Richard Vetstein Sudbury MA

What The Boston Zoning Board of Appeals Grants, The Courts Taketh Away

by Rich Vetstein on March 18, 2012

in Construction Law, Home Improvement, Massachusetts Real Estate Law, Permitting/Zoning, Real Estate Marketing, Zoning

Sheppard v. Zoning Board of Appeals of Boston: Appeals Court Overturns Variances, But Does Not Order Tear-Down Of South Boston Rehab Project

Disabled Southie homeowner Robert McGarrell wanted to improve his living situation. McGarrell, who suffered chronic emphysema, planned to rehab his dilapidated bungalow style house with a new townhouse style open floor plan enabling him to get around better with his oxygen tank. After discovering that the foundation was crumbling, he had no choice but to do a full gut rehab.

Abutter Alison Sheppard complained about the perceived impacts of the new house. The front of the new home was 4 feet closer to the front property line, and it extended approximately 4 feet deeper into the lot, bringing it closer to Sheppard’s three-decker house. The proposed house was also larger in mass, having a full second story (under a flat roof) over virtually its entire footprint (with a basement floor opening up to the back yard, as before).

In 1998, McGarrell went to the Boston Zoning Board of Appeals and they told him he needed 5 variances. After revising his design to address some of Sheppard’s concerns, the board granted the variances. Unhappy, Ms. Sheppard appealed to Superior Court.

Approval of Variances Always At Risk of Appeal

The result of this case will not surprise anyone who has experience with Boston zoning and permitting. The Boston Zoning Board of Appeals can be fairly liberal in doling out variances, however, the law says they should be rarely granted only in unique circumstances. I would say 80% of all variances issued by the board are susceptible to reversal on appeal, and the Appeals Court ruled McGarrell’s variances were no different.

The City of Boston has its own special zoning code which is both similar and different from the state-wide zoning code known as Chapter 40A. To obtain a variance, a Boston applicant must show 3 things:

  • Special and peculiar circumstances or conditions of the land or building such as exceptional narrowness, shallowness,  shape of the lot, or exceptional topographical conditions, and that failing to grant zoning relief would deprive the applicant of the reasonable use of such land or structure;
  • For reasons of practical difficulty and demonstrable and substantial hardship, the granting of the variance is necessary for the reasonable use of the land or structure and that the variance is the minimum variance that will accomplish this purpose;
  • Granting of the variance will be in harmony with the general purpose and intent of the zoning code, and will not be injurious to the neighborhood or otherwise detrimental to the public welfare.

The Appeals Court ruled that neither McGarrell’s rectangular lot nor dilapidated home was peculiar in any way to those in the neighborhood. The Court also held that McGarrell could have constructed a smaller home on the existing footprint, and that he could not expand his home vertically “as of right.”

Remedy: Second Chance

For McGarrell, the court left the door open for his new home to stand. Usually, in the case of construction built at the risk of permits being overturned, the court will order the new structure torn down, as in the recently publicized Marblehead mansion. Since the board supported McGarrell’s improvement of a dilapidated structure, the court allowed McGarrell to proceed on an alternative path under another section of the zoning code. The case will go back to the board for further findings, and this 14 year legal odyssey will go on.

Lesson: Get Neighborhood Support Early

The lesson here, as with any Boston zoning matter, is to get the support of the abutters and neighbors as early in the process as possible. Sometimes it’s not always possible, so you have to litigate.

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Richard D. Vetstein is an experienced Boston zoning, variance and permitting attorney who has substantial experience with variance and special permit applications before the City of Boston Zoning Board of Appeals and in Superior Court. Please contact him via email ([email protected]) or tel: 508-620-5352.

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Massachusetts Appeals Court Rules That Lost Promissory Note Renders Mortgage Unenforceable

by Rich Vetstein on March 2, 2012

in Foreclosure, Massachusetts Real Estate Law, Mortgages, Real Estate Litigation, Title Defects, Title Insurance

Case Underscores Importance of Safeguarding Loan Documents And Getting Subordinations

JPMorgan Chase & Co. v. Casarano, Mass. Appeals Court (Feb. 28, 2012) (click to read)

In a decision which could impact foreclosure cases involving missing or lost loan documents, the Appeals Court held that a mortgage is unenforceable and must be discharged where the underlying promissory note securing the mortgage could not be found.

Seller Second Mortgage Financing

This case involved an unconventional second mortgage for approximately $15,000 taken back from a private seller. The homeowner subsequently refinanced the first mortgage several times, but the refinancing lenders’ attorneys never obtained a subordination from the second lien-holder. That was a mistake. The first mortgage wound up in Wells Fargo’s hands which realized that due to the lack of recorded subordination, the second mortgage was senior to its first mortgage.

Alas, a title claim arose and the title insurance company had to step in and file an “equitable subrogation” action. In this type of legal action, a first mortgage holder asks the court to rearrange the priorities of mortgages due to mistake, inadvertence or to prevent injustice.

Where’s The Note?

The second mortgage holder had lost the promissory note which secured its mortgage, and notably, could not locate a copy of it. The mortgage itself referenced the amount of the loan and the interest rate but was silent on everything else, including the payment term, maturity date, and whether it was under seal. The second mortgage holder argued that enough of the terms of the missing note could be “imported” from the mortgage, but the Appeals Court disagreed, reasoning that there wasn’t enough specificity on key terms to enforce the mortgage.

Lesson One: Safeguard Original Loan Docs

This decision underscores the importance of safeguarding original promissory notes and other debt instruments, or at a minimum keeping photocopies so that if enforcement is required, the material terms of the original can be proved to the satisfaction of the court. With all the paperwork irregularities endemic with securitized mortgages these days, missing or lost promissory notes and loan documents have become more prevalent. This decision is potentially problematic for those foreclosures where the original promissory note is lost. The standard Fannie Mae form mortgage does not spell out the loan terms with specificity, instead, it references the promissory note. Indeed, the Fannie Mae mortgage does not even reference the interest rate. Based on this decision, a mortgage without sufficient evidence of a promissory note could be rendered unenforceable and un-forecloseable.

As an aside, a lender who lacks an original promissory note could rely upon Uniform Commercial Code Section 3-309, which provides:

(a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. (b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

Lesson Two: Get Subordinations For Junior Liens

This decision also underscores the importance of getting a subordination agreement for second mortgages and other junior lien-holders when closing refinances. A subordination agreement is a contract whereby a junior lien-holder agrees to remain in junior position to a first mortgage or other senior lien-holder during a refinancing transaction. Otherwise, the first in time rule of recording would elevate a junior lien-holder to first, priority position after a refinance. If a subordination was obtained and recorded here, this case would not have occurred.

Disclaimer:  I drafted the original complaint in this case while working at my previous law firm. I had long since left when the case was decided at the Appeals Court.

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Richard D. Vetstein, Esq. is a Massachusetts real estate and title defect attorney. He can be reached by email at [email protected] or 508-620-5352.

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