New Mandatory Forms and Regulations Released in Wake of Eviction Moratorium ActOn April 20, 2020, Gov. Baker signed into law An Act Providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency (the “Act”), which puts in place a moratorium on “non-essential evictions” of residential and small business tenants during the COVID-19 state of emergency. The Executive Office of Housing and Economic Development (EOHED) has released follow up regulations to ensure compliance with the Act. Several mandatory notices and forms have also been released which will be discussed and linked to below. The Regulations expire 120 days after the effective date of the Act, or 45 days after the state of emergency has been lifted, whichever is sooner, unless further extended by the secretary of EOHED. A link to the new regulations is here: 400 Code of Mass. Regulations 5.0: COVID-19 Emergency Regulations

New Required Form: “Notice of Rent Arrearage”

Under the Moratorium and the new regulations, landlords are prohibited from issuing a notice to quit for non-payment of rent, may not impose late fees for non-payment, or notify a credit reporting agency of the non-payment of rent if the tenant provides a notice and documentation of a financial impact from COVID-19. Instead, the new regulations allow landlords to send a new type of notice for a late or missing rent payment, called a “Notice of Rent Arrearage” which must contain the following special language:

“THIS IS NOT A NOTICE TO QUIT.  YOU ARE NOT BEING EVICTED, AND YOU DO NOT HAVE TO LEAVE YOUR HOME. An emergency law temporarily protects tenants from eviction during the COVID-19 emergency. The purpose of this notice is to make sure you understand the amount of rent you owe to your landlord.”

“For information about resources that may help you pay your rent, you can contact your regional Housing Consumer Education Center. For a list of agencies, see https://www.masshousinginfo.org/regional-agencies.  Additional information about resources for tenants is available at https://www.mhp.net/news/2020/resources-for-tenants-during-covid-19-pandemic.”

“You will not be subject to late fees or a negative report to a credit bureau if you certify to your landlord in writing within 30 days from the missed payment that your non-payment of rent is due to a financial impact from COVID-19. If possible, you should use the approved form at: https://www.mass.gov/lists/moratorium-on-evictions-and-foreclosures-forms-and-other-resources. If you cannot access the form on this website, you can ask your landlord to provide the form to you. You may also send a letter or email so long as it contains a detailed explanation of your household loss in income or increase in expenses due to COVID-19.”

The notice may also include other information that will promote the prompt and non-judicial resolution of such matters, such as the total balance due, the months remaining and the total of lease payments expected to be made on a lease for a term of years, information on how to contact the landlord to work out a revised payment arrangement, and a reminder that after the state of emergency ends the tenant may face eviction if rent remains unpaid. The notice should also also have language informing the tenant of the importance of having it translated to their native language.

My friends over at MassLandlords have created a sample Notice of Missed Payment form if you desire to download it.

Late Fees and Credit Reporting; Notice of Tenant Financial Hardship

Under the Moratorium Act, tenants are allowed to provide notice and documentation of a Covid-19 related financial hardship to their landlords, in order to avoid negative credit reporting. EOHED has issued forms so residential and commercial tenants can provide notice and documentation of a COVID-19 related financial hardship. Those forms can be found here (click on link):

Notice and Certification of Financial Hardship From Residential Tenant Related to COVID-19

Form of Notice -COVID-19 Hardship – Small Business Tenant 

Documentation of Financial Hardship – Small Business Tenant 

Under the new regulations, a tenant who misses multiple rent payments due to a financial impact from COVID-19 is required to provide a separate notice to the landlord for each such missed payment. The use of an alternative written form of notice by a residential tenant shall be deemed effective and timely if it includes a statement that the tenant has experienced a financial impact from COVID-19, and states in reasonable detail the cause of such financial impact.

Landlord Use of Last Month’s Rent Deposit

Under the Moratorium, a landlord who has a last month’s rent deposit may use it to pay for mortgage payments, utility costs, maintenance costs and other operating expenses incurred by the landlord for the leased premises. The last month’s deposit, however, must be accounted for and paid back if necessary, with accrued interest, at the end of the lease or tenancy. This is one of the reasons why I do not recommend that landlords utilize this remedy. If the landlord uses a last month’s deposit it must provide the following form to the tenant:

Notice to Tenant – Use of Advance Rent Payment 

Conclusion

We will keep you updated with further development on the Eviction Moratorium and any further regulations or guidance issued by the state.

I still believe that the Act is unconstitutional on several grounds, and myself along with several other lawyers are getting ready to file a legal challenge to the Act. If you are interested in donating or participating in the case, please contact me at [email protected]. We have set up a secure Paypal funding link for any donations here:  https://paypal.me/pools/c/8orbLzpxbY.

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New Laws Allow Video-Conferencing Technology For Notarization of Legal Documents during COVID-19 Crisis

Update 4/28/20: Gov. Baker has signed the bill. Remote virtual notarizations are now allowed during the COVID-19 State of Emergency!

After what seemed like an eternity during this unprecedented COVID-19 crisis, the Legislature has finally passed a bill providing for the remote virtual notarization of legal documents through video-conferencing technology. The measure will be in place temporarily during Gov. Baker’s declared COVID-19 State of Emergency, and will dispense with the legal requirement for in-person notarizations of real estate, probate and other legal documents requiring a notary public stamp. After over a month of intense lobbying by attorneys and the banking industry, and several revisions to the original bill, the House and Senate finally agreed on a final language today. The measure now goes to Gov. Baker’s desk where he is expected to sign it shortly. This is great news for everyone in the real estate industry as the new law will allow attorneys, paralegals, buyers, and sellers to sign important legal documents safely in their homes during the COVID-19 crisis.

The new law, An Act Providing for Virtual Notarization to Address Challenges Related to COVID-19, provides for a series of requirements and steps to effectuate a valid remote virtual notarization —

  • Remote notarizations may be conducted through video-conferencing technology such as Zoom or FaceTime. No specific type of technology is spelled out, but we are hearing that title insurance companies and lenders will require real estate closing attorneys to use approved virtual notary software. Some may not however.
  • All remote notarizations must take place with both the notary and the signatory within Massachusetts state lines. For example, a Massachusetts notary cannot notarize a document of a person signing in New York.
  • The signatory must show the notary a government issued photographic form of identification (a state issued driver’s license is OK). Non-US citizens must show a valid passport or government I.D. A copy of the front and back of the I.D. must be sent to the notary which must be retained for 10 years.
  • The notarization must otherwise be conducted in the usual manner over video-conference with the notary observing the actual signing of the legal document and taking the required affirmation, i.e., “this is your free act and deed.”
  • The original notarized documents must then be sent back to the notary, and for real estate closings, a second video conference must be conducted where the signatory authenticates the signed documents.
  • Once the above process is complete, the notary or attorney can stamp the documents as notarized, and must also complete and sign an affidavit attesting that all requirements have been met. The affidavit must be kept on file for 10 years.
  • Each video-conference conducted under the law must be recorded and retained for 10 years.
  • For real estate transactions and certain probate documents (will, trust nomination of guardian or conservator, durable power of attorney, health care proxy or caregiver authorization, only licensed attorneys (or a paralegal under their supervision) may conduct a remote notarization. For real estate closings, a second form of I.D. may be required.

The new law expires 3 days after Gov. Baker lifts the COVID-19 State of Emergency, at which time, only standard in-person notarizations will be allowed. The text of the bill is embedded below.

Massachusetts Virtual Remot… by Richard Vetstein on Scribd

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Unprecedented, Sweeping Prohibition on Residential and Commercial Evictions Enacted Without Corresponding Mortgage and Tax Relief to Property Owners

In an unprecedented, sweeping, and likely unconstitutional move, the Massachusetts Legislature has passed, and Governor Charlie Baker has just signed into law An Act Providing For a Moratorium On Evictions and Foreclosures During the COVID-19 Emergency (House Bill 4647), a statewide moratorium on the vast majority all evictions and foreclosures in Massachusetts during the COVID-19 Emergency — and possibly well beyond. The new law is in effect until 45 days after the Coronavirus (COVID-19) Emergency is lifted by Gov. Baker, or four (4) months, whichever is earliest, however, Gov. Baker is permitted to extend the law for 90 day increments.

Sweeping Eviction (Summary Process) Emergency Coronavirus (COVID-19) Relief

The Eviction Moratorium covers 90% of all evictions (summary process), including non-payment and no-fault evictions, both residential and commercial. The only exception is if a tenant is engaged in criminal activity or a lease violation which impacts the health and safety of other residents or first responders. Under the Act, Housing and District Courts will not even accept new eviction filings. Eviction cases which are already pending in court are effectively suspended until the law expires. (Under previous Housing Court orders, all evictions have been stayed until May 4). Eviction move-out orders are also suspended. All court deadlines and statutes of limitations are suspended.

Further, Landlords are prohibited from issuing notices to quit or terminating a lease. Late fees for unpaid rent are also banned. Landlords are also barred from reporting delinquencies to credit reporting agencies if the tenant provides documentation of financial hardship related to the COVID-19 crisis. Throwing a bone to landlords, the Act allows them to use last month deposits to pay for mortgage and property expenses, but they must account for the deposit at the end of the tenancy. (I don’t see any benefit there at all). The Act does not suspend the obligation to pay one’s rent.

Small Business Impacts

As stated above, the eviction moratorium also applies to certain “small business” commercial spaces. Small businesses are defined as any in-state for-profit and non-profit business with less than 150 full-time equivalent employees. It does not apply to chains or businesses operating multi-state, multi-nationally, or publicly traded companies. Commercial landlords may, however, issue payment default notices and notices to quit.

Foreclosure Relief

Under the Act, all residential property foreclosure proceedings are prohibited and suspended. The Act appears not to give foreclosure relief to investment or rental property owners, and that is one of the glaring inequities as discussed below. Lenders are banned from sending foreclosure notices, filing Land Court Servicemembers proceedings, conducting foreclosure auctions, or otherwise engaging in any foreclosure related action under state law. The Act also requires banks to grant up to 180 days of mortgage forbearance to homeowners who have been hurt by the coronavirus crisis. However, the forebearance will be added to the end of the term of the loan. The foreclosure relief part of the law expires 45 days after the Covid Emergency is lifted, or 4 months, whichever is sooner, but the Governor may issue 90 day extensions. The Act does not suspend the obligation to pay one’s mortgage.

Analysis: Potentially Devastating Impact to Small Property Owners, Potential Unconstitutionality of Law

Let me just say that I have compassion for everyone suffering through this pandemic. I have friends who are Covid-19 positive. My business is down, as are my colleagues and friends. I’m actually in favor of widespread financial relief for anyone who has been financially impacted by this crisis.

However, as I have pointed out from the very beginning of this debate on evictions, the flaw with this bill is that it does not provide for corresponding meaningful mortgage, foreclosure and real estate tax relief to rental property owners. It only goes one way. There’s no doubt that many tenants are in dire financial straights, but without providing similar relief to small landlords, they will be bearing the financial brunt of this crisis. And that’s simply unfair.

This Act will likely result in widespread suspension of rent payments by tenants because there is now no enforcement mechanisms for landlords and very little if any financial repercussions. Activists are already calling for rent strikes. As Gregory Vasil, CEO of the Greater Boston Real Estate Board, correctly stated to Bisnow, “the bottom line is, if you are an owner on the commercial or residential side, you likely won’t be getting rent until sometime in the third quarter or fourth quarter of 2020. If you end up in legal proceedings against a tenant, you very likely aren’t going to be getting rent until sometime in 2021.”

Aside from the financial considerations, there are also a number of constitutional and legal flaws with the law under the Massachusetts State Constitution, including violating the right to access courts, the Equal Protection Clause, usurping the exclusive role of the judiciary, violating the Takings Clause, and other major problems. We have not seen this type of sweeping restriction on property owner rights since the days of rent control. State legislators are essentially telling Housing Court judges how to do their job. Judges are already well-equipped to deal with this crisis, and have been doing so admirably. Shutting down the courthouse doors to only landlords and lenders while keeping it open to everyone else smacks of unfair and unequal treatment. I think this Act has a high chance of being struck down by the Supreme Judicial Court.

With the backing of MassLandlords, our statewide trade association, a group of talented attorneys including myself are exploring a legal challenge to the Act. If you are interested in donating or participating in the case, please contact me at [email protected]. We have set up a secure Paypal funding link for any donations here: https://paypal.me/pools/c/8orbLzpxbY.

The Act is embedded below (House Bill 4647).

Massachusetts Act Providing… by Richard Vetstein on Scribd

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My weekly Real estate Corona-Therapy Zoom meeting is back on for tonight at 730pm.

I have another special guest. Boston Globe Business Reporter Jon Chesto will talk about COVID-19 impacts on real estate and business in general.

Zoom link below:

Join Zoom Meeting
https://us02web.zoom.us/j/2622828798

Meeting ID: 262 282 8798

See you all tonight! Please feel free to share with your friends and colleagues. All are welcome.

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I’m posting the YouTube video of our fantastic Zoom call on COVID-19 with Dr. George Seage, Director of Infectious Disease Program at Harvard School of Public Health. Dr. Seage is the Harvard faculty advisor to the Massachusetts COVID-19 Tracing Program.

Some quick take-aways:

✅ Worst virus outbreak since 1918 Influenza Pandemic (could be worse actually)
✅ Massachusetts is actually not in good shape. We may run out of ICU units and ventilators. 
✅ We won’t be back to “normal” until July-August. 
✅ It will take longer to get back to normal because government leadership won’t take stricter mitigation – he recommends 2 week national shelter in place
✅ Masks and gloves in public but strict social distancing (stay at home) & frequent hand washing remains best
✅ Even when we get back to work and school, there will be flare-ups over 12 months until we get a vaccine. Some cities/areas could go back to lockdown status  
✅ Real estate agents: DO NOT HOLD OPEN HOUSES OR SHOWINGS. STAY AT HOME. If you do so, wear full protective gear and make visitors wear also. 
✅ Attorneys: It’s unreal that you don’t have remote notarization yet. What are these legislators thinking!? If you need to interface with clients, wear full protective gear (mask, gloves). Stay at least 6 ft. away. Wash and disinfect everything after.

Link to video is here: https://youtu.be/huATzARYffs

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COVID-19 Impacts: Eviction Moratorium Proposals, Tenant Payment Issues, Housing Court Delays, Stay at Home Order, and Move-In Delays

I’ve written two posts here and here about the Coronavirus (COVID-19) Global Pandemic, both focused primarily on impacts to real estate transactions and closings. Along with my colleague and fellow landlord-tenant attorney, Jordana Greenman, Esq., we want to now discuss the impact on rental housing, evictions and landlord-tenant relationships.

The number of reported cases are exploding and events are changing daily, even hourly. I first wrote about the Coronavirus (COVID-19) global pandemic on March 10, about two weeks ago. As of that writing (data as of March 9), there were 729 reported cases in the US, with 27 deaths. As of today March 27, Johns Hopkins is reporting that the United States has surpassed China with over 86,000 confirmed cases and over 1,300 deaths. With the well publicized testing delays, the real number of cases is likely far higher. Unfortunately, Massachusetts has not been spared, with over 2,400 reported cases, including over 140 Boston city hospital workers.

Gov. Baker has ordered the shutdown of all schools and day-cares through May 6, closed down restaurants and bars, and banned gatherings over 25 people. Last week, all Trial Courthouses were shut down for two full days. They have re-opened, but not to the public and with very limited availability for hearing cases (other than true emergencies). On Monday March 23, Gov. Baker issued a “stay at home” advisory, essentially closing down all “non-essential” businesses.

Of course, the big problem for the rental housing industry is the economy has gone into the tank. Experts predict that unemployment will rise to Great Depression levels. The stock market has lost some 30% of its value. When people have lost their jobs and lost their savings, they can’t pay the mortgage or the rent.

Legislation for Eviction Moratorium

In Boston, Mayor Marty Walsh has announced a voluntary eviction moratorium agreement with the city’s largest landlords including Trinity Financial, Winn Residential and the Community Builders, which manage hundreds of apartments in Boston. On Beacon Hill, legislators have filed a bill calling for a state-wide moratorium on evictions during the pendency of the COVID-19 State of Emergency. At the federal level, HUD has suspended all evictions for FHA insured single family residences. It’s unclear whether this also applies to HUD Section 8 rental subsidy participants. Lastly, Attorney General Maura Healy just implemented new regulations prohibiting consumer debt collection activities for a 90 day period, however, landlord-tenant payments are excluded from the regulation.

The problem with these legislative efforts, of course, is that there needs to be a corresponding moratorium on the payment of mortgages, real estate taxes and property expenses for rental property owners, otherwise small landlords will shoulder an enormous amount of the financial burden during this crisis. “If renters don’t have money to pay rent, landlords don’t have money, either,” Doug Quattrochi, executive director of the group MassLandlords told the Boston Globe recently. “That’s money that pays plumbers and electricians and mortgage bills. If they’re a senior on a fixed income, it might be how they buy food.”

Gov. Charlie Baker indicated during his last press conference that he was not at a point where he would impose such a moratorium. Thus, as of now, a moratorium on rental payments in Massachusetts is unlikely, but of course, that could change, and such change would disproportionately affect the small landlords.

Housing Court COVID-19 Response

Practically speaking however, there exists a de facto moratorium on evictions because the statewide Housing Court has deferred hearing eviction cases through April 21. Under two new Standing Orders, all Housing Courts are closed to the public through at least until April 6, 2020, and are hearing only emergency matters. All evictions (summary process) are impacted by the order, and are currently on hold until April 21, 2020. A party may seek to advance their case upon a showing of “good cause,” but my feeling is that those will be quite rare. “Emergency matters” include the following circumstances: applications for injunctive relief, temporary restraining orders where a complaint involves a lockout, condemnation, no heat, no water, and/or no utilities; conduct and or conditions endangering the health safety and welfare of residential occupants and others; stay of levy on an execution; or where access is required to address an emergency (e.g., burst water pipe, gas fumes, etc.).

We want to highlight the likely scenario that once this crisis (hopefully) ends, the Housing Court will be swamped with cases in Spring/Summer 2020. On average, the Boston Housing Court itself receives hundreds of new eviction cases weekly. The COVID-19 postponement is sure to result in a huge backlog of eviction cases for many months to come and even more crowding in the courthouses.

Legal Guidance: Advice to landlords dealing with tenants who cannot pay rent — You have to take a wait and see approach. Legally, you are still allowed to issue a 14 day notice to quit for non-payment of rent. You are also allowed to file an eviction complaint in the Housing Court. But you will likely not get in front of a judge until sometime in May, and possibly longer. So, it’s a good idea to go ahead and have an attorney send out the notice to quit and get the summary process complaint filed, and then you’ll have to wait in line and see what happens. We do not yet know the order in which cases will be scheduled or if those filed during this time will be given priority.

Stay At Home Order: Impact on Rental Agent Activities

Gov. Baker’s Stay at Home guidance/order appears to apply to real estate and rental agent activities. They are not specifically mentioned as one of the enumerated “essential” businesses, and their activities do involve much inter-personal contact in the ordinary course of business. Boston Mayor Marty Walsh has issued a formal letter advising rental agents not to hold showings of occupied rental units. He also issued guidance that any prospective tenants who are sick should not be allowed to view a unit in person, and added that open houses should not be used to market properties that are for rent or for sale. Anecdotally, I’m hearing that some (but not all) rental agencies are shutting down operations and many are simply working remotely.

Legal Guidance: showing rental properties live in person is a violation of the Stay At Home Order, and incongruent with the public health policy behind it. Rental agents should instead use virtual showing technology, FaceTime and Zoom to replicate in person showings. Moreover, holding in person showings could lead to someone getting infected with COVID-19, then a big lawsuit against the rental agent. We don’t want to see that either.

Move-in Delays

Many tenants are scheduled to move in the coming months and, while moving companies have been deemed “essential” under the Stay at Home Order, many people may feel safer staying in place than moving to an unknown locations. Landlords and tenants should be encouraged to work together in the event of delays.

We have created a COVID-19 Lease Rider addressing the issue of move-in delays during this crisis. While it may be tempting for a landlord to keep a prepaid first month’s rent, last month’s rent and security deposit in the event a tenant either cannot move or feels unsafe doing so, this may open landlords up to liability and legal claims are sure to ensue. We encourage the parties to work together and be flexible. 

For current occupancies, landlords should remind their tenants to keep the apartments clean and sanitary. Most importantly, during tenant turnovers, landlords should hire a sanitization company (e.g., Service Master) to clean and disinfect units prior to a new occupancy.

Conclusion

Our collective appreciation goes out to the many health care and public service employees working to help combat this epidemic. The Massachusetts’s official COVID-19 website contains the most up-to-date information. We are also available to consult regarding your current or pending landlord-tenant needs.

Feel free to email Rich at [email protected] or Jordana at [email protected].

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Legislation Would Temporarily Allow Video-Conferencing Technology For Attorney Notaries

Update: 4/23/20 — The bill (now Senate Bill 2645), has passed both Senate and the House, and will soon be on the way to the Governor’s desk where he is expected to sign the bill. Click here for my new post: Legislature Passes Remote Virtual Notarization Act for COVID-19 Emergency.

Update: 4/22/20 — The Senate has passed a new revised version of the Bill, now it moves on to the House where it is expected to pass.

The real estate legal community, including yours truly, have been working and lobbying tirelessly to address the various impacts of the Coronavirus (COVID-19) Crisis on real estate transactions and closings. One of the first solutions we proposed is legislation allowing for remote or virtual notarizations of deeds, mortgages and other closing documents so that buyers and sellers can sign documents in the safety of their own homes on their computers. Due to the COVID-19 crisis, many folks are subject to the Governor’s Stay At Home Order or don’t feel safe traveling outside to an attorneys’ office for a real estate closing. Meanwhile, while the economy heads towards a recession, real estate is one of the few assets with available equity for consumers.

Under our proposed legislation, An Act Relative To Remote Notarization During COVID-19 State of Emergency (S.D. 2882), a licensed Massachusetts attorney may notarize legal documents using video-conferencing technology. There is a two-step process laid out in the legislation to complete the notarization process where the signer shows the attorney his/her state issued identification, sends the original signed documents back to the attorney, and then verifies the authenticity of the signed documents. Once that process is complete, the attorney can stamp the documents as notarized and must also complete and sign an affidavit attesting that all requirements have been met. Those notarized documents may then be recorded with the Registry of Deeds as valid, legal and binding recordable instruments. Additionally, the two video-conferences must be recorded and kept on file for 10 years. The bill would only be in effect during the COVID-19 State of Emergency.

The bill has widespread industry support from the Real Estate Bar Association (including the Probate Section), the Massachusetts Bar Association, the Massachusetts Association of Realtors and Greater Boston Real Estate Board. Twenty three (23) states have now passed remote notarization bills, including just recently due to the COVID19 crisis, including New York State, Vermont, Connecticut, Florida, Virginia, Texas, and Nevada. Moreover, a nationwide bill has been proposed by the American Land Title Association.

There are a number of technology companies that offer end-to-end remote notarization systems and are approved by national title insurance companies and lenders. They include:

To our real estate partners and colleagues, WE NEED YOUR HELP NOW! We need you to email or call your State Rep. and Senator and tell them you support our proposed legislation, An Act Relative To Remote Notarization During COVID-19 State of Emergency (S.D. 2882). To search for your state legislator, please click here.

Thank you! I will keep you posted as to developments and hopefully passage of the bill. Also many thanks to Attorneys Kosta and Nik Ligris on spearheading the bill!

Massachusetts Act relative to remote notarization during COVID-19 state of emergency. by Richard Vetstein on Scribd

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Closings May Proceed Forward Without Smoke Detector Inspection Certifications

Due to the Coronavirus Crisis, many local fire departments have been ceasing state mandated smoke detector inspections, which are required for real estate transactions to close. I’m happy to report that on March 20, 2020, after intense lobbying from the real estate industry, Gov. Baker issued an Emergency Order allowing for the deferral of inspections by local fire departments until the Coronavirus (COVID-19) State of Emergency is lifted. The Order is embedded below and can be found here: COVID-19 Order Permitting the Temporary Conditional Deferral of Certain Inspections of Residential Real Estate.

Inspections may be deferred only if the following requirements have been met:

  • The parties agree in writing that the buyer, not the seller, shall be responsible for installing approved smoke/CO detectors in the premises;
  • The buyer agrees as a condition of taking title to equip the premises with approved detectors immediately after the closing
  • The state required smoke/CO detector inspection must be conducted no less than 90 days after the Mass. COVID-19 State of Emergency is lifted.

We (real estate attorneys) are drafting up new compliance agreements and language for Offers and Purchase and Sale Agreement to comply with this new Order. Please email me at [email protected] for assistance.

Massachusetts Gov. Baker CO… by Richard Vetstein on Scribd

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Significant Impacts Hitting: Registry and Court Closures, Closing and Financing Delays, Social Distancing, School Closings, Quarantine Potential

As I was writing this post tonight, Gov. Baker ordered the shutdown of all schools through April 6, closed down restaurants and bars, and is banning gatherings over 25 people. Also announced tonight is the shut down of all Trial Court facilities on March 16 and March 17, which includes the Cambridge and Suffolk (Boston) Registries of Deeds. We are now hitting the tipping point, and going forward there will be substantial impacts on the real estate and legal industry.

I first wrote about the Coronavirus (COVID-19) global pandemic five days ago. Seems like an eternity ago. As of that writing (data as of March 9), there were 729 reported cases in the US, with 27 deaths. As of tonight March 15, cases have over quintupled with Johns Hopkins reporting 3,722 confirmed cases and 61 deaths. With the well publicized testing delays, the real number of cases are likely far higher.

Registry of Deeds Impacts

As mentioned above, Gov. Baker just ordered the closure of all Trial Court facilities for Monday March 16 and Tuesday March 17. Both Cambridge and Suffolk (Boston) Registries are housed in Trial Court facilities so they will be closed for those two days. I spoke to Maria Curtatone, Registrar of Deeds for Cambridge Middlesex South, and she indicated that this may well be the precursor to widespread shutdown of all registries of deeds and courts throughout the state. We will await further announcements on that.

Update (3/17/20) — Suffolk and Cambridge are closed to the public until at least April 6. Currently, they are both still processing electronic recordings for recorded land. All Land Court recordings and plans must be sent in by overnight or regular mail.

We have just received a chart below showing current Registry status:

I remain concerned, however, that all Registries will be forced to shut down and will not offer in person, mail or electronic recordings. If that occurs, we will see a potentially catastrophic impact to real estate in Massachusetts. Title insurance companies have assured its attorney agents that they will offer “gap coverage” in case recordings are delayed. This coverage offers insurance coverage between the time of the physical closing and the time of actual recording of documents at the registry. However, it remains to be seen how this will play out. Will mortgage payoffs still be processed even though deeds will not be recorded? Will sellers allow buyers to get keys and move into homes if deeds aren’t recorded and their sale proceeds are held in escrow? We will need to work through these issues.

I am also concerned if COVID-19 starts hitting closing attorney offices. If a lawyer or staff member is infected, it could result in the quarantine of their entire office, essentially shutting it down for some time.

COVID-19 Contingency Provision

In my previous post, I discussed a new COVID-19 Impact Clause for Offers Purchase and Sale Agreements. (Sample language below). It is imperative that these clauses are used in both Offers and PSA’s. It’s also very important that all parties and their attorneys work together cooperatively throughout this crisis, acknowledging that there will likely be substantial impacts and delays. The goal, as always, is to get to the closing and complete the deal, by any means necessary.

COVID-19 Impact Provision. The Time for Performance may be extended by either Party by written notice for an Excused Delay which materially affects the Party’s ability to close or obtain financing. As used herein an Excused Delay shall mean a delay caused by an Act of God, declared state of emergency or public health emergency, pandemic (specifically including Covid-19), government mandated quarantine, war, acts of terrorism, and/or order of government or civil or military authorities. Notwithstanding anything to the contrary contained in this Agreement, if the Time for Performance is extended, and if BUYER’S mortgage commitment or rate lock would expire prior to the expiration of said extension, then such extension shall continue, at BUYER’S option, only until the date of expiration of BUYER’S mortgage commitment or rate lock.  BUYER may elect, at its sole option, to obtain an extension of its mortgage commitment or rate lock. Notwithstanding the foregoing, said Extension shall not exceed [insert number of days].

Virtual and Remote Closings

Another impact that we are already seeing is that parties to the real estate transaction are afraid of traveling outside their homes right now (or even being visited at home) and being in contact with other people, especially those who are high risk. My colleagues and I are working on an emergency executive order for Gov. Baker to sign which would temporarily authorize remote or virtual closings using such technology as Zoom and Docusign.

For more information on this please read my new post, Massachusetts Remote Notarization Bill Filed in Legislature

Court Closings

Update (3/17/20): The Supreme Judicial Court today ordered that, because of the public health emergency arising from the COVID-19 pandemic, beginning tomorrow (March 18, 2020) and until at least April 6, 2020, the only matters that will be heard in-person in Massachusetts state courthouses are emergency matters that cannot be held by videoconference or telephone. Each of the seven Trial Court departments, in new standing orders to be issued today, will define emergency matters for their departments.  As a result of the SJC order, courthouses will be closed to the public except to conduct emergency hearings that cannot be resolved through a videoconference or telephonic hearing.  Clerk’s offices shall remain open to the public to accept pleadings and other documents in emergency matters only.  All trials in both criminal and civil cases scheduled to commence in Massachusetts state courts between today and April 17, 2020, are continued to a date no earlier than April 21, 2020, unless the trial is a civil case where the parties and the court agree that the case can be decided without the need for in-person appearance in court. Where a jury trial has commenced, the trial will end based on the manifest necessity arising from the pandemic and a new trial may commence after the public health emergency ends. Courts, to the best of their ability, will attempt to address matters that can be resolved or advanced without in-person proceedings through communication by telephone, videoconferencing, email, or other comparable means.

A link to the SJC Order OE-144 is here.

In addition to the closings on March 16-17, the Massachusetts Court System announced over the weekend major “triage” changes reducing the number of persons entering state courthouses. These rules are effective Wednesday March 18, 2020. A link to all of the new changes can be found here — Court System Response to COVID-19. A summary of each court and respective changes are as follows:

Superior Court — All jury trials postponed until April 22. Motions handled by individual judges with preference for telephonic hearing and postponement where necessary to limit number of people entering courtroom. Emergency matters may proceed normally. The new Standing Order 2-20 can be found here.

Housing Court — All cases including evictions (except emergencies) postponed until after April 22. Matters may be heard earlier upon a showing of good cause. New Housing Court Standing Order is here.

Probate and Family Court — Trials postponed until May 1. Motions and pre-trials heard telephonically or postponed until after May 1. Modification complaints won’t be heard until after May 1. New Probate and Family Court Standing Order 1-20 is here.

District Court — No jury trials until after April 21. All criminal appearances rescheduled for 60 days, and no earlier than May 4. Arraignments and Bench trials may proceed. The new District Court Standing Order is here.

Land Court — All trials postponed until after April 21. All other motions and proceedings shall be held telephonically at judge’s discretion. Registration of title documents should not be done in person. Mail or email is now preferred. (Not sure how that will work). New Land Court Standing Order 2-20 is here.

Appeals Court — Oral argument for March will be telephonic.

Supreme Judicial Court — Please see the Court’s website.

As you can glean from the changes, virtually all trials are being pushed out through the end of April. Motion hearings are court specific with telephonic hearings being substituted for in-person hearings. Of course, if the courts are all shut down, all bets are off. With no staff, the courts will not even be able to handle new filings. The system would just stop in its tracks, except for the most emergency of matters.

Lender/Financing Delays

This week we will see if there are any major disruptions to lenders’ ability to provide financing. I am seeing some smaller mortgage companies moving to remote employee staffing. I’m also hearing about appraisal delays. If there are government employee impacts such as at the IRS for processing tax transcripts, there could be delays with underwriting. I think it’s inevitable that we will be seeing lender delays moving forward.

Municipal Closings

I am also hearing of closings of municipal departments, which may affect the availability of final water/sewer readings and possibly smoke detector certificates. Title 5 inspections could also be impacted.

25 Person Social Gathering Restriction

New restrictions on crowd sizes that Gov. Charlie Baker issued on Sunday, March 15, could upend open houses. The restrictions banned gatherings of 25 or more people. Brokers seemed to anticipate a possible drop-off in attendance, even before Baker’s restrictions and despite strong numbers the past couple of weeks. “Next week may be a different story,” Jason Gell, a Keller Williams broker and president of the Greater Boston Association of Realtors, said on March 12. “Unfortunately, any decline in open houses or listings is likely to make the conditions for buyers even more difficult.”

Social Distancing, School Closures and Possible Lockdown

The impacts of COVID-19 are manifesting not necessarily in the actual infection and sickness of patients (which I’m not discounting at all) but all the measures we are taking to “flatten the curve.” I want to urge all my readers that COVID-19 could wind up being the worst global pandemic since the Spanish Flu and should be taken as seriously as life and death. If you can work from home, do that and don’t go into the office. If you can arrange for remote employee access, please do that. Take advantage of technologies like Zoom, Docusign and Dotloop. Please keep your kids at home. No playdates, family gatherings or hang-outs. They say we are only 2 weeks behind Italy and you see what’s going on there. Stay safe! More updates to follow as I get them.

-Rich

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Potential Impacts: Registry of Deeds Closings, Financing Delays, New Covid-19 PSA Clause, Housing Market Slow Down?

The Coronavirus (COVID-19) is a highly infectious respiratory virus, which originated in Wuhan, China, and has spread across the globe, wreaking havoc on financial markets, public health systems, schools, universities, and daily lives. As of March 9, there are 729 reported cases in the US, with 27 deaths. Here in Massachusetts, as of March 9, there are 41 cases with no reported deaths. Infectious disease experts predict that the virus will continue spreading across the United States, affecting just about every aspect of our lives.

Update (3/17/20): Registry and Court Closings

Update (3/27/20): Impact on Rental Housing

Update (3/26/20): Remote Notarization Legislation

Here in Massachusetts, we are beginning to see significant impacts. Harvard University just cancelled all classes in favor of online instructions. Mayor Walsh has cancelled the St. Patrick’s Day parade. Some schools are closing temporarily and cancelling events. Companies are cancelling conferences and restricting travel. And of course, the stock market has dropped precipitously.

Likewise, in the real estate industry we are starting to see impacts as well. Despite the COVID fear factor, most agents are still reporting robust attendance at open houses and market activity, as confirmed by Curbed Boston. However, that may soon change as the virus gets increasingly widespread and the impacts to the financial markets begin to set in. I’m going to outline some potential impacts going forward, and I’ll update this post as developments emerge.

Registry of Deeds and Court Closings

Update (3/13/20): Suffolk and Salem Registry have shut down public closings. Only title examiners and attorneys are allowed access. They are still recording documents.

We are starting to see court and government building closings in other states. Federal courts in New York’s Southern District, including Manhattan, are restricting entry. No one will be allowed in who traveled within the past 14 days to China, South Korea, Japan, Italy or Iran, or who had close contact with someone who has. Trials have been postponed in Seattle and Tacoma courts.

No closings have been announced here in Massachusetts, but it’s a possibility. Virus impacts may result in Registries of Deeds and the Land Court being forced to closed or operate with a skeleton staff.

Fortunately, we have electronic recording capabilities here in Massachusetts. If the registries are closed, hopefully they will still allow for e-recording which should enable closings to keep on track. However, registry staff must still examine each electronically recorded document so there still could be impacts. We don’t know the fully extent of the impacts, if any.

Lender/Financing Delays

I have not yet heard of any major disruptions to lenders’ ability to provide financing. However, it’s not out of the realm of reason if companies are requiring their employees to work from home, etc. Further, if there are government employee impacts such as at the IRS for processing tax transcripts, there could be delays with underwriting. The same is true if appraisers cannot get out into the field and do their reports. I’ve already heard of at least one lender asking an attorney for a COVID-19 delay provision in a purchase and sale agreement, which brings me to the next topic…

COVID-19 Delay Clause In Purchase and Sales Agreement

Due to the various impacts and possibilities for delays as outlined above, we are already seeing requests for language dealing with the Coronavirus in purchase and sales agreements. As just mentioned, there may be lender delays affecting a buyer’s ability to obtain timely financing due to virus impacts. Buyers and sellers may be subject to quarantines, or if they are traveling, they may be stuck in a public health purgatory like the Princess Cruise ship. If Registries are closed and no e-recording is allowed, then closings will need to be cancelled or rescheduled. My colleagues and I are working on a new COVID-19 clause that will balance all of these concerns.

Our draft provision (subject to change) is as follows:

COVID-19 Impacts. The Time for Performance may be extended by either Party by written notice for an Excused Delay which materially affects the Party’s ability to close or obtain financing. As used herein an Excused Delay shall mean a delay caused by an Act of God, declared state of emergency or public health emergency, pandemic (specifically including Covid-19), government mandated quarantine, war, acts of terrorism, and/or order of government or civil or military authorities. Notwithstanding anything to the contrary contained in this Agreement, if the Time for Performance is extended, and if BUYER’S mortgage commitment or rate lock would expire prior to the expiration of said extension, then such extension shall continue, at BUYER’S option, only until the date of expiration of BUYER’S mortgage commitment or rate lock.  BUYER may elect, at its sole option, to obtain an extension of its mortgage commitment or rate lock. Notwithstanding the foregoing, said Extension shall not exceed [insert number of days].

Impact On The Real Estate Market

If you’re in the market for a house, all this uncertainty might have you worried about the housing market. Will it suffer a swoon similar to Wall Street? There are a few ways the virus could affect the housing market that you should be aware of. However, I think we can breath a sigh of relief, because a housing catastrophe on the scale of the 2008 financial crisis is almost certainly not going to happen.

The good news is that mortgage interest rates are still at historic lows. However, I’m also hearing that a lot of lenders are at full capacity with demand for both refinances and purchases so rates may be heading up in the very near future.

I think as we are heading towards a global recession and the continuing daily life impacts of the virus, we are going to see a slowing down of the real estate market in general. Uncertainty is the hobgoblin of the home buyer. Indeed, this is exactly what Lawrence Yun, Chief Economist at the National Assoc. of Realtors is saying:

I hope I’m wrong. Comment below or shoot me a line ([email protected]) and tell me what you’re seeing out there. I’ll keep you posted with any developments.

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Allen Seymour – Arraignment Brookline District Court

Summary Judgment Ruling In Favor of Forgery Victim Allows Case to Proceed to Trial

As I’ve written here, I have been representing three victims in a brazen and complex real estate forgery scam. The ringleader was Allen Seymour of Oxford, who used forged deeds, fake notary stamps and driver’s licenses to sell properties out from under homeowners, flipping their properties to wealthy investors, and pocketing the cash. Seymour targeted properties in Cambridge, Brookline, and Somerville. By accounts, he made off with over $2M in illicit sale proceeds. Seymour also worked with a group of accomplices including a Newton police lieutenant. The cases have been featured in several Fox News 25 segments. While Seymour remains in jail awaiting trial on 22 felony indictments, the civil cases have been ongoing for almost two years, and are heading towards trial.

I just received the first major court ruling in the cases from Superior Court Justice Douglas Wilkins. The ruling is noteworthy because it appears to be the first time a Massachusetts judge has issued a written decision dealing with the unique type of forgery that occurred in this case.

The Deed Forgery Scam

Forged Deed First Page
Forged Deed Second Page

The facts of the case are pretty surreal. My client is the owner of a three family property in Brookline, assessed at $1.5 Million. He was behind on his mortgage, and Seymour (using the alias “Rich Chase”) approached him with a foreclosure rescue scheme. Seymour had him sign a mortgage payoff authorization form which contained a separate signature page with a notary block – which would be used later to perpetrate the fraudulent scam. Ordinarily, mortgage payoff authorizations are not notarized. Behind my client’s back, Seymour took the notarized signature page of the payoff form and attached it to a quitclaim deed and recorded it with the registry of deeds. This deed “sold” the property from my client to Seymour’s accomplice for some 30% of its value, at $480,000. While this was happening, Seymour orchestrated a flip of the property for $750,000 to an LLC owned by Fred Starikov, the owner of City Realty in Boston. Starikov’s LLC then took out a $850,000 mortgage on the property from Bee Investments LLC. Seymour then made off with the sale proceeds, and tried to flee the country with a duffle bag of cash and a trash bag filled with Oxycontin. Fortunately, he was caught in South Carolina by the FBI, and brought back to Massachusetts to face multiple felony charges.

Lawsuit Asserts Claims for Forgery and Fraud

On behalf of the victim, I brought claims for quiet title and fraud, asserting that the quitclaim deed was a forgery. Under Massachusetts law, a forgery of a deed conveys no title. It is null and void, and title reverts back to the original owner as if the forgery never occurred. This is very important in these cases, because a forgery would also avoid the defense asserted by Starikov and his lender being a “bona fide good faith” purchase or lender. This defense, if successful, could allow them to keep title to the property. Starikov and his lender also asserted a claim for “equitable subrogation.” This theory is used to enable a lender to seek repayment of monies paid out in the transaction (typically mortgage proceeds) on the theory of unjust enrichment and mistake.

What is a Forgery?

Starikov and his lender filed a motion for summary judgment to dismiss the case prior to trial, arguing that the deed wasn’t a forgery because my client’s signature was “genuine” and on the deed itself, and asserting the good faith and equitable subrogation defenses. In what appears to be a case of first impression, Justice Wilkins held that the transfer of an altered signature page onto a deed was in fact a forgery under the common law definition. As he wrote in his decision:

Red Flags: Good Faith and Equitable Subrogation

Judge Wilkins also rejected the good faith purchaser and equitable subrogation defenses. As I argued, the judge recognized that there were several “red flags” with the deed and the purchase and sale agreement (which was also forged) which could have put a closing attorney on notice of the irregularities in the transaction. These red flags are properly considered at trial, the judge ruled.

What’s Next?

Overall, I’m very pleased with Judge Wilkin’s ruling. He understood the issues, and provided some much needed justice for my client. So now the case will proceed to trial (or settlement). I will keep you appraised of any further developments. I’ve embedded the entire opinion below for your reading pleasure.

Nelson v. Chandler Cazenove LLC (Middlesex Mass. Superior Court) Jan. 23, 2020 by Richard Vetstein on Scribd

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Legislators Freeze Landlords Out of Rent Control Debate

by Rich Vetstein on January 21, 2020

Hearing Rigged Against Small Landlords

After voters statewide strongly rejected rent control in 1994, tenant groups have been pushing hard for its resurrection, getting far enough to have a major hearing on several bills on Beacon Hill last week. As I’ve written here before, economists have universally concluded that rent control does not work, and in many cases, it has actually resulted in higher rents overall. But that has not stopped tenant groups like City Life/Vida Urbana from pushing this failed policy and using their clout to get lawmakers to jump on the rent control bandwagon.

The best evidence of how lawmakers are kowtowing to these groups is the travesty which transpired at the State House hearing on Jan. 14. The hearing lasted for 6.5 hours at which landlords were given only 15 minutes of speaking time. That’s not even 4% of the total hearing time. While representatives from the GBREB spoke first for about 10 minutes, the remaining six plus hours was a cattle call of tenant groups, paid housing lobbyists, affordable housing advocates, and public housing reps, advocating rent control and increased transfer and property taxes to subsidized their rents.

According to Doug Quattrochi, the Executive Director of MassLandlords, the largest statewide property owner trade association, the hearing was essentially rigged in favor of tenants. He said that legislators intentionally controlled the order of speakers to freeze out small landlords and property owners. There was a small army of small landlords who showed up early at 9AM, but were not allowed to speak at all, even though the hearing went until 6PM.

The implementation of rent control would cost Massachusetts rental property owners literally billions of dollars, and the best that Legislature can do is give them 15 minutes of speaking time?

This is outrageous.

If you feel so inclined, please email the members of the Joint Committee on Housing.

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Parties Who Negotiated Past Purchase and Sale Agreement Deadline Waived It, Court Rules

The Massachusetts Appeals Court just came down with a ruling which should be a cautionary tale to everyone in the residential real estate business. It’s an interesting fact pattern, but not necessarily unusual. For those with short attention spans, the Court held that the standard deadline to execute the purchase and sale agreement is not necessarily a hard deadline. Rather, the deadline can be waived by the parties if they negotiate beyond the date, even without a formal extension in place. The Court also held that where the property is owned by several individuals, even if only one of those individuals sign the offer, this is not necessarily fatal to the deal.

Ferguson v. Maxim, Mass. Appeals Court, 18-P-1081 (Nov. 6, 2019)

In the case, the buyer, David Ferguson, and the seller, Joyce Maxim, signed the standard form Offer to Purchase put out by the Massachusetts Association of Realtors for the sale of residential property in Leominster. (For my post comparing the MAR form with the Greater Boston Real Estate Board, click here). It turns out that title to the property was actually held by a group of five individuals including Maxim, but we will get to that in a few. As is standard, the Offer provided that the parties would enter into a standard form purchase and sale agreement by a specific deadline. However, the seller’s attorney did not sent out a draft PSA until after the deadline, and negotiations continued well past the deadline without any issue raised by the parties or their attorneys. Both attorneys had suggested formalizing an extension of the PSA deadline at various times, but a formal extension agreement was never signed. At some point the seller’s attorney tried to cease the negotiations acknowledging that “we are well beyond our [PSA] date.” A week later, the buyer’s attorney tried to resurrect negotiations and save the deal. Further negotiations ensued between the parties, but they were abruptly stopped by the seller’s attorney who stated that the deal was for all intents and purposes dead.

Mr. Ferguson, the buyer, was naturally upset, and sued, seeking an order of “specific performance” to enforce the deal, based on well established law that an offer to purchase is a legally binding contract for the sale of real estate. (Read the case if you want to learn about various procedural issues that arose in the case with respect to the buyer’s obtaining a lis pendens and the seller’s special motion to dismiss under the lis pendens law.).

Two Important Take-Aways

The important take-aways from the ruling were twofold. First, the Court ruled that the typical deadline to execute the purchase and sale agreement is not always a hard deadline. Some people may be surprised to here that, but under Massachusetts law, a deadline in any contract can be “waived” by the parties words, actions, or conduct. Here, the Court said that a waiver of the deadline could be found where the seller’s attorney didn’t provide the draft PSA until after the deadline and the parties freely negotiated well past the deadline, even without a formal extension in place. Second, the Court also held that where the property is owned by several individuals, only having one of those individuals sign the offer is not necessarily fatal to the deal. If there is evidence that the signatory had apparently authority to sign for the others, or that the sellers ratified the offer, then the contract could be enforced. So now the buyer’s case will continue on for trial. Interestingly, during the pendency of the case, the sellers sold the property to another party. If the buyer is successfully, that new buyer is going to be very unhappy because his transfer will be voided! He may want to lawyer up himself.

Let’s Play Monday Morning Quarterback!

Now, what could have been done differently in this case to avoid the bad result for the seller? For starters, the seller’s attorney should have delivered the draft PSA on time. Once the parties started negotiations after the PSA deadline, they were in “no man’s zone” and that can only come back to hurt the sellers. Deadlines need to be taken very seriously, and sharp lawyers will always send out emails or other written reminders of them, and reserve their rights to terminate an agreement if the parties blow past a deadline without a written extension in place. The buyer’s attorney played this correctly, and didn’t push on the deadline issue because the law would favor his client on the waiver issue (which it ultimately did).

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Benefits and Affordability Of Owner’s Title Insurance Coverage Praised In Widely Read Article

When my friend Jim Morrison, formerly of Banker and Tradesman and now a freelance real estate reporter, contacted me about an article on owner’s title insurance, I was rather surprised. After all, title insurance isn’t the most “sexy” of real estate topics. However, I did have a whole bunch of horror stories to tell Jim about what happens when buyers don’t elect to get owner’s title insurance coverage. I told Jim the stories and, as always, recounted how I got owner’s title insurance on my own house purchases, even though I was pretty certain the title was clean. The article would be posted on Boston.com, Jim said. Sound great, Jim, thanks for letting me comment, I said.

Well, Jim wrote a fantastic article. And what do you know, but the article was so widely read and shared that the Globe decided to put it in the Boston Sunday Globe Magazine with yours truly featured in the inset! I was thrilled — not only for the good press, but more importantly, to spread the word that owner’s title insurance is a “must-have” for every buyer and a good deal financially.

You can find a link to the article here: What Is Title Insurance, and Why Do You Need It? It is really one of the best articles on owner’s title insurance that I’ve seen in a long time. For all my fellow law colleagues, real estate agents, and mortgage professionals, it’s a great piece to share on your social media feed and client newsletters!

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Appeals Court Rules That Law Places Responsibility On Parents

From hotel quality pools, to monster play-sets, to the ubiquitous trampoline and fun houses, backyard activities are all the rage these days. But what happens when a guest or young one is injured in your backyard play space? Can you be held liable for negligence and personal injuries? Or are the parents responsible for the actions of their own children? A recent court ruling considered these issues.

LaForce v. Dykeman, Mass. Appeals Court Sept. 9, 2019

Earlier this month, the Massachusetts Appeals Court considered a case where a 6 year old boy fell off a backyard zip-line and sustained a very serious fractured arm. The little boy was a guest of the homeowners. The zip-line was of the classic variety with the line attached to two trees, and a hand trolley used to traverse the line. The little boy was helped onto the hand trolley by his father, who held him for the first few yards, then (as we fathers tend to do), let him go, saying “You’re on your own, buddy!” Unfortunately, mid-way down the line, the child fell off the trolley and broke his arm in several places, requiring multiple surgeries.

Parental Responsibility Remains the Rule of Law

The child’s father sued the homeowners, whose insurance policy covered the loss, claiming that the zip-line should have had a seat apparatus which was recommended by the manufacturer. The Appeals Court, in an opinion written by Justice Gregory Massing, held that the law puts responsibility on the boy’s father, not the homeowner, to ensure that his kid is safe on the zip-line. The father argued that a duty of care was owned not to him, but to his young son, who is too young to assess the dangerousness of the zip-line without a seat component. Justice Massing, using a dose of common sense, saw otherwise, commenting that “Aaron [the boy] used the zip line with his father’s assistance and under his father’s supervision. Any duty to warn would be owed to Aaron’s father, who was expected to keep his son safe, had the opportunity to prevent his son from using the zip line, and placed his son in the position that led to his injury. And because the danger was open and obvious to Aaron’s father, the defendants had no duty to warn him.” The end result is that the homeowners are off the hook for liability.

An Insurance Agent’s View

I asked my friend and insurance company owner, Carlos Vargas of Vargas and Vargas Insurance about the take-away’s from this case. He stated that “insurance companies do get nervous with “attractive nuisances,” and that’s why it is important to review your policy. If your neighbor’s kid gets hurt using the trampoline and mom and dad sue you then your policy would afford coverage or at least the cost of legal cost to defend you. Insurance is designed to provide you coverage, however, it is a legal contact and you want to honest with your agent on what is happening on your property. A phrase we like to use is that “You are paying for coverage, don’t risk it by not answering questions honestly.” Carriers are loosening the guidelines for certain liability scenarios. Go back 10 years ago, you couldn’t find a company to insure you if you had a German Shepherd. Today we have 3 markets that will accept the breed. Same goes with trampolines, we have some carriers that are okay with the trampoline in the backyard and they are not restricting the liability.”

Rich’s View

I have mixed feelings about this case. I just googled “backyard zip-lines” and they all have seats or safety harnesses. The older ones were definitely not the safest contraptions around. On the other hand, this child was only 6 years old and obviously didn’t have the upper arm strength to stay on the trolley for the entire length of the line. That’s on the father. It’s a tough case for the court. But accidents do happen, and not every accident is a result of someone else’s negligence.

That said, this case simply underscores why you want to have a good property insurance policy in place. Here, the insurance company paid for all the legal fees for the homeowner. (This case was originally filed in 2016). Also, and especially if you have a zip-line, trampoline or pool, you definitely want to get yourself an umbrella excess policy in case you get sued for something catastrophic. If you need insurance guidance, click Carlos’ link above!

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Rent Escrow Orders Upheld by Supreme Judicial Court

by Rich Vetstein on September 16, 2019

Huge Victory for Landlords and Property Managers

Today, in Davis v. Comerford, Justice Scott Kafker of the Massachusetts Supreme Judicial Court issued the first appellate decision confirming that Housing Court and District Court judges have the legal authority to issue rent escrow orders in favor of landlords while eviction cases are pending. The hard working folks at MassLandlords, who filed a friend of the court brief in the case, and I have been working very hard to get this much needed ruling and guidance from our appellate courts on rent escrow orders. It finally came today.

For those who don’t know, a rent escrow order is an order issue by a Housing or District Court judge in an eviction case requiring the tenant to continue to pay rent (also called use and occupancy) during the pendency of the case which can drag on for many months. It seems like common sense, and several housing court judges do issue them, but up until now, there has never been a formal ruling by a Massachusetts appellate court that rent escrow orders were legal. The district courts, however, in my experience, have traditionally been unwilling to grant these orders.

Davis v. Comerford: Seminal Ruling on Rent Escrow Orders

In the Davis v. Comerford, the Southeastern Housing Court in Brockton issued a rent escrow order in a case where the tenant also claimed various housing code violations and security deposit violations. Arguing that the judge did not properly consider tenant’s counterclaims, he appealed the rent escrow order.

The SJC took the unusual step of transferring the case to its full court panel, using it as an opportunity to consider the legality of rent escrow orders in general, and the various factors that lower court judges should consider in making these orders. First, the Court confirmed what we landlord attorneys have been arguing for years — that rent escrow orders are fully within the statutory umbra and equitable powers of the Housing and District Courts, and should be issued on a case-by-case basis. Second, the Appeals Court held that a tenant’s counterclaims for code violations, property conditions and other defenses are relevant in the calculation of any rent escrow order. Third and lastly, the Court set forth a framework for lower courts to use in considering rent escrow orders, which I will outline below.

Factors for Judges to Consider in Issuing Rent Escrow Orders

  • A landlord must file a written motion for rent escrow. A hearing must be held on the motion, and the judge should issue written findings supporting his/her ruling.
  • A judge should consider the time delay expected before trial or final resolution, noting that a request for a jury trial will typically delay the case substantially.
  • A judge should consider the amount of rent due, whether the landlord has received full or partial payments, and (critically) the amount of the landlord’s mortgage and property expenses and whether there is a threat of foreclosure to the landlord.
  • The tenant’s counterclaims and defenses (and the merits of each) should be considered, especially any code violation/property condition claims which would result in a reduced fair rental amount.
  • A judge should consider whether the tenant had to pay out of pocket for any repairs under the repair and deduct law.
  • The tenant’s own financial situation is also relevant, as well as whether they have a lawyer or are proceeding on their own (pro se).
  • Rent escrow payments may be placed into court, into the tenant’s attorneys account, into a landlord attorney’s account, or if warranted, paid directly to the landlord

This is a great ruling by the SJC, and will be very helpful to both the landlord and tenant bar as cases move forward in our Housing and District Courts. I was also able to discuss this case with Attorney Arthur Doubleday, who represented the tenant. He said: “I am happy with the decision because it gives clarity and a road map through which Judges can now deny or allow use and occupancy orders.  Whereas before, use and occupancy orders were Judge specific, hopefully soon we will begin to see uniformity and in how these orders are denied or allowed. The requirement for an evidentiary hearing and a written finding after such hearing will let both tenants and landlords give their reasons as to why a use and occupancy order should or should not be made. That said, I am fearful that landlords will prevail in their request for use and occupancy orders even when there are poor living conditions for the tenants who may not know how to advocate for themselves in court.” I do agree with much of what Attorney Doubleday says, however, I’m confident that our Housing Court judges are up to the task in considering all the various factors which go into a rent escrow request.

If you have any questions about this court ruling or rent escrow orders in general, please reach out to me at [email protected].

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Local Loan Shark Stopped In His Tracks

by Rich Vetstein on September 14, 2019

NEW CASE ALERT: Our Firm Files Lawsuit Against Local Predatory Lender, Charging 50% Interest and Attempting to Evict Local Family

On Monday, a new client came into my office with an unbelievable story. My client had some financial difficulties and was in pre-foreclosure with his second mortgage holder. Looking for some unconventional solutions, he was introduced to a local “hard money” private lender who offered a workout loan to stop the foreclosure. This lender sold him on a $50,000 loan, with 50% interest rate with a 6 month balloon payment. 

Under the Massachusetts criminal usury law, however, a lender cannot charge more than 20% interest without first registering with the Attorney General’s Office. This private lender was not registered. That was the first red flag. The next red flag was that in addition to a standard mortgage, the private lender demanded that my client (and his wife) take the highly unusual step of signing over a “reverter deed” to their house, as additional security. Under duress, my clients signed the deed.

Only days later, the private lender recorded the deed, thereby becoming the record owner of the clients’ home, then, unbelievably, started eviction proceedings against my client and his family. Mind you, the loan was not even due for payment until March 2020. The lender appeared to have pulled a fast one over the local district court judge, and was able to get an eviction move out order. (My client did not have the means to retain counsel, unfortunately). The loan shark also sent threatening text messages like “TELL YOUR KIDS THEY ARE MOVING OUT!!!”

On the eve of the sheriff’s move out, I filed a multi-count civil action against the private lender, alleging predatory and illegal loan shark activities and unfair debt collection practices. I was able to get a temporary restraining order to stop the eviction, as well as a lis pendens (notice of claim), in order to rescind the loan and the deed.

This family of four can now sleep knowing they won’t be thrown on the street. And my father has come up with a new nickname for me….Robin Hood Vetstein. I’ll take it! I will keep you posted on developments. Hopefully, the Attorney General’s Office will take interest in this lender. If this story sounds familiar, please contact me…I do not want to divulge the lender’s name here on this platform, but I would be happy to provide it to you privately.

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A recent court ruling confirms a legal principle in Massachusetts which a lot of folks may be surprised to learn. Under the legal theory of adverse possession, if you mow your neighbor’s lawn and otherwise conduct typical suburban lawn care on that property openly and adversely for 20 or more years, you can claim legal ownership of that area. I’m not kidding, this is the law, and this principle comes up more than you think in boundary line disputes in Massachusetts.

Boundary Line Dispute In Newton

The case is Miller v. Abramson (Mass. Appeals Court Aug. 29, 2019) and is a good example of a classic adverse possession lot line dispute.

The Miller family lives in a single-family home at 11 Fellsmere Road in Newton, on a corner lot at the intersection with Ward Street. The Abramson family lives at 211 Ward Street in Newton. Fellsmere Road dead-ends onto Ward Street. As shown on the plan (left), the back of the Millers’ property directly abuts one side line of the Abramsons’ lot. The parties’ shared lot line is straight, running from Ward Street to the back of the Abramsons’ property. The area disputed by the parties forms a thin triangle, about 492 square feet in size, the base of which is along the Abramsons’ back lot line and one side of which is along the parties’ shared lot line. Since the Millers bought their property in 1986, a line of shrubs and small trees have formed a demarcation of the disputed area from the Abramson’s property. Since 1986 to the present, the Millers and their landscaping company mowed the lawn weekly and undertaken typical residential landscaping work within the disputed area.

Lawn Mowing and Typical Suburban Landscaping Can Constitute Adverse Possession

On appeal after the Millers prevailed at a Superior Court jury-waived trial, the Abramson’s argued that lawn mowing and landscaping was not sufficiently intense a use to establish adverse possession. As I have argued in other cases, the three judge panel confirmed that “typical suburban lawn care” can establish adverse possession so long as it was conducted for 20 or more years. The Appeals Court reasoned that “the context supplied by the surrounding landscape is significant in an adverse possession case — a use that is sufficient to establish ownership in a densely populated neighborhood may be inadequate in an isolated, wooded setting.”

So basically what the Appeals Court is saying is that the uses which would qualify for adverse possession depend on the type of property and the typical uses of land for that type of property. Here, in the single family residential setting, typical suburban lawn mowing, tree pruning and landscaping will be sufficient for a landowner to make a valid adverse possession claim. If the property is in a more open, heavily wooded area, more uses may be necessary, such as cutting trees and clearing the land. Conversely, if the property is in a dense urban area, uses such as paving a driveway, installing a fence, or the like may be enough. It depends on the situation, and every case is different.

Take-Away’s — Get a Plot Plan and Owner’s Title Insurance

As a prospective buyer, seller or real estate agent, how can you minimize the risk of adverse possession and boundary line disputes? The gold standard is to have a licensed surveyor undertake an instrument survey and run survey stakes along all lot lines. However, such a survey does cost upwards of $1,000 or more. Most lenders require a mortgage plot plan (around $125) at closing, however, these are not 100% accurate, but they will typically flag a potential encroachment. Owner’s title insurance with enhanced coverage does provide some coverage (subject to a cap) for boundary line disputes, so I always recommend that buyers get this. While buyers often pay the most attention to inside the home with their inspection, it’s a good idea for buyers to walk the property and try to scope out any potential lot line issues.

If you are dealing with a Massachusetts property line or boundary line dispute, please feel free to contact me at [email protected].

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Horry, SC Booking Photo — Allen J. Seymour

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 where he forged deeds and sold properties out from under owners. I’m happy to report that the Worcester Superior Court just sentenced Seymour to a prison term of 3-5 years at MCI-Cedar Junction. This sentence was for his violation of the terms of his probation from his first criminal conviction in a similar scam in 2010. He remains under indictment for 22 counts of forgery, larceny and money laundering in the most recent case involving my clients. We expect that he will receive another substantial prison term once that case goes to trial later this year.

As reported by the Worcester Telegram, Worcester Superior Court Justice Janet Kenton-Walker sentenced Seymour, 52, to 3-5 years in state prison, with 5 years of probation to follow, and also ordered to pay $750,000 in restitution and was prohibited from working in the real estate industry. Assistant Attorney General Edward Beagan had asked Judge Kenton-Walker to sentence Seymour to 6 years in state prison on the violation. He further asked the judge to keep Mr. Seymour on probation on one of the charges and allow the $750,000 restitution order to remain in place.

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

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It’s been awhile since I’ve posted, and that’s due in large part to my work on several complex cases involving challenges to deeds. So I figured since I’ve done a ton of legal research and writing on the subject in the actual cases, why not write about it?

When you think about undue influence and mental capacity, one conjures up the classic scene of the “evil” son putting a deed to the family house in front of a dying parent in the hospital, signing over the house and excluding all of the other siblings. Now, I’ve had a case where that actually occurred! But these cases run the gamut of situations.

These cases are often intra-family disputes, and can involve challenges to deeds and real estate transfers, as well as wills. Will contests are a different animal altogether, so I won’t cover those in this post. The common theme in these cases is that someone (say an heir of a deceased person or a sibling) is unhappy that a parent or sibling signed over a deed to someone else (say a brother or son) and thinks there was something nefarious behind it, and wants to essentially un-do that transfer.

Legal Standards Governing Deeds and Notaries Public

Let me start with some basics about the law of deeds and notarizations. In order to be considered enforceable and accepted for recording at the registry of deeds, a quitclaim deed must be executed before a notary public. A notary public’s job is essentially to ensure that the signatory is signing the deed is doing so freely and voluntarily. A Notary Public is governed by a comprehensive set of regulations under Executive Order No. 455 — Standards of Conduct for Notaries Public passed by Gov. Romney in 1994. A notary must examine a government issued form of identification in order to verify the identify of the person signing the deed. The notary does not have to make a medical or psychological determination as to whether the signatory is legally competent. Under the regulations, however, the notary is prohibited from notarizing a deed if the signatory “has a demeanor that causes the notary public to have a compelling doubt about whether the principal knows the consequences of the transaction or document requiring the notarial act,” or “in the notary public’s judgment, the principal is not acting of his or her own free will.”

A notary must also keep a journal of all notarizations performed (however, attorneys are exempt from this rule). The journal must contain the date, time and location of the notarial act, the signature, name and address of the person signing the document, the type of identification provided, and a description of the document notarized. The notary journal can prove to be a critical piece of evidence in a deed challenge case. (Note that the absence of a journal entry or journal itself does not render the deed or document invalid on its face).

Importantly, a notary public does not act as a lawyer or judge overseeing the legality of the deed or the conveyance in general. The regulations specifically provide that a “notary public has neither the duty nor the authority to investigate, ascertain, or attest to the lawfulness, propriety, accuracy, or truthfulness of a document or transaction involving a notarial act.”

Now this is very important. A quitclaim deed that is validly executed and acknowledged properly by a notary public and recorded with the registry of deeds is presumed by the law to be valid and enforceable. So how can someone challenge a deed which looks to be validly executed and notarized? Let me explain.

Undue Influence

Undue influence typically arises when the signatory to a deed (often elderly or mentally challenged) is under the influence of someone he or she trusts (often a close relative), and that person uses such influence to make them sign a deed under coercion or duress of some kind. The law defines undue influence as “whatever destroys free agency and constrains the person whose act is under review to do that which is contrary to his own untrammelled desire.” Four factors are usually present in a case of undue influence: (1) an unnatural disposition is made (i.e, the recipient would not otherwise have been entitled to own the property) (2) by a person susceptible to undue influence to the advantage of someone (3) with an opportunity to exercise undue influence and (4) who in fact has used that opportunity to procure the contested disposition through improper means. If undue influence can be established, a court can render the deed voidable and essentially undo the transaction in certain circumstances.  

Proof of undue influence is often challenging and involves recreating the circumstances of the deed signing and also examining the medical history of the person signing the deed many years ago. Medical records will need to be obtained. We often hire medical experts to give opinions on the victim’s neurological state. These cases are complex and can be expensive to litigate.

Lack of Mental Capacity

A person signing a deed must have a minimum level of mental capacity and awareness to know and understand what they are doing and that they are doing so under their free will. Mental capacity and undue influence often overlap. Lack of mental capacity may be found where a person may be affected by congenital deficiencies in intelligence, mental deterioration that accompanies old age, the effects of brain damage caused by accident or organic disease, and mental illnesses evidenced by such symptoms as depression, bipolar, or other neurological impairment. Like undue influence, proof of mental capacity can be challenging and involves medical records and expert medical witnesses as to the signatory’s mental state. A notary public should usually be the first line of defense in a situation where the signatory appears mentally incompetent, but often that does not happen or the signatory does not appear mentally challenged for the few minutes it takes to sign a deed. If lack of capacity can be established, a judge can invalidate the deed.

Forgery

Forgeries are a different situation all together. A forgery occurs when the person who is supposed to sign the deed did not sign it at all — someone else forged their signature on the document, and somehow had it notarized (often falsely). In my publicized forgery cases involving the accused criminal Allen Seymour, he allegedly forged victims’ signatures on deeds, then used a fake notary stamp on the deeds.

Under the law, if a deed is forged it is completely null and void — as if the deed never existed in the first place. Title reverts back to the original owner, and any subsequent good faith buyer or mortgage companies are out of luck. (That’s why you always get owner’s title insurance).

Proof of forgeries often requires a handwriting expert. Handwriting analysis is an interesting science, and I’ve dealt with it in several cases. Experts are usually former FBI agents or police detectives.

Litigating Challenges to Deeds

These cases are often brought in the Superior Court or Land Court under their quiet title jurisdiction. Sometimes they are brought in Probate Court. Claimants often seek a lis pendens (notice of legal claim) at the start of the case in order to prevent the property from being transferred or mortgaged while the case plays out. Sometimes, the signatory to the challenged deed is deceased, making the evidentiary history far more difficult to obtain and prove. Sometimes, the notary public is deceased or cannot be located. And sometimes the attorney who drafted the deed and participated in the signing has passed or cannot be located. Each case presents its own unique factual history and challenges.

It goes without saying that you need a very experienced real estate litigation attorney to handle this type of case. They are complex, both legally and factually, and can get very expensive, very quickly. But the stakes are usually quite high, with property values being so astronomical here in Massachusetts.

If you are dealing with one of these situation, please feel free to call (508-620-5352) or email me [email protected], and I would be happy to take a look at your case.

Good luck, Rich

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