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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Legislators Freeze Landlords Out of Rent Control Debate

by Rich Vetstein on January 21, 2020

in Landlord Tenant Law, Leasing, Rental Housing

Hearing Rigged Against Small Landlords

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

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

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

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

This is outrageous.

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

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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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Vetstein Says “Yes, Always!” to Owner’s Title Insurance in Boston Sunday Globe Magazine Piece

by Rich Vetstein on October 8, 2019

in Closings, Condominium Law, Deeds, Massachusetts Real Estate Law, Title Defects, Title Insurance

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

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

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

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

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Watch Your Kid! Homeowner Not Responsible for Backyard Zip Line Accident

by Rich Vetstein on September 23, 2019

in Massachusetts Real Estate Law, Premises Liability, Safety

Appeals Court Rules That Law Places Responsibility On Parents

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

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

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

Parental Responsibility Remains the Rule of Law

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

An Insurance Agent’s View

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

Rich’s View

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

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

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Rent Escrow Orders Upheld by Supreme Judicial Court

by Rich Vetstein on September 16, 2019

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

Huge Victory for Landlords and Property Managers

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

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

Davis v. Comerford: Seminal Ruling on Rent Escrow Orders

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

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

Factors for Judges to Consider in Issuing Rent Escrow Orders

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

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

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

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Local Loan Shark Stopped In His Tracks

by Rich Vetstein on September 14, 2019

in Deeds, Foreclosure, Liens, Massachusetts Real Estate Law, Mortgages

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

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

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

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

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

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

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Typical Suburban Lawn Care Supports Adverse Possession, Appeals Court Holds

by Rich Vetstein on September 4, 2019

in Adverse Possession, Boundaries, Massachusetts Real Estate Law, Title Defects, Title Insurance

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

Boundary Line Dispute In Newton

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

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

Lawn Mowing and Typical Suburban Landscaping Can Constitute Adverse Possession

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

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

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

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

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

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Allen Seymour, Mastermind of Forgery Scheme, Gets 3-5 Year State Prison Sentence

by Rich Vetstein on August 16, 2019

in Closings, Title Defects, Title Insurance

Horry, SC Booking Photo — Allen J. Seymour

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

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

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

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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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More Indictments Come Down In AG’s Forgery Investigation

by Rich Vetstein on April 1, 2019

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

Allen Seymour, 50, formerly of Oxford, MA

As I’ve written here before, I have been representing three families victimized in a well publicized criminal real estate scheme involving forged deeds and the theft of millions of dollars in real estate.

I’m happy to report that Attorney General Maura Healy’s Office has announced a new round of indictments issued by a statewide Grand Jury against the suspected mastermind of the scheme and his son. Allen Seymour, 50, was indicted on charges of larceny of more than $1,200 and four counts of forgery.

Thanks to my clients’ grand jury testimony, Seymour was previously indicted on 22 felony charges of forgery and money laundering. His former wife, Tina Seymour, was also indicted in the scheme.

Seymour, who used the alias “Rich Chase,” targeted elderly and unsophisticated homeowners, using 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.

I have filed three separate civil lawsuits seeking to undo the fraudulent transactions which remain pending. I am hopeful that all of my clients will receive the justice they deserve.

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Rent Control Rears Its Ugly Head Once Again

by Rich Vetstein on March 29, 2019

in Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Rental Housing

Recent Studies of Cambridge and San Francisco Prove It Not Only Doesn’t Work But Results In Gentrification, Displacement and Higher Rents

Rent control. Like a diseased zombie rising again from the dead after 25 years. Banned statewide by a voter referendum in 1994 and widely proven ineffective and counter-productive by economists, the debate over rental control is back in Massachusetts. As reported in the Boston Globe, a group of liberal urban lawmakers are readying legislation which would effectively override the 1994 voter ballot question, and allow cities and towns to impose rent control as a mechanism to curb rent increases and encourage affordable housing.

I’m all for a robust, healthy debate, so allow me to weigh in. The great thing about the 1994 vote banning rent control is we now have empirical data and a reliable study from prominent economists which has compared the Cambridge housing market during rent control vs. after rent control. We also have data and a similar study out of San Francisco. Both studies (and others from the past) have found that rent control did not work at all, and actually had the exact opposite effect — contributing to gentrification, displacement of tenants and income inequality.

Are rent control advocates and politicians aware of all this economic literature? I don’t know, but I do know that human beings are emotional creatures, and the debate over rent control has become very emotional. In fact, it reminds me of the climate change debate, but this time rent control advocates are behaving like climate change deniers. Faced with overwhelming evidence that rent control doesn’t work, these advocates continue to push the idea in a knee-jerk emotional reaction to the affordable housing crisis and high rent prices.

Study of Effect of Rent Control In Cambridge Market

Economists Autor, Palmer, and Pathak (2014), studied the effect of rent control on the Cambridge market. From December 1970 through 1994, all rental units in Cambridge built prior to 1969 were regulated by a rent control ordinance that placed strict caps on rent increases and tightly restricted the removal of units from the rental stock. The legislative intent of the rent control ordinance was to provide affordable rental housing, and at the eve of rent control’s elimination in 1994, controlled units typically rented at 40-plus percent below the price of nearby non-controlled properties. 

The economists found that newly decontrolled properties’ market values increased by 45%. In addition to these direct effects of rent decontrol, the economists concluded that removing rent control had substantial beneficial indirect effects on neighboring properties, boosting their values too. Post-decontrol price appreciation was significantly greater at properties that had a larger fraction of formerly controlled neighbors: residential properties at the 75th percentile of rent control exposure gained approximately 13% more in property value following decontrol than did properties at the 25th percentile of exposure. This differential appreciation of properties in rent control–intensive locations was equally pronounced among decontrolled and never-controlled units, suggesting that the effect of rent control had been to reduce the whole neighborhood’s desirability.

The economic magnitude of the effect of rent control removal on the value of Cambridge’s housing stock was large, boosting property values by $2.0 billion between 1994 and 2004. (And of course, that huge increase in property value translated to massive real estate tax revenue for the city). Of this total effect, only $300 million is accounted for by the direct effect of decontrol on formerly controlled units, while $1.7 billion is due to the indirect effect. These estimates imply that more than half of the capitalized cost of rent control was borne by owners of never-controlled properties. The economists ultimately concluded that rent controlled properties create substantial negative externalities on the nearby housing market, lowering the amenity value of these neighborhoods and making them less desirable places to live. In short, the policy imposed $2.0 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments.

To summarize in plain English, the economists concluded that rent control is a really bad idea, both in concept and in actual practice.

San Francisco: Another Failed Experiment

Economists came to the same conclusions when studying rent control in San Francisco. Its rent control law was different than Massachusetts’. It applied to buildings with five or more apartments and regulated rent increases, linked to the CPI, within a tenancy, but no price regulation between tenants. New construction was also exempt.

Economists Diamond, McQuade, and Qian (2018), concluded that San Francisco’s rent control ordinance encouraged condo conversions resulting in more owner occupied units (and less rental units) while encouraging rent controlled owners to defer maintenance and upkeep. As the economists found “it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy’s intended goal. Indeed, by simultaneously bringing in higher income residents and preventing displacement of minorities, rent control has contributed to widening income inequality of the city.”

Rent Control Just Doesn’t Work

In addition to the Cambridge and SF studies, there are many other articles by economists critical of rent control. The Urban Institute concluded that [g]iven the current research, there seems to be little one can say in favor of rent control.” Lisa Sturtevant, Ph.D. recently surveyed 30 different peer reviewed rent control studies, concluding that rent control decreased the supply of available rental housing, does a poor job in targeting benefits and generally leads to higher rents in the uncontrolled market.

As these studies show, rent control in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. When the government forces landlords to provide insurance to tenants against rent increases, it will ultimately be counterproductive. There are better ideas to address the affordable housing problem than rent control. We can do much better than this outdated, tired idea.

For a good summary of why rent control doesn’t work, check out the Masslandlords.net page on Rent Control.

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Boston Globe Magazine’s Hit Piece On Evictions Riddled With Misleading Statistics, Bias

by Rich Vetstein on February 25, 2019

in Affordable Housing/40B, Housing Court, Housing Discrimination, Landlord Tenant Law, Massachusetts Real Estate Law, Rental Housing

Accurate Court Data Shows The “Eviction Crisis” Is A Fallacy

You may have noticed the featured article in Sunday’s Boston Globe Magazine on the supposed “eviction crisis” in Massachusetts. Titled “As rents soar in Boston, low-income tenants try to stave off eviction,” investigative reporter Jenifer McKim cited inaccurate court statistics to create the false narrative that thousands of innocent tenants are being thrown out on the street by greedy landlords. Using this fallacy, McKim then advocates for a new legislative proposal giving all tenants (but not landlords) a “Right to Counsel” i.e, free legal representation courtesy of the Massachusetts taxpayer. I’m not a fan of the term “fake news,” but it is really justified here. Where do I begin?

McKim first claims that “eviction initiations in Massachusetts spiked in 2008, following the Great Recession. Each year since then, landlords have sued about 40,000 heads of household across the state seeking to evict them, according to data gathered by the New England Center for Investigative Reporting.”

Well, she’s totally wrong and does not know how to read court statistics. Take Fiscal Year 2018 for example. Housing Court publicly available data shows 29,684 summary process cases filed. Summary process is how Massachusetts defines an eviction case. There were about 10,000 other types of cases filed in Housing Court (code violations, search warrants, small claims and civil money actions) but those are not evictions. So she’s already off by 10,000 cases or 25% of her cited data. To the extent she’s using district court filings, one would have to determine whether those were residential or commercial. Commercial evictions are always filed in the district court. Making that important distinction would entail physically reviewing each case file which she didn’t do. So you can’t reasonably rely on that data either.

Second, one would also have to account for Housing Court’s recent expansion to statewide jurisdiction which has increased its filings while district court filings are down. Actually as you can see from the PDF linked above, summary process filings in Housing Court were trending down and level from ’14 to ’15, to ’16 and to ’17, but then slightly up for ’18 (by only 6% or so) because of the statewide jurisdiction enactment. Eviction filings in District Court were down about 10% in 2018. So McKim is being intellectually dishonest if she’s attributing the slight bump in Housing Court filings in ’18 as some sort of trend of increased evictions. The overall trend has been down and level, as you can see below in the chart I quickly created. Sure doesn’t look like a crisis to me…

Then McKim makes the most egregious inaccurate statement: “The state doesn’t track how many of these have resulted in actual evictions, but the Eviction Lab at Princeton University found that in 2016, there were roughly 15,708 forced removals in Massachusetts — an average of nearly 43 a day. That’s about double the number of evictions in 2005, before the housing bubble burst…”

This is another totally bogus statistic. She’s right, the state does not track the number forced removals (accurately called a levy on an execution for possession). Researching that would entail physically reviewing every single eviction case in the state — 6 separate Housing Court divisions and in our roughly 80 district courts. Did Princeton University send a small army of interns checking every case file for 2016? That’s the only way they could accurately conclude that there were 15,708 “forced removals,” however they are defining that. So I was curious and did some research. After some digging I found the Princeton Eviction Lab’s Report on Methodology, and no surprise, their researchers relied on online available statistics, and as McKim acknowledged, you cannot see if there was a forced move out from the basic online data. I can tell you that in my 20 years of experience handling thousands of evictions, forced move outs are around 1-2% of all cases. It is the rare exception indeed because it costs landlords no less than $3,000 for movers and storage costs. The vast majority of cases are either default no-shows or negotiated move out agreements.

So the truth is that there is nowhere near 43 forced removals per day in Massachusetts, as McKim claims. Not. Even. Close.

Also, the number of evictions has not “doubled” since 2005, as McKim states. In 2005, there were approximately 30,000 total eviction cases filed (and this includes commercial cases which cannot be carved out without reviewing the case files). In 2018, there were about 40,000 total cases filed (again, this includes commercial cases). So McKim is off by 20,000 cases. And of course, the vast majority of all eviction cases are resolved amicably between the parties, without the need for a forced move out. I find it incredulous that highly regarded Boston Globe investigative reporters would be so sloppy with these critical statistics which are publicly available online.

Lastly, Ms. McKim interviewed me for a solid hour on this story, but only used a small snippet of my extensive commentary on the issue, pertaining to how I’ve been physically threatened by tenants in Housing Court. Yes unfortunately this is true. But I’ve been practicing in the Housing Courts for 20 years now and I gave her a small treatise of information which she ignored for her article. Ms. McKim also extensively interviewed Doug Quattroci, the Executive Director of the largest trade association for landlords, MassLandlords.net. Mr. Quattroci has led our lobbying efforts to level the playing field for landlords and offered extensive data on the topics Ms. McKim was writing about. None of Mr. Quatrocci’s comments made it into the article. Contrast that with paragraph upon paragraph dedicated to the tenant side of the story. I e-mailed Ms. McKim about all of these inaccuracies and her response was “feel free to write a letter to the editor.” I gave her an “LOL” on that one!

Ms. McKim’s article was certainly not fair and balanced, in my humble opinion. I guess we can’t expect that from the Boston Globe these days, can we? How sad.

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MassLandlords Trade Group Files Record Number Of Legislative Bills

by Rich Vetstein on February 17, 2019

in Housing Court, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Rental Housing, Senior Housing

Rent Escrow, Security Deposit Reform, and Elderly Housing Legislation Filed By Trade Group

Historically, Massachusetts rental property owners have struggled to overcome the coordinated and organized political lobbying of tenant rights and rent control groups at the State House. I remember just a few years ago I testified on Beacon Hill for the rent escrow bill against a small army of tenant advocates. That is now changing in a big way.

Previously splintered across many small groups, property owners have consolidated their lobbying efforts through a state-wide organization, MassLandlords.net. Created by Executive Director Doug Quattrochi, MassLandlords.net has hired a full time lobbyist, and has been instrumental in filing a record number of legal reform bills during the current legislative session. This is really important given that tenant rights groups have been very active recently in pushing just cause eviction, rent control and other socialist proposals.

Here is a summary of some of the bills backed by MassLandlords filed in the current legislative session:

H.D. 1191 – Rent Escrow (sponsored by Rep. Boldyga) — Tenants must pay rent into court if they are invoking rent withholding due to code violations or necessary repairs

H.D. 1194 – Elderly Tenants (sponsored by Rep. Boldyga) — Creating rental voucher program for elderly tenants (age 75+), protections during evictions

H.D. 1205 – Equal Counsel (sponsored by Rep. Boldyga) — Allowing rental companies to represent themselves in court without an attorney

H.D. 1192 – Late Fees (sponsored by Rep. Boldyga) — Changing late fees on unpaid rent to 10 days overdue from 30 days

H.D. 1202 — Tenant Sale Disclosure (sponsored by Rep. Boldyga) — Requiring property owners to notify tenants upon advertising of property for sale

H.D. 1457 — Security and LMR Deposit Reform (sponsored by Rep. Barrows) — Eliminating triple damage penalty and streamlining payment of deposit interest

H.D. 1474 — Rent Escrow (sponsored by Rep. Barrows) — Requiring tenants to pay monthly rent into escrow during pendency of any eviction action unless it would cause undue hardship

S.D. 231 – Rent Escrow (sponsored by Sen. Tarr) — Requiring rent escrow where tenant is withholding rent due to code violations

Whether these bills will advance through committee hearings to actual vote and passage is unknown. But this is a great start for the up and coming MassLandlords group, and I’ll be monitoring the progress of the bills in the coming months.

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The Federal Government Shutdown’s Effect On Real Estate Closings

by Rich Vetstein on January 9, 2019

in Massachusetts Real Estate Law

Bumpy Ride Ahead — Expect Some Delays For Certain Loans

I asked my friend David Gaffin, Senior Mortgage Banker and Branch Manager at Fairway Mortgage – Hudson ([email protected]), whether and to what extent the federal government shutdown is affecting real estate closings in Massachusetts. Here’s what he has to say.

Fannie Mae, Freddie Mac Loans — Mixed Bag on Impact/Delays

In general, the shutdown doesn’t impact loan processing at these agencies because they’re not funded by the government. If you’re a federal worker or contractor, however, and your lender cannot get a verbal verification of employment from your federal employer prior to loan delivery, your loan approval may be denied or delayed. Verification of employment is a key requirement to get a loan from Fannie Mae and Freddie Mac, and the agencies cannot buy loans in which a borrower’s employment — and ability to repay — hasn’t been fully vetted. Also, if you loan requires SSA or IRS tax transcript verification, there could be delays, as discussed below.

FHA Closings May Be Delayed

With fewer staff working at FHA, some borrowers may see a closing delay due to increased backlog. Systems and functions that will NOT remain available during the shutdown are:

  • Endorsements on HECM/Reverse mortgages (please watch for updates from reverse mortgage investors on any impact to those programs as a result)
  • Homeownership Center staff will be furloughed so they will not complete HRAP condo project approvals that have been submitted. They recommend holding all submissions until the shut down is over.
  • Loans with cases created during the shut down will have “holds” for the social security verification that happens in FHA connection. With the social security administration services also impacted this verification cannot occur.  Until this is resolved these loans with cases created during the shut down won’t be able to close until the shut down ends and we can remove the verification “hold.”

USDA Loans Will Be Impacted

It appears that the shutdown will have a significant effect on USDA loans.

  • Loans with a conditional commitment already issued by a RHS office before the shutdown will be able to close as normal.
  • Loans that have not been reviewed by RHS staff and had a conditional commitment issued before the shut down will NOT be reviewed until after the shut down. This will impact closings as can not close a USDA loan without the conditional commitment issued. Effectively, even though a conditional commitment issue, until reviewed cannot close. CLOSING DELAYS, RATE LOCK EXTENSION FEES POSSIBLE TO CONSUMER
  • Loans that have already closed but have not obtained the loan note guarantee prior to the shut down will also have that process delayed, potentially impacting secondary market operations.

SSA (Social Security Administration) Verification Impact

To process a mortgage application, lenders verify that your Social Security number is valid with the Social Security Administration. With significant delays expected in processing these requests, government-sponsored agencies have relaxed their rules to allow lenders to submit these reports prior to loan delivery rather than earlier in the loan process. If your Social Security number cannot be validated prior to this time, however, your loan could be denied.

  • Third party vendors used to verify social security numbers may not receive responses from SSA during a shutdown. This has the potential to impact closings
  • Borrowers may not be able to obtain income benefit documentation information in a timely manner during the shut down. This has the potential to impact closings

NFIP (National Flood Insurance Program)

  • FEMA has instructed the NFIP to issue flood policies during the shut down, a reversal of previous direction

Internal Revenue Service — Tax Transcripts Back Online

As part of the usual underwriting process, lenders request copies of a borrower’s tax transcripts from the IRS. Originally, the IRS suspended processing tax transcript information when the shutdown began, but as concerns about a prolonged shutdown heightened, trade groups – including the Mortgage Bankers Association – lobbied the IRS to reconsider. The IRS will resume processing lender requests for tax transcripts to verify income for mortgage applicants despite the government shutdown. In a letter released Monday to participants of its Income Verification Express Service, the IRS said it will begin working through the backlog of requests that have piled up since December 22 and that the employees involved will return to work. There still could be delays in obtaining tax transcripts.

Another issue brought to my attention concerns tax lien releases. There have been reports that the IRS is not issuing or delaying the issuances of tax lien releases, so that would impact a seller’s ability to deliver clean title.

_______________________________________________________________

If you have any further questions about the impact of the federal government shutdown on Massachusetts real estate and loan closings, feel free to contact David Gaffin directly at [email protected] or Tel: 508-683-0383

 

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Governor Baker Approves New Short Term Rental (Airbnb) Law and Taxes

by Rich Vetstein on January 1, 2019

in Condominium Law, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law, Real Estate Taxes, Rental Housing, Short Term Rentals

New Occupancy Tax, Statewide Registry, Insurance Requirements, and Inspections

At the very end of 2018 without much fanfare, Governor Baker signed into law a bill regulating and taxing short-term rentals. The new law provides for new taxes, a statewide registry, insurance requirements, and inspections varying by town/city. It becomes effective on July 1, 2019.

Overview of Requirements
The new law expands the state’s hotel and motel tax to include the short-term rental of homes (condominiums, single family, multifamily, etc.). This applies to Airbnb, VRBO, and all other short term rental platforms. The tax applies to all rentals for a period of 31 days or less, regardless of whether the rental is for recreational, vacation, personal, or business use. The burden is on the owner to collect and remit the taxes to their local town/city and the Mass. Dept. of Revenue, which is expected to issue guidance later in the year.

Tax Structure
The short-term rental rate varies by locality and is the total of the following rates:

  • State: 5.7%
  • Local: up to 6% (Boston 6.5%)
  • Cape Cod & Islands: includes additional 2.75% to fund Cape Cod and Islands Water Protection Fund
  • A community impact fee of up to 3% may be assessed locally on professionally managed properties (Owners of two or more units in one town).

The law requires regulations to minimize the administrative burden on tax filings for those who only rent their unit five (5) months or less each year.

Are there any exemptions in the law?
The tax imposed by the new law does not apply to properties rented for fewer than fourteen (14) days per calendar year. It is important to note that these properties are still subject to the other requirements of the law, such as insurance and registration.

When will this law take effect? 
July 1, 2019

What about the 2019 rentals I already booked? 
The law exempts from tax any 2019 rental that is booked on or before December 31, 2018. Rentals booked on or after January 1, 2019 for stays on or after July 1, 2019 will be subject to the tax. We anticipate that the Department of Revenue will issue guidance on how to handle the tax on bookings made on or after January 1, 2019.

Does this apply to the units I rent? 
As stated above, the new law applies to all rentals for a period of 31 days or less. Ordinary rentals, such as an annual lease or a tenancy-at-will are not covered. The new law applies regardless of whether the owner rents the property themselves, hires a rental agent to rent the property, or uses an online platform to facilitate the rental.

Do I need to collect the tax? 
Most likely, yes. The law requires intermediaries (which includes rental agents who post the property for rent online) who enter into a written agreement with the owner or operator to collect rent or facilitate the collection or payment of rent on behalf of the operator to collect and remit the tax. The Department of Revenue will issue regulations to clarify how often the tax should be remitted to the Department. This also means that an agent who does not collect or facilitate the collection of rent on behalf of the owner or operator does not need to collect and remit the tax.

Do I need to carry insurance for the listed properties?
Yes. Owners are required to maintain $1 million dollars in liability insurance to cover each short-term rental. The coverage is required to defend and indemnify the owner or operator and any tenants in the building for bodily injury and property damage. Realtors may elect to offer insurance coverage as part of their services but are not required to.

Before offering a property for short-term rentals, a hosting platform (including Realtors) must provide notice to the owner or operator that standard homeowners or renters insurance may not cover property damage or bodily injury to a third-party arising from the short-term rental.

Do the properties need to be registered with the state or city/town? 
Each rental unit will need to be listed with the state short-term rental registry. Additionally, each city and town is permitted to create a registration requirement for short term rentals. Check with your municipal government office for details.

Are there any inspections required? 
Cities and towns may implement a health and safety inspection requirement and set the frequency of inspections. Short-term rental operators are required to cover the cost of inspections and will likely face a fee to cover registration costs as well.

What are some best practices I can apply as the new law gets implemented? 

  • Owners and rental agents should disclose to prospective renters that any booking made on or after January 1, 2019 may be subject to a tax and that the tax rate may change before the rental period.
  • Develop a policy to verify the number of units owned by each client in a municipality and that those units are properly insured.

The Mass. Association of Realtors has provided the following documents to help manage short-term rentals: an updated Short-Term Rental Lease, a Community Impact Fee Form, a 14-day Exemption Form, and a required Insurance Disclosure Form. These documents can be found at marealtor.com/ShortTermRentals

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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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Airbnb Seeks Federal Injunction Against Boston Short Term Rental Rules

by Rich Vetstein on November 13, 2018

in Condominium Law, Leasing, Massachusetts Real Estate Law, Rental Housing

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

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

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

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

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

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

Airbnb v. City of Boston by Richard Vetstein on Scribd

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Murder At Million Dollar Airbnb House Party Leads to Local Crackdown On Short Term Rentals

by Rich Vetstein on October 9, 2018

in Land Court, Landlord Tenant Law, Leasing, Massachusetts Real Estate Law

Land Court Considers Local Ban On Airbnb Rentals in Lynnfield

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

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

Judge Long Rules In Favor of Town

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

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

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

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

Link:  Styller v. Lynnfield Board of Appeals 

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Third Lawsuit Filed In Widespread Forgery Scheme

by Rich Vetstein on September 17, 2018

in Massachusetts Real Estate Law

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

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

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

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

If you have any information concerning Mr. Seymour or any of these transaction, please email me confidentially at [email protected].

Fox 25 News Report below

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