to him in the past about being victimized by the free rent ploy. He said he has heard complaints of tenants who knew how to “work the system,” invoking housing regulations to “essentially stop paying rent.”

While we haven’t been successful in getting a rent escrow bill passed, I’m hopeful that Legislators are finally listening to landlords’ legitimate concerns that the eviction playing deck is stacked against them.

As always, I will keep tabs on these developments.

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Property Owners Vehemently Opposed to “Right of First Refusal” Proposals Giving Tenants Up to 240 Days to Purchase Rental Properties For Sale

In an effort to stem the affordable housing problem, cities like Cambridge and Somerville are exploring giving tenants a legal right to purchase the homes and apartments they are renting when owners go to sell them on the open market. The concept is a “right of first refusal” which would be triggered when the owner lists the property for sale and gets a bona fide offer from a third party buyer. Under the Cambridge proposal embedded below, a tenant would have up to 240 days to put down a deposit, obtain financing and close on the purchase, and would also have the right to assign the contract to a non-profit housing trust for affordable housing. The proposed law would apply to all rented single family homes, condominium units, multifamily and apartment buildings except owner two-family residences fully owner occupied or with one of the units occupied by the owner’s immediate family. (These definitions are somewhat unclear).  

Somerville State Senator Denise Provost originally filed a Tenant Right to Purchase Bill with the Legislature, but it did not move past committee. Now, Cambridge and Somerville are considering Home Rule Petitions to pass their own Right of First Refusal laws. If these proposals gain traction, they could spread to other cities and towns like Boston.

Property owner groups vehemently oppose these proposals. A similar proposal was passed in Washington, D.C, and the Huffington Post has exposed how it’s been an abysmal failure and abused by tenants. As the HuffPost, writes, “some tenants are using [the Act] to extract money from landlords, should a landlord decide to sell a building. At present, TOPA is holding up or blocking real estate transactions, causing grief for developers and homeowners and victimizing low-income residents stuck living in buildings owners are unable to sell but forced to maintain at a financial loss.”

I agree that this would be a terrible idea and extremely unfair to Massachusetts property owners. No, it’s not just terrible. It’s crazy and socialist. First, any sale of rental property is always subject to an existing tenancy or lease. That’s been the law in Massachusetts for centuries. So renters are already protected from displacement. Second, the proposal would wreck havoc on the local real estate market and skew free market dynamics. The Cambridge law would give tenants with no skin in the game 8 months to purchase a property. That’s 3 real estate cycles! Knowing that any offer would be subject to a tenant right of first refusal, investors would avoid making offers for occupied properties for sale, or would reduce offering prices, thus chilling sales. Tenants would be able to “flip” their right of first refusal to local nonprofits for affordable housing, walking away with a tidy profit. There are much better ways to create affordable housing than this idea.

Update (3/6/18): After Owner Outcry, Cambridge City Council Votes Down Proposal

Cambridge MA Tenant Right of First Refusal Home Rule Petition by Richard Vetstein on Scribd

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“From the Assessor’s Office” — A New Regular Column by Jonathan Steinberg, MAA, MACR, Chief Assessor, Town of Westborough

Along with the celebration of the holidays comes the moment of truth when communities with quarterly tax billing send out the new Fiscal Year’s tax bills. Often there is an emotional response of frustration and anger. However, take a deep breath before contacting the Assessor’s office and ask yourself two questions: “Is it my assessment that’s too high or are my taxes simply too high? Could I sell my house for the assessed value?” If your assessment seems reasonable, but you think your taxes are too high, my recommendation is to go vote at Town Meeting or contact your City Councilmen, and get involved in your local government. Don’t contact your Assessor. If your assessment is too high, it’s worth considering filing for an abatement.

There are a few things to know before picking up the phone to call the Assessor’s Office.

Most importantly, applications for abatement must be postmarked by February 1st . After that deadline, the Board of Assessors has no authority to grant abatements for the Fiscal Year.

How are real estate taxes calculated and what do these bills represent?

The Fiscal Year begins on July 1st and runs until June 30th. The first two tax bills received on July 1st and October 1st are preliminary tax bills based upon the prior year’s values and tax rate. The new Fiscal Year’s assessments are set in the fall, the community determines if there will be a split or single rate and a tax rate set by mid-December. The tax bills sent by January 1st represent the Actual bills for the Fiscal year. These bills use the new Fiscal Year’s assessment and tax rate to determine the total year’s taxes due. The preliminary amounts are subtracted. The remaining amount is divided by two for the third and fourth quarters. This calculation results in the four quarters not being the same.

Ex. Fiscal 2017 assessment of $450,000 and rate of $17.80/$1000

Fiscal 2018 Preliminary bills $450,000 x $17.80/$1000= $8,010 /4 quarters = $2,002.50

Fiscal 2018 Q1 = $2,002.50   :     Q2= $2,002.50 Total Preliminary Paid = $4,005.00

Fiscal 2018 Value set at $465,000 and rate $18.25

Fiscal 2018 taxes: $465,000 x 18.00/$1000 = $8,370.00

Less Preliminary Bills: $8,370.00 – $4,005.00 = $4,365.00

Fiscal 2018 Q3 & Q4 Bills: $4,365.00/2 = $2,182.50

The total increase in taxes is $360.00

Many take the recent tax bill just received, multiply by four. In the example above, that would represent an increase of $720.00. You can take some consolation in that the next July’s bill should be less than the bills just received.

Understanding Your Assessment

Assessed values for Fiscal 2018 are as of January 1st, 2017. They are based upon the calendar 2016 sales of similar properties. The property that sold in your neighborhood last month is not considered in the current assessments. Unlike a “Fee Appraisal” for a mortgage, Assessor’s utilize “Mass Appraisal”. Assessors analyze an entire year’s sales, looking at assessment to sales ratios and different property characteristics. The analysis compares similar properties comparing factors such as size, location, style, age, quality and condition. Utilizing a CAMA (Computer Assisted Mass Appraisal) system, they apply this analysis equitably across all the properties in Town. The effectiveness of this relies on accurate data to evaluate that people paid X for Y.

A word of caution, before proceeding. When filing for an abatement, assessments can go up if errors are found that need to be corrected.

Procedures for Filing an Abatement

The first step is to get a copy of your property record card and review the information for accuracy. Look at the measurements and details such as acreage, bath count, fireplaces, finished basement, central air, etc. Next, review the grade rating, quality and condition of the dwelling compared to other similar properties. It is key to look only at similar properties. Don’t compare your newer colonial to a 1950’s cape. Inequitable valuation is a difficult case to support since the same valuation model is applied to all properties. If there are differences in value between you and your neighbor, it will be the result of differences in data. Correct or incorrect.

Don’ts:

  • Don’t cherry pick sales and properties throwing out anything that doesn’t support your argument. Assessor’s won’t overlook these. If other properties need correction, it doesn’t make your property value wrong.
  • Don’t compare your newer colonial to a 1950’s cape. Even if the property is next door, similar properties need to be compared. If you find data errors, filing for an abatement may be worth your time.
  • Don’t simply divide the assessment by the living area and compare $/square foot. This is not an accurate comparison. Factors are not linear. This calculation does not take into account differences in acreage and interior details.
  • Don’t bring a Zillow value into the Assessor’s office as support. Zillow can be a decent tool for lists of sales, but it falls short when it comes to analysis. Any information provided from online sources should be evaluated independently rather than relying on their values. There are simply too many variables that impact value that can’t be captured by these sites. Information about comparable sales can also be found through brokers or in the Assessor’s office.
  • Don’t bring in a bank appraisal that was done on your property within the last six months. It will use comparables that are after the January 1, 2017 effective date of the assessment.
  • Don’t refuse an inspection.

Do’s:

  • Fill out the application completely and submit it prior to the deadline.
  • Clearly explain any issues with the data on the record card.
  • Select and present comparable sales that are prior to the January 1, 2017 effective date of this assessment.
  • Select comparable sales that are actually comparable. They should be similar location, age, style, size etc.
  • Provide a reasonable opinion of value that is supported by your explanation.
  • Make yourself available for an inspection within the schedule of the Assessor’s. While you are never required to allow Assessor’s into your property, denying an inspection when applying for an abatement can almost guarantee a denial regardless of the reason for application. Don’t delay the inspection. Bear in mind, that this is something you have applied for so do your best to be accommodating for the Assessor’s inspection schedule.

After the Board of Assessors has acted on your application and you’ve received notice, if still unhappy with the outcome, the next step is an appeal to the Appellate Tax Board.

In closing, remember the February 1st filing deadline, assessments can go up if other errors are found(review your record card carefully), and go back and review the “Don’ts” above before sending in your application.

Jonathan Steinberg, MAA, MACR, is the Chief Assessor, Town of Westborough

The views contained in this article are the personal views of the author, not the Town of Westborough or the Commonwealth of Massachusetts.

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Property Owners — Shovel Early and Often!

As I sit here working from home watching the “Bomb Cyclone” storm make its way up the East Coast, the clicks on my blog searching for “Massachusetts snow removal law” are going as rapidly upward as the barometric pressure of this “Bombogensis” storm system. Massachusetts law underwent a monumental change back in 2010 with a Supreme Judicial Court decision overruling the 125 year old “Massachusetts Rule” which allowed property owners to leave “natural” accumulations of snow and avoid liability. Now, all Massachusetts property owners are under a legal duty to keep their property free from dangerous snow and ice. Moreover, cities and towns have been passing all types of new snow removal ordinances and by-laws regulating whether owners must shovel public/private sidewalks, and how long they have to clear snow. So let’s do a quick Frequently Asked Question post.

I own a rental property with a driveway and one common walkway and entrance. Am I responsible for shoveling snow on the driveway and/or walkway?

My opinion is the answer is yes. Under the previously referenced 2010 Supreme Judicial Court ruling, all property owners (rental or owner occupied) can be held liable for failing to remove snow and ice from their property. The old rule was that owners didn’t have to remove “natural accumulations” of snow and ice, but the court overruled that in favor of a general obligation to keep property safe for all visitors and guests. There are also many local town and city ordinances which likewise obligate property owners to keep snow and ice off their property and sidewalks. I will discuss some of those below.

Can I use a lease which provides that the tenant is responsible for snow removal. Is that legal and will that protect me from liability?

It depends on your particular property. Landlords have the primary responsibility for snow removal at a rental property. Under the State Sanitary Code, property owners/landlords must keep all means of egress free from obstruction — that cannot be negotiated away. As for the removal of snow and ice, the Code provides that the landlord shall maintain all means of egress at all times in a safe, operable condition and shall keep all exterior stairways, fire escapes, egress balconies and bridges free of snow and ice. Again, those obligations cannot be negotiated away.

A landlord may require the tenant be responsible for snow and ice remove in a lease provision only where a dwelling has an independent means of egress, not shared with other occupants, and a written lease provides for same. On its face, this exception only applies to entrance-ways and not driveways or parking areas. I am not aware of a court ruling on this particular Code provision, but if I were a landlord I would not risk being on the wrong side of a “test case” where someone is injured badly.

So, in the example above with an owner occupied two family with one common entrance and driveway, that lease provision would be illegal.

Even if the tenant is responsible for snow removal under a legal lease provision, the landlord could still face personal injury liability for slip and falls on snow and ice under the SJC ruling.  A guest or visitor who is injured due to untreated snow or ice will likely sue both the property owner and the tenant. The property owner must ultimately ensure that the property is safe for visitors.

How soon do I have to shovel the snow before I get in legal trouble?

The City of Boston’s policy is to give businesses 3 hours to clean snow, and 6 hours to residents. In Worcester, it’s 10 hours to clear snow. Those are the minimums. As with any dangerous condition, my advice is to shovel and treat snow and ice early and often. Even a thin coating of black ice can cause someone to slip and fall and seriously hurt themselves. (Admit it if you’ve dumped on your rear end like I have!). If you are an out-of-town landlord, you must hire someone to shovel your snow.

Am I required to shovel the public sidewalk in front of my house/business after a storm?

In most Massachusetts towns and cities, the answer is yes. Check your local town ordinances for guidance. The cities of Boston, Cambridge, Somerville, Arlington, Belmont, Newton, Lynn, and Worcester (among others) all require property owners and businesses to clear municipal sidewalks in front of their residences or businesses. Fines are assessed against non-compliance. In Somerville, for example, if snow ceases to fall after sunrise (during daylight hours), property owners must shovel sidewalks by 10 p.m, and if snow ceases to fall after sunset (overnight), property owners must shovel sidewalks by 10 a.m. You can also be fined for shoveling snow onto the street, blocking a curb cut or putting snow on municipal owned property.

In some more residential towns, the local DPW will clear the sidewalks, but the default rule is that property owners are generally responsible for clearing their own sidewalks and driveways.

Will my homeowner’s or CGL insurance policy cover any injuries from slip and fall on snow/ice?

Yes, usually. The standard Massachusetts homeowners insurance policy and commercial general liability insurance policy (CGL) will have liability coverage for slip and falls on property. Make sure you have ample liability coverage of at least $500,000 to 1 Million. (You can never have enough insurance!). As with any insurance question, it’s best to contact your personal insurance agent.

I’m just a regular homeowner. What if the mailman or delivery person slips on my walkway?

You may be liable if you left dangerous snow and ice on your walkway. The new law applies to every property owner in Massachusetts, not just landlords. Get some Ice-melt and sand and spread on your walkway. If it re-freezes overnight into black ice, you will remain liable.

Helpful Links

City of Boston Snow Removal Notice

City of Worcester Snow Removal

City of Newton Snow Removal

City of Framingham Snow Removal

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Taxpayers Rushing To Claim Deductibility Of Real Estate Taxes — Prepayment Should Be OK 

As I wrote in my overview of the recently signed Tax Cuts & Jobs Act of 2017 (Tax Reform Act), for 2018, Massachusetts property owners will only be allowed to deduct $10,000 of real estate taxes and state income taxes. As a result, taxpayers have been rushing to pre-pay their real estate tax bills before year-end, in order to claim full deductibility on their 2017 tax returns.

The IRS has just issued an Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017.  The Advisory states:

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017. State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

I’ve spent this morning attempting to break this down as it applies to the complex byzantine world of Massachusetts real estate property taxes.

The Massachusetts real estate tax system operate on the Fiscal Year system, running from July 1 through the following June 30. January 1 is the property tax assessment date for each fiscal year. We are now in the middle of Fiscal Year 2018 which ends on June 30, 2018. The 2018 fiscal tax bill is based on the property value assessment as of January 1, 2017. Taxpayers receive four (4) bills per year, due on August 1, November 1, February 1, and May 1. The first two quarterly bills are typically “estimates” with the subsequent two quarterly bills “actual” bills.

With respect to the Tax Reform Plan, taxpayers are attempting to pay their fiscal year 2018 third and fourth quarter bills (due 2/1/18 and 5/1/18) prior to year-end.

My assessment is that this (paying 3rd and 4th quarter tax bills before year-end) should be acceptable under the IRS Guidance because the tax obligation was “assessed” as of January 1, 2017, i.e, prior to Jan. 1, 2018. On the other hand, real estate taxes due after May 1, 2018 will likely not qualify for deductibility — even if paid in 2017.

Many tax collector offices are only accepting pre-payments on or before December 29th, so hurry up and pay!

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Tax Reform Act Not Nearly As Bad As Feared For Massachusetts Homeowners

With Paul Ryan and Mitch McConnell and their minions burning the midnight legislative oil, the Tax Cuts and Jobs Act of 2017 is set to pass with President Trump’s signature before Christmas. (Updated: President Trump signed the bill into law on Dec. 22).  Everyone is asking me the same question. How will the biggest change in US tax policy in 30 years affect the Massachusetts real estate market and homeowners? There’s been a ton of commentary that the Act is the second coming of the Apocalypse for the real estate market, but I’m not convinced. While I do have many concerns with the overall bill (bloating the deficit, etc.), my opinion is that it will be a small net positive for the real estate industry.

(Disclaimer: I am neither a tax attorney nor a CPA, and I don’t play one on TV, so consult your own tax professional for any tax advice).

Capital Gain Exclusion on Sale of Primary Residence – No Change 

Excellent news here. The long-standing rule has been that the gain (increase in value) of the sale of a primary residence is non-taxable up to $250,000 for a single person and up to $500,000 for a married couple, if you occupied the home for 2 out of the last 5 years. This provision has been a huge incentive for home sales for many years. In prior GOP tax reform bill drafts, the exemption was increased so that owners needed to reside in the home for 5 out of the 8 years preceding the sale. The National Association of Realtors argued that this change would have resulted in a 10% drop in home sales. In response to the NAR’s intense lobbying, the final bill does not include any changes to the capital gains exclusion.

So the current rule stays in place – you can exclude up to $250,000 as a single filer and $500,000 for joint married filer in capital gain on the sale of your primary residence if you lived there for 2 out of the last 5 years. This is really great news for the Massachusetts real estate market.

SALT – Real Estate Taxes and State Income Taxes — $10,000 Cap

This change is a “loss” to homeowners, especially those with high value properties and in wealthy towns. Currently, all real estate taxes paid in Massachusetts are 100% tax deductible if you itemize your deductions. In Massachusetts, those real estate tax bills can be quite large.

Under the Act, there is now a deductibility cap of $10,000 — which includes not only local real estate taxes but all state and local income taxes. This will be a huge hit to taxpayers in wealthy towns with high real estate tax bills. Going forward, taxpayers will only be allowed to deduct $10,000 of all real estate taxes and state/local income taxes. This is definitely a major “loss” for Massachusetts homeowners, especially those in towns with high real estate taxes. This change, however, may be offset by the increase in the standard deduction ($12,000 for single, $24,000 for married) and the boost in child tax credits, but if you live in Weston or Boston, for example, this is likely going to hurt.

Tax Tip:  If your real estate tax bill is over $10,000, consider pre-paying your real estate tax bill before 12/31/17, so you can still deduct it. According to the Boston Globe, most town assessors around the state are accepting such payments. Update (12/28/17): The IRS has issued a Formal Advisory on Real Estate Tax Pre-Payments. Click to read my full review here.

Mortgage Interest Deduction – Deductible Up to $750,000. No Deductions For HELOC/Vacation Homes 

Again, due to the NAR’s strong lobbying efforts, the GOP kept the mortgage interest deduction intact for the most part, but with caps, and equity lines and second mortgages losing their deductibility. I would say this is a net “win” for homeowners. Starting in 2018, homeowners can keep the mortgage interest deduction on a loan of up to $750,000, down from the current law’s limit of $1 million.

Individuals who take out home equity (HELOC) loans, however, will no longer be able to deduct that interest under the new bill. The same is true for second mortgages and vacation homes. No more interest deductions for those. So this change may impact the vacation home market, particular down the Cape and Islands. However, a rental property owner could offset this loss by renting out the home for a few weeks, per the new benefits for rental housing discussed below.

Importantly, these new rules only apply to new mortgages applied for after Jan. 1, 2018. Existing mortgages incurred on or before Dec. 15, 2017 will remain fully tax deductible. There is some IRS guidance on these new rules, so consult your CPA.

Rental Property Owners/Landlords — Thumbs Up! 

As Bloomberg News reports, the Tax Reform Act will be very good for rental property owners and landlords if they do business via pass-through entities — real estate investment trusts, partnerships, limited liability companies, and S corporations — all of which are set to get big tax breaks in the Act. Under the new rules, all pass through income for qualified entities will enjoy a 20% deduction on the owner’s individual 1040 return. For landlords who have greater than $157,500 (single) or $315,000 (married filing jointly) in qualified taxable income, they can select an alternative deduction of (i) the greater of 50% of all W–2 wages, or (ii) the sum of 25% of the W–2 wages plus 2.5% of the unadjusted basis immediately after acquisition of all qualified property.

Attorney’s Advice: I’ve always counseled clients to set up an LLC to hold title to rental property, both from a liability and tax planning standpoint. With the Tax Reform Act giving even greater benefit to pass-through entities, it makes even more sense to set up that LLC. If you need assistance setting up an LLC, please email me at rvetstein@vetsteinlawgroup.com.

Also for depreciation rules, the depreciable life term has been reduced — from 27.5 years to 25 years for residential property and from 39 years to 25 years for nonresidential property. In addition, while most other businesses will find their interest deduction limited under the Senate bill, that limitation doesn’t apply to landlords, who can continue to deduct their mortgage interest in full.

There are other rules also favoring rental property owners, so definitely consult your CPA to prepare for 2018.

Thoughts and Comments?

As an attorney who has handled thousands of residential purchases and refinance loans, I’ve never been one to ascribe to the notion that the tax code has a ultimate determinative effect on whether a buyer is going to purchase a home or not. I’ve always believed that tax implications are one factor out of many in the home buying and selling equation. In my opinion, income, job security and consumer confidence play a larger role. I would doubt that the young couple searching for a starter home in Medway is going to say “geez, now that the SALT deduction is limited to $10k, let’s scrap this whole home buying idea.” If people have decided they want to buy a house, they will usually do so.

Overall, I think the Tax Cuts and Jobs Act of 2017 will have a net positive effect on the national and Massachusetts real estate market, despite the SALT cap and changes to HELOC/second mortgage deductibility. I’m hopeful that the increase in standard deductions and child tax credits will offset the mortgage deductibility and real estate tax changes. The no-change to the capital gain rules was critical and we have the NAR to thank for that. That was a game changer. And lastly, the rental and investment property market will get a big boost.

Rick Moore, Senior Mortgage Advisor with Zenith Mortgage Advisors in Holliston, is one local loan officer who is happy with the Tax Reform Act, both personally and professionally. “I think it’s a historic day, and I’m happy to have the extra money for some home improvement projects. Overall, if the economy will get a boost as expected by the administration, then that’s good for me as a loan officer. I’m looking forward to a very prosperous 2018!”

I do, however, worry about the addition of some 1.5 Trillion to the federal deficit as a result of the tax reform act. This is never good for long term stability of the economy and the housing market. It’s probably a safe bet to say that interest rates are going to rise to keep inflation at bay. I’m concerned that in exchange for some short term gain, we may be setting ourselves up for some long term pain. Only time will tell, but I hope Rick is right!

Feel free to post your comments below and on Facebook.

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Court Shoots Down Lender’s Attempt to Expand Doctrine of Equitable Subrogation

In the interesting case of Wells Fargo Bank v. Comeau (Nov. 15, 2017), Justice Peter Agnes of the Appeals Court has held that a surviving wife is not financially responsible for paying back a refinanced mortgage where the wife neither signed the promissory note nor the refinance mortgage, even though she originally held title to the home as a married couple (tenants by the entirety) and signed the original mortgage on the property. In so ruling, Judge Agnes rejected Wells Fargo’s argument to expand the doctrine of equitable subrogation to cover a situation such as this.

Parties to Deed Must Match Up With Mortgage!

Nancy and William Comeau owned their Haverhill home jointly in the traditional Massachusetts form of ownership called “tenancy by the entirety” where title passes automatically to the surviving spouse upon death of a spouse. When the couple purchased the home, they both signed a first mortgage to Haverhill Cooperative Savings Bank. It appears that Nancy was not an applicant for the loan because she did not sign the promissory note. However, the cardinal rule is that the parties to the deed must match the parties to the mortgage, otherwise there will be problems (foreshadowing what happened in this case).

When the couple went to refinance the Haverhill Savings loan with Wells Fargo, only William, the husband, signed the note and mortgage. Big mistake! Since Nancy, the wife, remained on the title as a joint owner, she should have signed the mortgage as well. After the refinancing, William unfortunately dies. His estate is probated, but Wells Fargo makes another mistake and fails to file a claim within the one year probate statute of limitations.

Lender Goes To Court

In an attempt to get Nancy to pay up on the mortgage, Wells Fargo went to Superior Court and made the creative argument that the wife should be responsible under the little known legal doctrine of equitable subrogation which gives courts equitable power to reform mortgages, to restore once-extinguished mortgages, and to adjust priorities among existing mortgages where it is fair and just to do so. Wells lost in Superior Court. On appeal, Justice Agnes agreed, ruling that this case was not appropriate for the equitable subrogation remedy, thereby leaving Wells Fargo with a total loss on its mortgage debt. Judge Agnes reasoned that the situation was entirely of Wells Fargo’s making, and that it had the opportunity to have Nancy sign the mortgage or make a claim against William’s estate, but it failed to do so.

Having handled many title insurance claims in my prior practice, we often used equitable subrogation in cases where a title examiner missed a mortgage in connection with a refinance. Those types of human error would allow for equitable subrogation, however, this case would not, as Judge Agnes correctly ruled in my opinion.

This case is a good example why closing attorneys should always have both married spouses execute the mortgage even if one spouse is not on the loan.

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No Triple Damages Although Landlord Failed To Provided Sworn Statement of Itemized Damage at Move Out

When a tenant leaves damage to a rental unit at move out, the Massachusetts Security Deposit Law allows a landlord to deduct the cost of repairs from the security deposit, provided the landlord issues a sworn statement of itemized damage along with repair estimates within 30 days of the move out. I’ve seen many landlords attempt to comply with the law only to be on the receiving end of a Chapter 93A letter from a tenant attorney demanding triple damages for messing up this requirement. This is one of many reasons why I advise my landlord clients to decline taking a security deposit from tenants.

Last week, the Supreme Judicial Court had the opportunity to clarify this particular provision of the law in the class action case of Phillips v. Equity Residential Management LLC. In this case, Equity Residential, attempted to deduct $968.08 in carpet and other cleaning charges from a tenant’s security deposit. However, Equity failed to provide the required itemized statement sworn under the pains and penalties of perjury. The tenant filed a class action seeking return of the deposit, triple damages, and attorneys’ fees under the statute.

I won’t bore you with all the technicalities of the Court’s ruling, but the SJC came down on the landlord’s side on this case, holding that while the landlord mistakenly failed to provide the sworn statement the law was clear that this is not one of the situations where triple damages is the proper remedy. (Equity did have to return the tenant’s security deposit in full). Yes, I know a rare victory for property owners in Massachusetts…

Again, while this case came out on the landlord’s side, it demonstrates the risks involved in failing to comply strictly with the Massachusetts Security Deposit Law. As a reminder, if a landlord is claiming that a tenant caused damage at the end of the tenancy and wants to deduct it from the deposit, it must provide within thirty days “an itemized list of damages, sworn to by the lessor or his agent under pains and penalties of perjury, itemizing in precise detail the nature of the damage and of the repairs necessary to correct such damage, and written evidence, such as estimates, bills, invoices or receipts, indicating the actual or estimated cost thereof.” The law also requires that landlord provide a “statement of condition” at the beginning of the tenancy, so that damage can be verified. Only then will a landlord be allowed to deduct repair costs from a security deposit.

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Richard D. Vetstein, Esq. is an experienced Massachusetts residential landlord – tenant attorney. You can contact him at info@vetsteinlawgroup.com.

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Changes Catching Landlords By Surprise

Without much publicity or property owner input, the Massachusetts Department of Public Health has rolled out proposed revisions to the State Sanitary Code which provides minimum standards of habitability for all rental housing units across the state. There are some significant changes which will definitely impact both small and large property owners/landlords.

Integrated Pest Management Plan
The proposed rules requires that any rental property with 4 or more units implement an Integrated Pest Management Plan with pest inspections conducted at least every 4 months. Owners are required to maintain a record documenting the following activities conducted within the residence including inspection results, complaints filed by occupants, the date, location, product name, and name of any person applying pesticides, and modifications to the original IPM plan, all of which should be available upon request by the board of health.

Mold, Mold, Mold
DPH is on a mission to eradicate mold in rental housing. The new rules place landlords responsible to remove all possible signs of mold in apartments as well as any areas of “chronic dampness.” As every landlords knows, tenants are often the ones who cause mold growth by not using proper ventilation or having poor hygiene. Boards of health are now authorized to conduct mold-specific inspections and conduct air quality tests.

Bathroom Exhaust Fans

The new rules require exhaust fans in every bathroom whether or not there is a window. Previously, landlords did not have to install a fan if there was a bathroom window.

Central Heating Systems

Property owners are required to provide a “central heating system” for all units. Fireplaces, woodstoves, pellet stoves, portable electric space heaters and unvented propane or natural gas-fired space heaters will not meet the requirements of this new standard. This will impact rental housing in the outer counties. Also prohibited from use in any residence are (1) any portable space heater, parlor heater, cabinet heater, or room heater that has a barometric fed fuel control and a fuel supply tank located less than 42 inches from the center of the burner, (2) heating appliances adapted for burning propane, kerosene, range oil or number one fuel oil, and (3) Portable wick type space heaters.

Code Violations/Tenant Remedies

Of course, any violations of the State Sanitary Code entitles tenants to withhold rent under state law. There can also be Chapter 93A/Consumer Protection liability which carries the prospect of triple damages and payment of tenant attorneys’ fees. Code violations can severely de-rail any eviction action so landlords must ensure that any code violations are quickly and properly addressed. Without the passage of a rent escrow law, landlords remain at risk of tenant abuses of the rent withholding statute.

The proposed revisions to the State Sanitary Code, 105 CMR 410 can be downloaded here.

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Updated 11/10/17

Proposal Heads To State House Next

Once thought to be dead, the Boston City Council yesterday approved the first ever “just cause” eviction act in Massachusetts, known as the Jim Brooks Community Stabilization Act. The Act, which opponents dubbed a return to rent control, requires landlords owning 6 or more units to file a notice to quit/termination with the newly formed Office of Housing Stability, prior to starting an eviction. However, after intense lobbying by property owner groups, the council passed a watered-down just cause eviction provision which only applies to foreclosing owners/lenders. The vote was 10-3 in favor of the Act, with City Councilors Bill Linehan, Sal LaMattina, and Timothy McCarthy voted no.

City Rights Notice

The Act requires that a landlord or foreclosing owner provide a city-approved “notice of basic rights” and a list of tenant assistance organizations simultaneously with the issuance of a notice to quit/termination or notice of lease renewal/expiration. In the case of a lease non-renewal or expiration, landlords and foreclosing owners must provide another “City Termination Notice” to the tenant and the City, at least 30 days prior to starting a summary process (eviction) action. All of these notices must be filed with the summary process case, and the failure to provide these notices will result in eviction cases being dismissed. As with any notice to quit, the best practice is to have such notices served by licensed constable or deputy sheriff.

“Just Cause” Grounds for Eviction

The original version of provided that landlords could only evict tenants for nine (9) specified just cause reasons. However, the final version passed only applies to foreclosing owners/lenders, not to ordinary landlords. Some of the just cause reasons include

  • Nuisance/damage to unit
  • Illegal activity such as drug use
  • Refusal to pay reasonable rent
  • Failure to provide access.
  • Owner requires premises for housing for family member

What’s Next?

It’s not all bad news for property owners, however. The bill faces more hurdles before becoming law. It is a Home Rule Petition, so it must be approved by the entire State Legislature before it becomes law. That may prove to be quite difficult for proponents. The bill may also face court challenges because, as opponents argue, it’s an unlawful return to rent control, which was outlawed in the 1980’s, and fundamentally alters existing private contracts and the very nature of a tenancy at will relationship.

The Act is also somewhat of a compromise between property owners and tenant groups. Tenants wanted to require landlords to submit to mediation for rent hikes of more than 5%, but were not able to get support for it among city council members. Tenant groups also pushed for prohibitions on evicting elderly or disabled tenants and long term renters with children in the school system. The Mayor rejected those ideas as well.

Additionally, small landlords owning 6 or fewer units are exempt from coverage as are owner-occupants of multi-family dwellings and Section 8/federally subsidized housing providers.

The final text of the Act can be read here.

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