Real Estate Litigation

A Counterfeit South Carolina Driver’s License, Forged Deed, and a UPS Store In Philadelphia: The Anatomy Of A Title Theft Scam

by Rich Vetstein on September 12, 2024

in Closings, Construction Law, Deeds, Massachusetts Real Estate Law, Real Estate Litigation, Title Defects, Title Insurance

FBI Investigation: Scam Artists Use Forged Deed and Counterfeit ID’s to Steal Concord, MA Property; Local Real Estate Agent, Developer, and Attorneys Caught Up In Fraudulent Transaction

Using a counterfeit driver’s license and passport (shown at right), fake e-mail address impersonating the real owner, and a forged deed and notary stamp, scam artists were somehow able to dupe a local real estate agent and two seemingly experienced real estate attorneys, and get to the closing table, where a Concord, MA lot was fraudulently sold to a local developer, and the scammers getting away with nearly $500,000 in stolen sale proceeds. The transaction had red-flags all over the place, yet all the purported professionals seemed to have buried their head in the sand and ignored the clear warnings of fraud, according to a lawsuit recently filed by my office on behalf of the victims. With a looming FBI financial crimes investigation and active federal grand jury proceeding in Boston, my clients are seeking to restore their title and ownership and recover damages for this title theft scam.

Title Theft:  A Brief History

With the proliferation of publicly searchable land records, internet search capabilities, and reliance on electronic communications, “title theft” has become an increasingly prevalent criminal scheme to transfer properties from unsuspecting owners and steal millions of dollars. Property owners across the country have been targeted by scammers who prepare deeds purporting to convey title to property the scammers do not own. Sometimes, the true owners are entirely unaware of these bogus transfers. In other instances, the scammers use misrepresentation to induce unsophisticated owners to sign documents they do not understand.

Massachusetts is no stranger to the wave of title theft schemes.  In 2018, convicted felon Allen Seymour and accomplices orchestrated a complex scheme using forged documents, bogus notary stamps, and fake driver’s licenses to defraud several innocent home owners, buyers and lenders in connection with fraudulent sales of properties in Cambridge, Brookline and Somerville, resulting in over $1.5 Million in losses. I represented several victims in those cases which were successfully prosecuted by the Attorney General’s Office, with Seymour sentenced to 6-8 years in prison. 

Scam Artists Target A Vacant Lot in Mattison Farms Subdivision in Concord

My clients are an older married couple now living in South Carolina. Back in 1991, they purchased a 1.8 acre lot in the Mattison Farms subdivision in Concord. They originally intended to build a home on the lot, however, the husband’s practice as a cardiologist took the family out of state for several decades. The couple kept the property and paid the real estate taxes all along, hoping at some point maybe they would move back to Massachusetts or gift the lot to one of their three adult sons so they could someday build a home here. The lot is now likely worth north of $1 Million.

At some point in 2023, using a fake email account, the scam artist contacted a local real estate agent, and convinced him that she was the true owner of the Concord lot and interested in selling it.  Successful, the broker placed the Property on the Multiple Listing Service with a list price of $699,900, advertising that it was “a great opportunity to build your dream home in the ultra-exclusive, sought after and prestigious Mattison Farm neighborhood. One of the only remaining lots and nestled on a 1.84 acre parcel. Close proximity to Concord & Nashawtuc Country Club.” The broker quickly found an interested buyer in a local real estate agent and developer who had his sights set on building a new luxury home on the Property. Using a fake electronic signature, the imposter signed an offer and purchase and sale agreement with the buyer, agreeing to sell the lot for $525,000 – hundreds of thousand of dollars less than the fair market value of the lot.

Red Flags:  Counterfeit South Carolina Driver’s License, U.S. Passport, an Apartment in Dallas, Texas

One of the keys to this successful scam was that the scam artist provided the players involved with a copy of a fake South Carolina driver’s license and US Passport (shown above). However, both identifications display tell-tale signs of counterfeit. The driver’s license and passport both use the same photograph – which is impossible because the state registry of motor vehicles and U.S. Passport Office work off independent systems. The driver’s license layout is clearly fake when compared to a real South Carolina ID, and there’s no evidence of a hologram.

Even more suspicious, despite the ID’s showing a South Carolina residential address, the scam artist suspiciously instructed the seller attorney to send the deed and power of attorney to a nondescript apartment in Dallas, Texas. And when those “signed” documents came back to the seller attorney there were other tell-tale signs of forgery and fraud. Critical portions of the notary clause were left blank; the county of notarization is misspelled as “Tourrant,” instead of Tarrant County, Texas; the notary’s signature is clearly bogus; and the notary stamp was lifted from other documents and transposed using a PDF editing program.

Town Permits and Access

With the real owners blissfully unaware and the professionals apparently not picking up on the fraud, the transaction proceeded forward with the buyer applying for various town approvals for construction. Using a fake digital signature, the scam artist signed various applications for those approvals, which were submitted by the buyer to the Town of Concord. The real owners got a certified letter about the town approvals, and immediately contacted the Concord Natural Resource Director who informed them that the Property was “up for sale.” My client told the director that they absolutely did not list the Property for sale and had no knowledge of any pending sale, and sent her an email demanding that all proceedings be terminated. After that, according to our lawsuit, the director informed the buyer team of my client’s call, however, nothing was done to investigate the potential fraud and stop the approval process. Shockingly, the Town approved the permits without any further inquiry.

Despite All The Red Flags for Forgery and Fraud, the Closing Goes Forward

As of late March into April 2024 – months prior to the scheduled closing – all parties and their attorneys knew or should have known of the existence of irregularities, fraud and/or forgery in this transaction, according to our lawsuit. Yet, none of them put the transaction on pause in order to further investigate whether in fact the transaction involved forgery or fraud, as would be reasonable to do in the circumstances. Despite all of the visible red flags, notice of the true owner’s claim of ownership and likely forgery, the closing of the transaction went forward on May 13, 2024, with the seller attorney executing the closing documents pursuant to the forged power of attorney.

The final and perhaps most telling red flag came at the very end of the closing process with the scam artist instructing the attorneys to send the nearly $500,000 seller proceeds check to a UPS Store address in Philadelphia, PA. So at this juncture we have a South Carolina address on the driver’s license and passport, a Dallas, Texas apartment address for the deed and power of attorney delivery, and UPS storefront in Philly for the proceeds check. As the saying goes, “make it make sense.”  

The scam artist received the check, deposited it into a Charles Schwab account, and the money is now gone, along with the title to my client’s property.

To make matters far worse, there is now a $1.8 Million construction loan mortgage on my client’s title, and the “buyer” is well into site work and construction on the Property. The land has been cleared and graded with numerous trees cut down, a foundation poured and a large house framed out, portions of the septic system installed, and utility service brought in, as shown above.

The Aftermath: FBI Investigation And Superior Court Lawsuit

When my client ultimately discovered that their property had been officially sold and that a house was being built on the land, she started shaking and screaming, and then fainted, spending the next days and weeks riddled with anxiety and nightmares. My clients then went to the FBI, Concord Police and the Middlesex District Attorney’s Office to report the matter. The FBI Financial Crimes Squad in Boston is conducting an active investigation of this matter, and FBI agents have already interviewed the two attorneys involved in the transaction who are cooperating. Grand jury subpoenas have also been issued. The scam artists have not been found as of yet.

On September 11, 2024, we filed the lawsuit below for quiet title, trespass, civil conspiracy, and negligence against the buyers, the developer and the attorneys involved in the transaction. My clients are hopeful that they can restore their ownership to their property and get some measure of compensation for this ordeal, which should have never happened. I will keep you posted as to developments. This story is a painful warning to all real estate professionals to be on the look out for title theft scammers from out of state who target vacant properties or unsophisticated owners. And needless to say, always purchase owner’s title insurance when you buy any real estate! There are also “Title Lock” services which claim to monitor your title and ownership but I cannot vouch for them at all.

The CBS 4 Boston I-Team recently did a segment on the case, below.

Verified Complaint Halla Shami v. Geesey, Middlesex Superior Court (Mass.) CA 2481CV02412 by Richard Vetstein on Scribd

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The Massachusetts Lis Pendens: The Definitive Guide For Lawyers and Clients

by Rich Vetstein on January 21, 2024

in Land Court, Massachusetts Real Estate Law, Offer To Purchase, Purchase and Sale Agreements, Real Estate Litigation, Title Defects, Title Insurance

A Massachusetts Real Estate Litigator Talks About Lis Pendens Basics, Strategy, and Pro Tips.

Recently, I gave a well attended webinar for the Real Estate Bar Association on a subject that is near and dear to my real estate litigator’s heart — The Massachusetts Lis Pendens. The webinar was an introductory presentation which I called “Lis Pendens 101,” and covered essentially all the basics from what is a lis pendens, how to get one, how to defend against one, and everything in between. I’m basically going to convert my presentation into this blog post. I’m going to write it for both lawyers and the general public, so some of it may seem basic while other parts may seem complex. Ok, let’s do this.

What Is A Lis Pendens?

Well, let’s start with the Latin translation of the term “lis pendens.” It means “a suit pending.” Here in Massachusetts, a lis pendens is a notice of a lawsuit recorded at the registry of deeds against the title to the particular property at issue in that lawsuit. A lis pendens must be approved by a judge who must find the lawsuit “affects the title to real property or the use and occupation thereof or the buildings thereon.” Once recorded at the registry of deeds, a lis pendens can effectively stop a purchase or sale of real estate from closing, create a “cloud” on title, and otherwise prevent a party from taking adverse action involving the subject property. Additionally, title insurance companies routinely decline to insure a title with a lis pendens on title. The lis pendens really earns its well-deserved reputation as deadly arrow in a real estate litigator’s quiver.

For Which Type of Case Can You Get a Lis Pendens Issued?

The lis pendens procedure is governed by statute, Mass. Gen. Laws ch. 184, sec. 15, and practitioners should be intimately familiar with it. The statutory standard for obtaining a lis pendens is that the lawsuit “affects the title to real property or the use and occupation thereof or the buildings thereon.” Ok, so what does that mean? Some examples of cases that are covered are:

  • Real Estate Contract Disputes/Specific Performance
  • Boundary Line/Easement Disputes and Adverse Possession
  • Quiet Title Actions 
  • Restrictive Covenants

Please note that under the statute, in Zoning/Wetlands Appeals cases, you are not entitled to a lis pendens — this was enacted to keep real estate development permitting from being railroaded by abutter appeals.

How To Get a Lis Pendens

First off, you need an experienced real estate litigation attorney because the process is complicated. The attorney will draft a Verified Complaint which must be signed by the plaintiff client under the pains and penalties of perjury attesting that all facts are true and accurate, and no material facts have been omitted. The “no material facts have been omitted” requirement was added in 2002, and I’ll discuss this below as there has been recent case law on it. The complaint must name as defendants all owners of record and any party in occupation under a written lease. Along with the Verified Complaint, the attorney will file a Motion for Issuance of Lis Pendens, a proposed Memorandum of Lis Pendens, and Motion for Short Order of Notice.

You also have to pick your venue, which is between Superior Court and Land Court. There are a lot of factors which will go into that calculation, including how complex your case is, whether you want a jury trial, and whether you want your case in Boston (Land Court).

The way I handle a lis pendens is that I will file the case in person in the afternoon and seek what’s called a “short order of notice,” which accelerates the time schedule for getting the motion for lis pendens heard by the judge. You get to pick a hearing “return date” and then you must serve a Summons and Order of Notice along with all the other pleadings on the defendant(s) by sheriff or constable. Then you wait a couple weeks until the hearing date and any opposition or special motion to dismiss from the opposing side (which I’ll cover below). If there is a clear danger that the other party will convey or encumber the subject property, you can file the motion “ex parte” – that is, without the other side being notified in advance, however, you have to make that factual showing there is an emergency.

At the hearing on the motion for lis pendens, both sides and their attorneys will argue before the judge whether the case qualifies for the issuance of a lis pendens. In theory, the standard for getting a lis pendens is quite low. There should not be any debate over the merits of the claims; the only issue is whether the case qualifies for a lis pendens. However in practice, especially if the defendants are opposing the lis pendens or have filed a special motion to dismiss, you’ll get deep into the merits of the case at that hearing.

Defending The Lis Pendens

With the 2002 amendments to the lis pendens statute, there are now several ways to attack a motion for lis pendens. When I was first practicing back in the late 1990’s, judges would give out lis pendens like candy. Not anymore.

A party defending a lis pendens may now file a “special motion to dismiss.” If a judge allows the special motion to dismiss, any claim affecting title will be dismissed AND the plaintiff will have to pay the defense’s attorney’ fees and costs. Additionally, the case is basically frozen in place until the special motion is ruled upon. So this remedy has a lot of teeth. However, getting a judge to grant a special motion to dismiss is not easy. You must demonstrate that the action is frivolous because (1) it is devoid of any reasonable factual support; or (2) it is devoid of any arguable basis in law; or (3) the action or claim is subject to dismissal based on a valid legal defense such as the statute of frauds. In my 25 years, I’ve only had a handful of cases thrown out on a special motion to dismiss.

Another way to attack a motion for lis pendens is to focus on what may have been left out of the plaintiff’s lawsuit. Under recent case law, a party’s failure to include all material facts in its complaint or required certification may result in denial of lis pendens and dismissal of that party’s claims where the omitted facts establish that those claims are devoid of reasonable factual support or arguable basis in law.  Some cases detailing this strategy are: McMann v. McGowan, 71 Mass. App. Ct. 513 (2008); Galipault v. Wash Rock Invs., LLC, 65 Mass. App. Ct. 73 (2005); DeCroteau v. DeCroteau, 90 Mass. App. Ct. 903 (2016). I’ve used this strategy several times successfully resulting in the judge declining to issue a lis pendens where the plaintiff left out critical facts in his complaint.

The Memorandum of Lis Pendens

If you have the good fortune of convincing the judge to issue a lis pendens in your case, your attorney will have the judge endorse a Memorandum of Lis Pendens form which then is recorded at the registry of deeds. The Memorandum must contain the caption of the case, the record owners, address, and deed reference to the subject along with the judge’s endorsement that: “It is hereby found and ordered that the subject matter of this action constitutes a claim of a right to title to real property or the use and occupation thereof or the buildings thereon within the statutory definition of G.L. c. 184, § 15.” A certified copy of the Memorandum of Lis Pendens along with Affidavit of Service (service by certified mail) must be recorded either in person or through the e-record system.

The lis pendens stays on record (and creating a cloud on title) during the entire pendency of the case, which can go on for many years. That’s what makes it so powerful, and in many cases, can force a party into a favorable settlement or resolution.

Appeals

Ok, you’ve either got your lis pendens or you may have lost and had a lis pendens issued against you. Can I appeal? The answer is maybe, and it’s complicated. An “interlocutory appeal” is available to a Single Justice of the Appeals Court available under G.L. c. 231, s. 118, first and second paragraphs for “any party aggrieved by a ruling [under the statute].” A full panel appeal to the entire Appeals Court is also available. There is a hard 30 day appeal period for both. An appeal covers the denial/grant of lis pendens and a grant of a special motion to dismiss, but not the denial of a special motion to dismiss. Practicioners should review the statute carefully and DeLucia v. Kfoury, 93 Mass. App. Ct. 166 (2018); Citadel Realty LLC v. Endeavor Capital North, 93 Mass. App. Ct. 39 (2018). The best practice is to file single justice appeal and notice of appeal in lower court for full panel appeal. 

Dissolution

Once a lis pendens goes on record, it doesn’t go away unless it is properly dissolved. If the parties are fortunate enough to settle the case, dissolving the lis pendens is fairly easy with the attorneys signing and recording a formal Dissolution of Lis Pendens, or a Stipulation of Dismissal, then certified copy of Judgment of Dismissal. If you get the lis pendens dissolved by the court or even better, the entire case dismissed prior to judgment, you’ll need to record certified copy of Order Dissolving Lis Pendens and/or Certificate of Judgment.

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I often refer to the lis pendens as a real estate litigator’s best friend and worst enemy. It can make the difference between winning and losing your real estate case, and most often creates the leverage needed to secure a favorable resolution. If you have any questions regarding the lis pendens process, feel free to email me at [email protected].

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SJC Gives Country Club A Mulligan From $5 Million Jury Award In Errant Golf Ball Case

by Rich Vetstein on January 17, 2023

in Easements, Massachusetts Real Estate Law, Premises Liability, Real Estate Litigation, Safety, Trespass

High Court Rules That Trial Judge Improperly Instructed Jury On Golf Course Property Easement, Covenants and Restrictions

Credit: Boston Globe

In a case which has received national attention and a People Magazine article, the Supreme Judicial Court has overturned a jury’s award of $5 Million to a family whose home overlooking the 15th hole at the Indian Pond Country Club in Kingston was pelted by hundreds of errant golf balls. Erik and Athina Tenczar brought the lawsuit against the Indian Pond Country Club in Plymouth Superior Court, claiming that duffers shanked over 700 wayward golf balls off the 15th tee, peppering their home, breaking windows, and tormenting their family for years without an acceptable solution from the club. A jury agreed, awarding the couple an eye dropping $3.4 Million in emotional distress damages, plus another $1.6M in property damage with interest.

The massive jury verdict had many real estate attorneys and golf enthusiasts scratching their 9-irons, with online comments ranging from “what did they expect living next to a golf course” to “the club did not do enough.” In an eagerly awaited decision, a unanimous Supreme Judicial Court struck down the jury verdict. The justices ruled that the trial judge misinterpreted the covenants and restrictions governing the golf course home community, and that he incorrectly instructed the jury on those rules which gave the club an easement allowing for the “reasonable and efficient operation” of a golf course in a “customary and usual manner.”

Justice Scott L. Kafker, who wrote the opinion, acknowledged that golf is a game of misses and errors:

“Errant golf balls are to golf what foul balls and errors are to baseball. They are a natural part of the game. They demonstrate the difficulty and challenge of the sport even for the very best players,” Kafker wrote. “Despite practice, instruction, technological improvements, and even good golf course design and operation — disputed in [this] case — golf shots go awry, as a matter of course.”

It’s hard to say whether the jury, if properly instructed on the scope of the covenants, restrictions and easements, would have come to the same result. The Tenczar’s presented the jury with evidence that over 700 flying balls shattered windows in their house with such force they sent glass spraying into the next room; the siding on the house was peppered with circular dents. The couple say they anticipated putting up with some amount of sound and distraction from living along a golf course. But they were not prepared for the extent, frequency, and intensity of all of it . . . Honestly, if you have all these houses on a course, I assumed it was safe,” Athina Tenczar told the Boston Globe. The club made several modifications to the 15th hole to encourage golfers to hit shots away from the Tenczer home, but they did not install protective netting.

While owning a home on a golf course comes with the inherent risk that errant golf balls will come onto property, the Tenczars will get to tee up their case another time before a jury. That is, if they aren’t able to settle the case with the club. Perhaps that’s the best way to an “even par” result. The case is Tenczar v. Indian Pond Country Club, Inc., 491 Mass. 89 (Dec. 20, 2022), embedded below.

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Double Dipping By Cummings Properties Not Allowed In Commercial Lease Dispute

by Rich Vetstein on December 7, 2022

in Commercial Leasing, Commercial Real Estate, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Real Estate Litigation

Appeals Court Rules That Liquidate Damages Clause Is Unenforceable Where It Allowed For Recovery of Rent For Remaining Term On Top of Rent Received From New Tenant

If you enjoyed the famous Seinfeld episode where George Costanza was accused of “double dipping” his chips and dip at a family funeral, then you’ll appreciate this post. The case is Cummings Properties LLC v. Hines (Mass. Appeals Court Dec. 6, 2022) where the Appeals Court struck down a liquidated damages clause in a commercial lease which purported to allow the landlord to recover a large financial penalty even though it was able to re-lease the premises.

The case is a good example of what can happen where a party can get a bit too greedy in seeking damages in a commercial lease case. Cummings Properties, one of the largest commercial real estate firms in the Greater Boston area, has a well deserved reputation of being an overly litigious commercial landlord (in my humble opinion). I’ve dealt with them several times, and I can tell you a few stories offline. Anyways, in this case, Cummings leased office space to Darryl Hines, who owned a constable/process serving business. Hines had just secured a lucrative contract with the Mass. Dept. of Revenue and needed a larger office for the new business. The lease was for 5 years at around $16,000 annually. Unfortunately, only a month into the new lease, the DOR abruptly cancelled the contract with Hines, leaving him in severe financial distress. Hines tried to work out a resolution with Cummings but it refused to release him from the lease obligations. Hines then defaulted. A year later, Cummings was able to find a new tenant and signed a 4 year lease. Cummings sued Hines, who signed a personal guaranty, for some $82,000 in damages representing the entire balance of the 5 year lease.

The lease provided for a rather common acceleration and liquidated damage provision: 

"In the event that . . . LESSEE defaults in the observance or performance of any term herein, and such default is not corrected within 10 days after written notice thereof, then LESSOR shall have the right thereafter, without demand of further notice, to declare the term of the lease ended, and/or to remove LESSEE's effects, without liability, including for trespass or conversion, and without prejudice to any other remedies.  If LESSEE defaults in the payment of any rent, and such default continues for 10 days after written notice thereof, and, because both parties agree that nonpayment of said sums is a substantial breach of the lease, and, because the payment of rent in monthly installments is for the sole benefit and convenience of LESSEE, then, in addition to any other remedies, the net present value of the entire balance of rent due herein as of the date of LESSOR's notice, using the published prime rate then in effect, shall immediately become due and payable as liquidated damages, since both parties agree that such amount is a reasonable estimate of the actual damages likely to result from such breach."

There has been a fair share of litigation in the last several decades over the enforceability of liquidated damage penalty clauses. These clauses are generally enforceable as long as it is not so disproportionate to anticipated damages as to constitute a penalty. Courts will generally enforce these clauses if (1) at the time the agreement was made, potential damages were difficult to determine, and (2) the clause was a reasonable forecast of damages expected to occur in the event of a breach. Massachusetts used to have a “second look” rule where judges could consider the state of events at the time of the breach, however, the SJC stopped that practice in 1999 in favor of a “single look” approach which only accounts for the circumstances present at contract formation.

The fatal problem for Cummings in this case was that its liquidated damage provision permitted it to have its cake and eat it too. That is, it allowed Cummings to re-lease the premises, collect rent from the new tenant without credit or offset to Hines, then on top of that, pursue all of the rent owed by Hines through the end of the 5 year term. This is akin to the “double dipping” perpetrated by said George Costanza in Seinfeld. The Appeals Court ruled that the clause allowed for such double dipping and was therefore an unfair penalty.

So what are the take-aways from this case? The obvious one for commercial landlords is don’t be a pig and chase a small business owner for tens of thousands of dollars over and above what you received in new lease funds. As far as drafting these clauses, it’s a tough one because so far humans have been unable to accurately predict future outcomes. I would say that your liquidated damage clause should have some type of caveat that the tenant will get credit for any rent received from a new tenant and be liable for the differential in rent through the end of the term. Hopefully that would work.

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Evictions Remain A “Lose-Lose” For Massachusetts Landlords: A Case Study

by Rich Vetstein on June 2, 2022

in Housing Court, Landlord Tenant Law, Massachusetts Real Estate Law, Real Estate Litigation, Rental Housing

Suffolk Sheriff Deputies Enforcing Eviction Order

Recent Case Shows Fundamental Flaws Remain In The Housing Court Eviction System

I recently concluded an eviction with a forced moved out in Dorchester, MA, which epitomizes everything that is wrong with the system here in Massachusetts. For the privacy of the parties, I will not divulge the names or docket number of the case.

I represented the property owner, a young woman who grew up low income in Worcester and put herself through college, then law school, and is now working at a law firm. She bought a condo unit in Dorchester, but then had to relocate for work, so she rented it out to four people, including the defendant-tenant. The tenant, a young male, had a very hard time getting along with the other housemates so the three other tenants moved out, leaving this tenant there alone. Initially my client said that if he found new roommates, he could stay, but it was apparent that he was not going to do that, so we issued a notice to quit back in January 2021. He also stopped paying any rent.

When he failed to move out, we filed the eviction in Eastern (Boston) Housing Court in March 2021. The tenant was savvy and knew how to work the system. He took advantage of free legal services attorneys at every juncture in the case. We had two mediation sessions, where initially he appeared willing to enter into a move out agreement only to pull the rug out at the very last minute. We even dangled a cash-for-keys deal, which he rejected.

The tenant then tried to claim a jury trial after the deadline to do so, so we had a motion hearing on that issue, which thankfully Judge Kelleher denied that motion, but this also delayed the case. There was a snowstorm cancellation on the original trial date thrown in as well. We finally received a firm bench trial date in March 2022 — a full year after the case was filed. The tenant also refused to apply for RAFT aid (and we did not want to pursue that because we would be required to dismiss the case). Believe me, I tried to push the case forward as fast as I could, but with the pandemic case backlog it is very difficult.

My client came in from California for the trial which took all of 20 minutes, and went in our favor on all issues. Meanwhile, the tenant had still not paid a penny in rent, and the rent balance had ballooned to over $40,000 by that point. Judgement for possession entered for the landlord, and an execution for possession (move out order) issued in April 2022.

Due to the pandemic caused backlog of cases, the Suffolk Sheriff’s Office is extremely backed up in scheduling eviction move-out’s. We did not receive a firm date for our move out until June 1. We tried to negotiate a voluntary move out with the tenant but he would not budge. After all, he was living rent free himself in a 4 bedroom condo unit — why would he move out?

On June 1, a team of Suffolk Sheriff deputies, movers and a locksmith (all paid for by the landlord) conducted the move out. The tenant was completely non-cooperative and refused to open the door. A supervising lieutenant and Boston police officers were called as back up because you never know what could happen in this day and age. After about a 90 minute stand off, the deputies breached the door and gained entry. Not surprisingly, the unit was absolutely trashed, rugs destroyed, bottles of liquor everywhere, walls damaged, etc. Huge thanks to the Suffolk Sheriff deputies who were unbelievably professional and a pleasure to deal with.

After 16 months since the notice to quit was issued, here are my client’s losses: Lost rent ($55,000), attorneys’ fees ($10,000 range), court costs and eviction move out costs ($6000 range), clean up restoration costs ($5000+ range).

It’s these type of cases which should be highlighted when state legislators push the Right to Counsel and Just Cause Eviction bills. Massachusetts remains one of the worst states for landlords in the country. That much is undisputed.

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Specific Performance, Lis Pendens, and The Special Motion to Dismiss: Enforcing and Defending Real Estate Contract Claims

by Rich Vetstein on December 28, 2021

in Land Court, Massachusetts Real Estate Law, Offer To Purchase, Purchase and Sale Agreements, Real Estate Litigation

The Difference Between Winning and Losing A Real Estate Contract Lawsuit

I have handled countless cases enforcing and defending real estate contracts, particularly involving Offers to Purchase and Purchase and Sale Agreements. For buyers, these cases typically involve the standard form Offer (or Contract) to Purchase, a one or two page short form contract, which under Massachusetts law (McCarthy v. Tobin) is a binding and enforceable contract. The seller then usually attempts to wriggle out of the deal or may even receive a higher or better offer. Sometimes the transaction has progressed past the execution of the Purchase and Sale Agreement and falls apart, and the buyer still wants to close, or the seller believes the buyer has violated the agreement and wants to retain the buyer’s deposits. When that occurs, litigation often ensues.

Specific Performance

The buyer wants to pursue the deal, and asks “Can a judge make the seller perform and close?” The answer is yes, under the theory of “specific performance.” However, the buyer must establish several elements for such a claim.  The buyer must establish: (1) the existence of a written contract containing reasonably specific terms signed by or duly authorized by the other party and otherwise binding upon such party, and (2) the breach of that contract by the seller.  The breach of contract may be shown by (i) a clear repudiation of the contract by the seller, (ii) the buyer’s tender of performance, formally or by notice, and (iii) a demand for performance with the buyer ready, willing, and able to proceed to a closing.

A solid paper trail is critical to winning these cases. The parties and their transactional lawyers in the underlying deal should always document the seller’s repudiation or breach of contract and the buyer’s willingness to close, preferably by letter or email. These days, text messages can also be helpful, but often open to differing interpretations. Armed with exhibits of emails and texts, the buyer’s attorney can often persuade the judge that the seller has unjustifiably breached the contract and issue a lis pendens (discussed below), and after trial or summary judgment, an award of specific performance.

Obtaining Leverage — The Lis Pendens

The difference between winning and losing (or settling favorably) is for the buyer to obtain a Lis Pendens from the court. As I have written about in this article, a lis pendens is Latin for “a suit pending.” The lis pendens is recorded at the registry of deeds against the property and its owner(s), creating a cloud on the title to the affected property. A lis pendens will, in many cases, effectively prevent the owner from selling the property while the lawsuit is pending — which could be years, thereby giving a buyer incredible leverage in the case. In order to obtain a Lis Pendens, a buyer must show that the claim “affects the title to real property or the use and occupation thereof or the buildings thereon.” A buyer should file a motion for lis pendens right from the start of the case, seeking a quick hearing on the motion, or even ex parte (without the seller getting advance notice, if there is a clear danger that the property will be conveyed).

Defending the Lis Pendens and Claim for Specific Performance

If you are a seller defending a claim for specific performance and a motion for lis pendens, the deck is often stacked against you out of the starting gate. The standard of review favors the buyer because unlike obtaining an attachment or other pre-judgment lien, a lis pendens does not require a showing a likelihood of success on the claim. A lower standard is used — the claim must not be frivolous or lack an arguable basis in fact or law. Further, buyers typically run into court quickly, and there is often a time crunch to gather and marshal all the evidence before the initial hearing on the motion for lis pendens. Nevertheless, I have been successful in beating back lis pendens motions by raising defenses such as the Statute of Frauds, which requires a writing signed by the party to be charged, and other contractual defenses.

Special Motion to Dismiss and Certification That No Material Facts Have Been Omitted

In defending claims for specific performance and lis pendens’, I have been most successful using the “special motion to dismiss” and raising the requirement that plaintiffs must certify that no material facts have been omitted from their complaint.

The “special motion to dismiss” is a newer tool which allows defending parties to dismiss a lawsuit seeking a lis pendens by showing: that the action or claim is frivolous because (1) it is devoid of any reasonable factual support; or (2) it is devoid of any arguable basis in law; or (3) the action or claim is subject to dismissal based on a valid legal defense such as the statute of frauds. This standard is relatively high, however, it can be reached with the right factual record and defenses in play.

I’ve also had success pushing another one of the new requirements of the amended Lis Pendens Statute: the requirement of a verification on a complaint to “include a certification by the complainant made under the penalties of perjury that . . .  that no material facts have been omitted therefrom.” Courts have ruled that a party’s failure to include all material facts in its complaint may result in the dismissal of that party’s claims where the omitted facts establish that those claims are devoid of reasonable factual support or arguable basis in law. If the plaintiff has failed to disclose all of the relevant facts in the case, often those which are unfavorable, you can raise this defense which may give you some traction with the judge.

As you can see, this area of law is quite complex for the layperson. Consultation with an experienced real estate litigator is paramount. If you are dealing with such a case, feel free to reach out to me at [email protected].

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Judge Enjoins Paragliders Who Harrassed Homeowners On Peaked Cliff, Plymouth

by Rich Vetstein on June 10, 2021

in Boundaries, Massachusetts Real Estate Law, Premises Liability, Real Estate Litigation

First Known Reported Decision In Massachusetts On Private Nuisance and Paragliding

Recently, I filed a very interesting and novel case involving private nuisance and paragliders which resulted in a favorable injunction ruling for my client. My clients have a beautiful home on Peaked Cliff in the Sagamore Highlands area of Plymouth/Bourne, overlooking Cape Cod Bay providing breathtaking views of ocean and cliffs. The home has a large back deck overlooking the ocean which the family uses frequently to enjoy the views and ocean.

With its high thermal wind activity, the area has become a hotbed for a local paragliding club who start flights at 6AM running through sunset. Unfortunately, it is alleged that the gliders have become increasingly reckless and belligerent. They have flown within feet of my clients’ home yelling and screaming obscenities and giving obscene finger gestures. On several instances, the gliders have crash landed on the grounds, and at least one glider crashed into my client’s roof. One glider almost died when he crashed directly on the cliff, necessitating a complicated rescue operation. The gliders were brought before the local conservation commission and were required to implement changes and new safety protocols. Those were not followed, unfortunately.

We filed a lawsuit for private nuisance and trespass in Plymouth Superior Court, asking the Court to issue a no-fly zone around my client’s property.

A private nuisance occurs when someone “creates, permits or maintains a condition or activity on property that causes a substantial and unreasonable interference with the use and enjoyment of the property of another.” This is the first case that I am aware of in Massachusetts whether paragliding and hang-gliding may rise to the level of private nuisance. Judge Thomas F. McGuire, Jr. held an in-person evidentiary hearing, which was actually my first in-person hearing since Covid-19 hit. I put together a video montage of photographs and video footage of the offending glider activity and showed that to the Judge. I also cross-examined one of the lead gliders who conceded that their no-fly zone would not substantially impede glider flights in the area.

The Court issued a well-reasoned written opinion granting an injunction prohibiting all glider flights over my client’s property with a 30 foot buffer zone around my client’s property. Notably, the judge found that the club itself had documented the gliders’ problematic activity in their internal meeting minutes (which we found online). The judge ruled that the gliding activity rose to the level of being a private nuisance, and that my clients would suffer irreparable harm if they were not enjoined from flying over and near their house. We are hopeful that this will keep the peace, but the order is enforceable with contempt powers, as the judge made clear in his ruling.

As I said before, this ruling is notable because it’s the first reported decision involving gliders and private nuisance in Massachusetts. With the proliferation of drones and other low flying aircraft and devices, this ruling should provide some much needed legal precedent and guidance in this other situations where property rights conflict with airspace rights.

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Frustration of Purpose: Judge Rules Newbury Street Cafe’s Rent Excused During Covid-19 Shutdown

by Rich Vetstein on February 14, 2021

in Commercial Leasing, COVID-19, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Real Estate Litigation

One of the First Reported Court Rulings Addressing Whether Business Can Be Legally Excused From Paying Rent While Subject to Government Covid-19 Shutdown

As the Boston Globe reported this week, Suffolk Superior Court Business Litigation Session Judge Kenneth Salinger ruled that a Caffe Nero coffee shop on Newbury Street was legally excused from paying rent for the nearly three months last spring when indoor dining was halted under state orders to combat the spread of COVID-19. The ruling could give leverage to struggling restaurants dealing with lost business and unpaid rent bills. The 12-page court ruling is embedded below.

UMNV 205-207 Newbury LLC (UrbanMeritage) v. Caffe Nero Americas, Inc., Suffolk Superior Court CA 2084CV01493-BLS2

The dispute between Caffe Nero and UrbanMeritage, a prominent Back Bay landlord that owns a number of storefronts on Newbury Street, began not long after Governor Charlie Baker ordered indoor dining closed on March 24, 2020 — a massive blow for a European-style cafe whose business model hinges on people lingering over lattes and croissants. Caffe Nero promptly asked for a break on its roughly $13,000-a-month rent, but UrbanMeritage said no, and issued a default notice for nonpayment. By June, UrbanMeritage had launched eviction proceedings, ultimately filing a lawsuit seeking more than $300,000 in back rent, damages, and legal fees.

Frustration of Purpose Doctrine

Applying the doctrine of “frustration of purpose,” Judge Salinger ruled that rent payment is excused when performance becomes impossible through no fault of either party, such as a natural disaster or pandemic. Since Caffe Nero’s lease only allowed for restaurant use (and no other uses), and Gov. Baker’s Covid-19 shutdown order of indoor dining during the early days of the pandemic prevented that use, Judge Salinger found that the doctrine of frustration of purpose applied in this case.

Force Majeure Clause

Judge Salinger also side-stepped the parties’ “force majeure” lease clause, which could have been read to negate the frustration of purpose defense used by Caffe Nero. A force majeure provision is a common clause commercial leases which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic, sudden legal changes or an event described by the legal term Act of God, prevents one or both parties from fulfilling their obligations under the contract. The force majeure provision in the Caffe Nero lease, however, specifically stated that the payment of rent due to financial inability cannot be a reason to invoke the clause. In perhaps questionable reasoning, Judge Salinger ruled that “the force majeure provision addresses the risk that performance may become impossible but does not address the distinct risk that the performance could still be possible even while [the] main purpose of the Lease is frustrated by events not in the parties’ control.”

Take-Aways

I have several Covid-19 related lawsuits pending where businesses and restaurants could not pay their rent during the pandemic, and I’ve pled the same defense as Caffe Nero did in this case. (I don’t yet have a formal ruling in my cases). I think it’s inevitable that we will see more of the same rulings by judges who are sympathetic to businesses who were shut down completely due to Gov. Baker’s orders. Certainly, this ruling will cause landlords to reevaluate whether they will be able to collect all unpaid rent from a Covid-impacted business. Of course, the usual considerations will also apply — financial ability to pay, assets, timing of payments, etc. We will see….as always, if you are dealing with a commercial lease dispute or know someone who is, feel free to contact me at [email protected].

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Critical Update: Coronavirus (COVID-19) Massachusetts Real Estate Impacts

by Rich Vetstein on March 15, 2020

in Appraisals, Closings, COVID-19, Deeds, Electronic Closings, Housing Court, Land Court, Landlord Tenant Law, Massachusetts Real Estate Law, Mortgages, Purchase and Sale Agreements, Real Estate Litigation, Real Estate Market, Safety, Title Insurance

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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Judge Wilkins Issues Major Court Ruling in Allen Seymour Deed Forgery Cases

by Rich Vetstein on January 25, 2020

in Deeds, Massachusetts Real Estate Law, Mortgages, Purchase and Sale Agreements, Real Estate Litigation, Title Defects, Title Insurance

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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Contract Deadlines Can Be Waived and Other Cautionary Tales From the Real Estate Trenches

by Rich Vetstein on November 6, 2019

in Closings, Condominium Law, Massachusetts Real Estate Law, Offer To Purchase, Purchase and Sale Agreements, Real Estate Litigation

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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Challenges to Deeds: Forgeries, Undue Influence, Mental Capacity, and Defective Notarizations

by Rich Vetstein on June 14, 2019

in Deeds, Land Court, Massachusetts Real Estate Law, Notary Public, Probate, Real Estate Litigation, Title Defects

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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Mastermind of Complex Forgery Scheme, Allen Seymour, Indicted On 22 Felony Counts

by Rich Vetstein on December 4, 2018

in Deeds, Massachusetts Real Estate Law, Real Estate Litigation, Title Defects, Title Insurance

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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Land Court Dismisses Foreclosure Challenge Under New Title Clearing Act

by Rich Vetstein on August 21, 2017

in Foreclosure, Land Court, Massachusetts Real Estate Law, Mortgage Crisis, Mortgages, Real Estate Litigation, Real Estate Market, Title Defects, Title Insurance

Kenney v. Brown:  First Reported Decision Under Act Clearing Title to Foreclosed Properties

In a ruling applauded by the conveyancing bar and title underwriters, Land Court Justice Robert Foster has dismissed a borrower’s challenge to a 2007 foreclosure sale even though the borrowers recorded an affidavit reflecting the alleged title defect within the time period set by the Act. This is the first court ruling that I am aware of interpreting the new Act Clearing Title to Foreclosed Properties.

The Title Clearing Act, now codified in Mass. General Laws Chapter 244, section 15,was enacted by Gov. Baker last year in an effort to minimize the impact of several troublesome SJC rulings which cast doubt on titles coming out of foreclosures, including the seminal case of U.S. Bank v. Ibanez. The Act establishes a three-year deadline to bring a legal challenge to a foreclosure. To timely bring a challenge, an aggrieved homeowner must file lawsuit challenging the validity of the foreclosure sale, and must also record a copy of the lawsuit in the registry of deeds before the limitations period expires.

The plaintiffs argued that even though the Act expressly calls for the timely filing of a copy of the complaint challenging a foreclosure sale with the Registry of Deeds, the timely recording of their affidavit provided sufficient notice of their claim to satisfy the intent of the statute.

But Judge Robert B. Foster found the plain language of §15 controlled. “The language of the Statute is conjunctive,” Foster ruled. “It requires both the commencement of an action in court and the recording of the complaint or pleading with the registry before the deadline. The recording requirement is not surplusage. It is not simply a notice provision, but rather an additional requirement necessary to file a timely suit.”

Because the plaintiffs failed to comply with §15’s requirement to record their amended complaint within one year of the effective date of the act, Dec. 31, 2016, the judge concluded that their wrongful foreclosure claims were barred.

This is a great ruling for the conveyancing bar. Judge Foster’s decision furthers the underlying purpose of the statute to provide clarity of title in the wake of the foreclosure crisis and the Supreme Judicial Court’s 2011 decisions on wrongful foreclosure in Bevilacqua v. Rodriguez and U.S. Bank National Association v. Ibanez. The whole purpose of the act is to slowly clear away these defective foreclosure titles. It was also important for Judge Foster to clarify that so-called “5B affidavits” do not satisfy the act’s recording requirements. I have seen an increased prevalence of borrowers and attorneys recording bogus 5B affidavits in an attempt to cloud titles and shake down third party buyers and title insurance companies.

The 23 page court opinion can be read below.

Kenney v. Brown (Mass. Land Court) by Richard Vetstein on Scribd

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OMG! Text Messages May Form Binding Real Estate Contract, Land Court Rules

by Rich Vetstein on May 8, 2016

in Land Court, Massachusetts Real Estate Law, Offer To Purchase, Purchase and Sale Agreements, Real Estate Litigation, Realtors, Technology

Text Messages Enforceable As Written Contract, Court Rules

With the proliferation of email and texts as the primary method of communications in real estate negotiations, it was just a matter of time before Massachusetts courts were faced with the question of whether and to what extent e-mails and texts can constitute a binding and enforceable agreement to purchase and sell real estate. In a ground-breaking case, Land Court Justice Robert Foster ruled in a case of first impression that text messages may form a binding contract in real estate negotiations–even where a formal offer has not been signed by the seller. This is huge wake up call for the remaining industry people who still believe that electronic communications are not legally binding.

St. John’s Holdings LLC v. Two Electronics, LLC

The case (embedded below) involves a commercial real estate deal between two businesses both represented by commercial real estate brokers for the purchase and sale of an industrial park property in Danvers. Two Electronics, as seller, and St. John’s Holdings, as buyer, negotiated for several weeks exchanging two “Binding Letters of Intent” spelling out all material terms of the proposed purchase of $3.2 Million. Towards the culmination of the negotiations, the real estate brokers exchanged several emails and texts, with the seller’s agent sending an email that his client was “ready to do this,” then a text that —

“[the seller] wants you to sign first, with a check, and then he will sign. Normally, the seller signs last or second. Not trying to be stupid or to the contrary, but that’s the way it normally works. Can Rick sign today and get it to me today? Tim”

The buyer signed four copies of the final Letter of Intent and tendered the deposit check with the buyer broker, after which the buyer’s broker sent the seller’s agent another text — “Tim I have the signed LOI and check. It’s 424 [PM]. Where can I meet you?” Shortly thereafter, the two agents met, and the buyer’s broker tendered the buyer signed Letter of Intent along with the deposit check.

Unbeknownst to the buyer, that same day, the seller had received another offer on the property, and proceeded to sign that offer. The seller then refused to sign the Letter of Intent with St. John’s. St. John’s sued, claiming that the series of letters of intent, emails and text messages constituted a binding and enforceable contract.

Intersection of 17th Century Statute of Frauds with 21st Century Text Messages

In Massachusetts, the Statute of Frauds requires that contracts for the sale of real state must be in writing signed by the party (or agent) to be charged. In the old days of pen and paper, application of the Statute was quite simple. If there wasn’t a written agreement signed in wet, ink signatures, there was no binding contract. With the proliferation of e-mail and text communication, application of the Statute of Frauds has become much more nuanced.

In the case discussed here, Judge Robert Foster noted several recent judicial decisions holding that emails may be binding as well as the Uniform Electronic Transactions Act, under which parties may impliedly consent through their actions to make email and text transmissions binding and enforceable. Emphasizing the fact that the seller’s agent signed his name “Tim” at the end of the critical text message, the judge found that the text message was sufficiently “signed” under the Statute of Frauds to constitute a binding agreement at the culmination of the previous communications and unsigned letters of intent. The judge also found persuasive that the seller’s agent told the buyer’s agent to have the buyer sign the letter of intent first, and that’s exactly what the buyer did. Finding in favor of the buyer, the judge denied the seller’s motion to dismiss and issued a restraining order against the seller’s conveyance of the subject property.

Take Away: IMO, Watch What You Say!

This area of the law is really becoming a dangerous minefield. After the e-mail ruling came out a few years ago, I advised my clients to use the following disclaimer: “Emails sent or received shall neither constitute acceptance of conducting transactions via electronic means nor shall create a binding contract in the absence of a fully signed written agreement.”

The problem, however, with text messages is that they are so short and informal. It’s not practical to use a legal disclaimer on texts, and there’s no technology that I’m aware of that would insert one into every text. You could always start off a negotiation with the caveat that electronic communications will not create a binding contract until a formal offer is executed. Also, it’s always a good idea to end every email/text with “subject to seller/buyer review and approval” when negotiating an offer. But, such boilerplate language can always be waived by subsequent conduct or actions.

This case reminds me of Lomasney’s First Rule of Politics:  “Never write if you can speak; never speak if you can nod; never nod if you can wink.” — and by winking that does not mean an emoji. ?

And always take screenshots of important texts…just in case.

This post is sponsored by Brian Cavanaugh, Senior Mortgage Banker, Mortgage Network

Cav Zillow

St. John’s Holdings LLC v. Two Electronics, LLC by Richard Vetstein

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Tales From The Boundary Line Trenches

by Rich Vetstein on January 31, 2016

in Adverse Possession, Boundaries, Deeds, Massachusetts Real Estate Law, Real Estate Litigation

41 Oakland Street image 3“A picture is worth a thousand words.” – Old Photograph Found In Attic Key to Victory

I handle a fair amount of Massachusetts boundary line and adverse possession disputes. For those who don’t know, adverse possession is a legal doctrine in Massachusetts where one property owner can make a claim of ownership over his neighbor’s land if such use was “open, hostile, adverse, notorious and exclusive” for 20 or more years. These disputes often come up where neighbors don’t know the true location of their property line, and one neighbor puts up a fence, retaining wall or has essentially annexed the land of the other neighbor.

In my most recent case, I am defending a gentleman whose next door neighbor claims adverse possession to an area about 15 feet into my client’s side yard which includes a small portion of the neighbor’s driveway. The dispute arose because my client wanted to put up a 6 foot privacy fence along the lot line. The neighbor sued, asking the court for a preliminary injunction to stop the installation of the fence.

My opponent claimed adverse possession dating back to when he purchased the property in 1985. The first problem I had was that my client bought his property in 2009. Thus, in order to poke holes in the claimed 30 year period, I had to track down the former owners of his property. Luckily, I found them — a charming elderly couple living in Medway. I met them over the weekend and sat down at their kitchen table with the case file and photographs. They said my opponent was a liar and disputed virtually everything he said in his lawsuit.

The elderly man went up to his attic and found several old photographs showing his then young grandchildren playing in the sideyard. That’s the picture in this post. In the background of the photo dating back two decades, you can see a fence in the disputed side yard area. The fence essentially destroyed my opponent’s adverse possession claim because he was physically prevented from using the disputed area, and thus, could not prove 20 years of uninterrupted and adverse use. When I showed the photos to opposing counsel, the response was that his client didn’t remember the fence despite the fact it was there for at least 10 years of his ownership. How convenient!

After working all weekend on the case and armed with the photographs and affidavits from the prior owners, I felt optimistic heading into the injunction hearing before a judge in Norfolk Superior Court. In order to obtain an injunction, the plaintiff is required to show a “likelihood of success on the merits.” The bottom line was that I caught my opponent in a lie, given that he never disclosed the existence of the fence in his original complaint, then came up with the convenient excuse that he didn’t remember it. The judge ruled that the neighbor could not establish adverse possession at this juncture of the case, and denied his motion for an injunction.

As with every adverse possession case, relentless preparation and determination to investigate the history of the property is critical. I was more prepared than my opponent, and that is one of the reasons why I won this round.

_______________________

100316_photo_vetstein-2-150x150.pngIf you are dealing with a Massachusetts boundary or property line dispute involving adverse possession, please contact me at [email protected] or 508-620-5253. I’ve handled scores of these cases successfully through trial and appeal.

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Evicting Unauthorized Occupant Requires Creative Approach

by Rich Vetstein on June 15, 2015

in Housing Court, Landlord Tenant Law, Massachusetts Real Estate Law, Real Estate Litigation, Rental Housing, Trespass

Restricted-Access-Signs---Industrial-43894BBHPLYALU-baBy-Pass Housing Court For Expedited Superior Court Restraining Order Procedure

I recently handled an interesting case involving an unauthorized family member taking up residence in my client’s rental unit. My client, a doctor, owns a very nice condo unit in the Theatre District in Boston. He and his family live next door in the adjacent unit. The client signed a one year lease with a wealthy foreign national from Jordan, a middle aged lady. Per the lease, the tenant was the only authorized occupant for this 1BR unit. There was no discussion about family members being authorized occupants, and my client would not have agreed to it.

My client comes to find out that the tenant’s 20-something year old son, who attends a local college, has taken up residence in the unit. To make matters worse, the kid hosts several loud late night parties reeking of marijuana and cigarette smoke. My client is incensed, and to add insult to injury, he is fined several thousand dollars for noise and lease violations by the condo association. My client attempts to take action against tenant and son, but they hire a well known tenant’s rights attorney who stonewalls the two attorneys hired by the client. The client finally hires me.

Typically, this type of case would be filed as a standard eviction case in busy pro-tenant Boston Housing Court. The tenant’s attorney is also well known there. Accordingly, I needed to find a way to bypass Housing Court and take away this lawyer’s home court advantage.

So I came up with an creative approach. I filed a restraining order application in Superior Court to remove the son as an illegal trespasser. Although Superior Court typically handles major civil cases, it does share jurisdiction with the Housing Court over trespass cases requesting equitable relief. I served the interloper with a formal trespass notice, then filed the Superior Court application a few days later. The judge granted the move out order, after which my client and I had the pleasure of taking a victory walk down Tremont Street to serve the move out order. We were able to have the management company immediately change the locks and remove all the kid’s possessions. He is now permanently barred from entering the building. And the best part was that he left his wallet and passport in the unit! My client is now preparing the unit for rent to a better tenant. 

As the saying goes, “possession is 9/10ths of the law”!!!

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$1.85 Million Verdict Upheld Against Demoulas In-Law In Back Bay Condo Squeeze Out

by Rich Vetstein on January 8, 2015

in Condominium Law, Massachusetts Real Estate Law, Real Estate Litigation

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

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

A Classic David vs. Goliath Tale

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

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

Staggering Jury Verdict

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

Jury Verdict Upheld on Appeal

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

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

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

Expansion of Condominium Trustee Liability?

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

Kettenbach v. Wodinsky

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Appeals Court Puts Brakes On Condominium Rolling Super Lien Practice

by Rich Vetstein on November 22, 2014

in Condominium Law, Liens, Real Estate Litigation, Title Defects

massachusetts condominium super lienUpdate 3/30/16: SJC Reverses Appeals Court, Allowing Rolling Lien Procedure

Ruling Hurts Condominium Associations’ Collection Efforts

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

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

Rolling Lien Practice

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

Court: Super-lien Limited To 6 Months Of Fees

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

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

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Sellers Hit With $500,000 Judgment For Torpedoing Closing

by Rich Vetstein on May 30, 2014

in Closings, Massachusetts Real Estate Law, Purchase and Sale Agreements, Real Estate Litigation

how to handle criticismAttorney’s Obnoxious Conduct At Closing Factor in Large Award

Every now and then I have a contentious deal where I should be wearing a black and white referee’s shirt instead of a shirt and tie. I’m usually successful in getting everyone to calm down and close the transaction. The case of KGM Custom Home Builders v. Prosky (embedded below) recently decided by the Massachusetts Supreme Judicial Court is an example of how really bad behavior at a real estate closing can get a party into big legal trouble.

45 Acres in Mansfield for Sale

The Prosky family of Mansfield entered into an agreement to sell 45 acres of developable land to KGM Custom Builders. The sale price was linked to the number of buildable lots that KGM could permit. After spending over $300,000 in 5 years including weathering an appeal, KGM was able to obtain permits for 60 residential units. However, the Proskys received a better offer for the land and a dispute over calculation over the purchase price arose. Nevertheless, KGM was not willing to back down, and scheduled a closing. Repudiating the contract, the Prosky’s attorney informed KGM that it should calculate the liquidated damages provision in the contract because the sellers were not going to sell.

Closing Shenanigans

A closing was nevertheless scheduled at which the Prosky’s attorney showed up with a professional videographer as “defense strategy.” The parties’  attorneys started yelling at each other, and KGM’s attorney shut off all electricity to the building, but the videographer was able to tape with battery power. KGM’s attorney demanded that the Prosky’s attorney produce the closing documents he was supposed to have drafted. The Prosky’s attorney waived the documents in the air, and when the buyer’s attorney went to grab them, he pulled them back and asked if could read them from 2 feet away. KGM, with funds on hand, was ready, willing and able to close, and took the Prosky’s attorney’s antics at the closing as not engaging in good faith, and walked out. At the end of the closing, one of the sellers asked the videographer, “can you explain to me what just happened”? (I would love to see this videotape!).

Anticipatory Repudiation, Breach of Good Faith and Fair Deal, or Both?

Naturally, KGM sued the sellers. The trial judge ruled the sellers had engaged in anticipatory repudiation but he calculated the sales price in favor of the sellers at over $1M, giving the buyer the option of going forward with the deal or taking the liquidated damages because the buyers had also breached the covenant of good faith and fair dealing with their attorney’s antics at the closing. The buyer elected damages, and the judge awarded nearly $500,000 in permitting costs and attorneys’ fees. The sellers weren’t happy with this, so they appealed.

On appeal at the SJC, the legal issue was whether the law allowed the trial judge to provide the buyer with this favorable election of remedies. With few exceptions, outside of the commercial law context, Massachusetts has not generally recognized the doctrine of anticipatory repudiation, which permits a party to a contract to bring an action for damages prior to the time performance is due if the other party repudiates. One such exception occurs where a seller of land informs the “holder of an enforceable option” to purchase that he plans to sell the land to a third party. The high court ruled that this case fit within this exception and upheld the award of damages to the buyer. Naturally, the court seemed particularly upset about the behavior of the seller’s attorney at the closing. In fairness, the SJC did slash the attorneys’ fee award by $120,000, but with statutory interest accruing for several years now, the end result will likely be the same — the sellers are out a lot of cash.

Fortunately, these types of antics are very much the exception rather than the rule at Massachusetts closings. There is really no excuse for this type of unprofessional behavior at a closing, no matter how contentious the dispute. If a party is going to elect to terminate a deal, go ahead and do it without the theatrics. After all, what you say and do at a real estate closing may come back to bite you and your client.

KGM Custom Home Builders v. Prosky (MA SJC 5/30/14)

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