U.S. POSTAGE Columnist Paul PAID BOSTON, MA Judge Cutler to Alphen says PERMIT#: 1323 speak at Land Boston’s future is Use meeting looking brighter. PAGE 2 PAGE 3

WWW.REBA.NET SEPTEMBER 2012 THE NEWSPAPER OF THE Vol. 9, No. 4 news REAL ESTATE BAR ASSOCIATION A publication of The Warren Group ALTA counsel off ers insider’s view of CFPB at Annual Meeting & Conference

Steve Gottheim, Conference on Monday, Oct. 29, 2012, tection Bureau for comment. Steve will Emergency Economic Stabilization Act regulatory and leg- at the Best Western Royal Plaza Hotel off er a detailed insider’s view of the po- of 2008. In his spare time his interests islative counsel for in Marlborough. litical process leading up to the promul- include cooking, tennis and his beloved American Land ALTA is the trade association and gation of the 1,200-page draft rule. New York Mets. Title Association national voice of the abstract and title Steve is a graduate of the University For more information about the (ALTA), will de- insurance industry. As ALTA’s regula- of Maryland – College Park and the REBA Annual Meeting & Conference, liver the luncheon tory point person in Washington, Steve University of Maryland Law School. turn to page 6. keynote address has been involved in crafting the pro- He was a Capitol Hill staff er working To register for REBA’s Annual STEVE GOTTHEIM at REBA’s all-day posed rule and disclosures recently is- as a legal fellow for the Senate Bank- Meeting & Conference, go to www. Annual Meeting & sued by the Consumer Financial Pro- ing Committee during passage of the reba.net. Economic REBA shuts down out-of-state Development notary closing company Act of 2012 Highlights for land use, EBA’s continuing battle to end After REBA learned that National Superior Court. Th e Superior Court the unauthorized practice of Loan Closers was providing notaries will be asked to recognize that notaries environmental, municipal and law recently secured an agree- public for “witness only” closings in public are public servants performing development attorneys mentR from National Loan Closers, Inc., Massachusetts, REBA sued in Supe- public duties by administering oaths, one of the country’s largest providers of rior Court in April 2012 to enjoin the taking acknowledgements, issuing sub- BY GREG D. PETERSON “professional notaries” for witness clos- practice. Th e Real Estate Bar Association poenas, and acting as independent wit- ings, to stop doing business in Mas- for Massachusetts, Inc. v. National Loan nesses in a variety of situations. Private sachusetts. In a “witness only” closing, Closers and Linda L. Audet, C.A. No. parties, like National Loan Closers, On Aug. 7, 2012, which are not permitted in Massachu- SUCV2012-01609.) REBA also sued cannot aggregate the services of nota- Gov. Deval Patrick setts, the individual presiding over the Linda Audet, one of the Massachusetts ries public, or any other public offi cials, signed into law the settlement of the real estate transaction attorneys who had been hired as a to sell those services as a commer- Economic Develop- acts only as a witness to the transac- notary public for “witness only” cial good. Th e parties have also ment Act, Chapter tions and not as an attorney. closings, thereby enabling Na- agreed to ask the Superior 238 of the Acts of National Loan Closers, which is tional Loan Closers’ illegal Court to enter a judgment 2012. Th e act ex- based in Cincinnati, Ohio, advertised practice. that private parties, like pands and extends a itself as “the nation’s leader” in provid- Within a few weeks after National Loan Closers, GREG number of existing ing “professional notaries and attorneys the complaint was fi led, Na- cannot sell the services of PETERSON programs to support for your mobile and witness closings.” tional Loan Closers agreed an attorney. Th e Superior infrastructure devel- It maintains a database of “signing to a settlement by which it Court judgment is opment and enhance agents,” including notaries public and would stop providing expected in a competitiveness, provides new funding some attorneys, who are willing to notaries public few weeks. and adds new programs supporting eco- preside over “witness only” closings. in the com- nomic development. National Loan Closers’ notary manage- monwealth. ment systems, known as “My Closing REBA and EXPANDING AND Tracker” and “Closing Board,” together National EXTENDING THE PERMIT with its notary public database, are used Loan Closers EXTENSION ACT by title companies and mortgage lend- have also agreed ers across the country to locate and hire to fi le a joint re- Under the act, applicable permits have notaries public for “witness only” clos- quest for the entry been expanded to include any permit in ings. of judgment in the eff ect at any time between Aug. 15, 2008, and Aug. 15, 2012 (a two-year expansion of the scope of permits aff ected). Th e pe- riod of time for which applicable permits A dual in the sun are extended has been increased from two years to four years. REBA Ethical Standard No. 4: Attorney Acting in Dual Capacity as Attorney and Real Estate Broker Th is impacts not only state per- BY JAMES S. BOLAN mits (wetlands order of conditions and in the same transaction.” Th e purpose of the lawyer’s own interests, unless: ◆ groundwater discharge permits) but also this article is to highlight the reasons for the lawyer reasonably believes the local permits (special permits and local In May 2012, the the standard and the potential risks for representation will not be adversely wetlands orders of conditions) and re- Real Estate Bar As- not appreciating its eff ect. aff ected; and ◆ gional permits. In essence, virtually any sociation adopted a Th e comments to Standard No. 4 the client consents after consulta- property development permit is within new ethics standard, note, fi rst, a lawyer’s general fi duciary tion.” the scope of the Permit Extension Act No. 4, to memorial- duty under Mass. R. Prof. C. Rule 1.3 (40B Comprehensive Permits are the no- ize the policy that to zealously represent one’s client within If a lawyer is acting as a broker in table exception). “an attorney shall the bounds of the law. A concomitant to the same transaction in which she/he Th e Executive Offi ce of Housing and not act as both at- that duty is the obligation, under Rule is acting as counsel, then it is not pos- Economic Development (EOHED) has JIM BOLAN torney for a party in 1.7(b) not to represent a client if that sible that the representation will not be updated its Permit Extension Act FAQ a real estate transac- representation “may be materially lim- adversely aff ected. As a part of the rea- website to refl ect the new law. tion and as a real es- ited by the lawyer’s responsibilities to sons cited in the comment to the new tate broker to a party another client or to a third person, or by standard, lawyers need to be aware of See EDA, page 8 See DUAL CAPACITY, page 2 PAGE 2 REBAnews SEPTEMBER 2012 Englander joins State Land Surveyor Board

Gov. Deval Patrick tions which includes rules of professional gator with more than 30 years of expe- has appointed long- responsibility. The group also serves as a rience. He possesses particular expertise time REBA member gatekeeper for licensing new land survey- on rights in the intertidal zone and beach Ed Englander to the ors and engineers. disputes. In addition, Englander is litiga- 10-member Board of “The board serves the engineering tion counsel to the Boston Redevelop- 50 Congress Street, Suite 600 Professional Engi- profession – as well as the general public’s ment Authority on an array of land use Boston, Massachusetts 02109-4075 neers and Land Sur- welfare – in much the same way that our and contract cases, including zoning, www.reba.net veyors. Board of Bar Overseers and our Board of affordable housing, urban renewal, dis- ED ENGLANDER The board estab- Bar Examiners acts for the legal profes- crimination and Chapter 121A. He also lishes, monitors and sion,” Englander said. “It is an honor to represents the Hull Redevelopment Au- President: enforces quality stan- serve as the public’s representative in the thority on a contract matter. Englander is Christopher S. Pitt dards for the engineering and land sur- board.” a partner in the Boston law firm of Eng- [email protected] veying professions. The board regulates A member of REBA’s Litigation lander, Leggett & Chicoine P.C. and can the practice through a code of regula- Committee, Englander is a veteran liti- be contacted at [email protected]. President Elect: Michael D. MacClary [email protected] Immediate Past President: Land Court Judge Judith Cutler to speak at Edward M. Bloom [email protected] Treasurer: land use meeting Michelle T. Simons [email protected] Land Court Associate Justice Judith Cutler, appointed to the bench in Clerk: C. Cutler will address a luncheon meeting 2009, was a principal in the Boston law Christopher L. Plunkett of the REBA land use and zoning com- firm of Kopelman & Paige, P.C., where [email protected] mittee at 12:00 noon on Tuesday, Oct. she represented municipalities in a vari- 2, 2012. The luncheon program, which ety of land use matters including zoning, Executive Director, Editor: is open to all REBA members, will be subdivision control, public and private Peter Wittenborg hosted by Greg D. Peterson, committee ways and affordable housing. [email protected] co-chair, at Tarlow, Breed, Hart & Rogers, To register for this program, please P.C. at 101 Huntington Ave. (fifth floor), contact Andrea Morales at morales@ Legislation Counsel: in Boston. reba.net. Edward J. Smith [email protected] Managing Editor: Nicole Cunningham Avoiding dual capacity in Massachusetts [email protected] CONTINUED FROM PAGE 1 Assistant Editor: Andrea M. Morales the extensive limitations under Rules which can be reasonably understood the client to appreciate the significance [email protected] 1.6 and 1.8. by the client; of the matter in question.” (See Rule ◆◆ Rule 1.6 codifies a lawyer’s duty to the client is given a reasonable op- 1.9.) In the ultimate, REBA has con- maintain the confidentiality of infor- portunity to seek the advice of inde- cluded that the risk of serving two mas- MISSION STATEMENT mation provided by a client: “A lawyer pendent counsel in the transaction; ters is such that informed consent can To advance the practice of real shall not reveal confidential information and never be fully and fairly obtained, even estate law by creating and sponsoring ◆◆ relating to representation of a client un- the client consents in writing there- if it could be sought. professional standards, actively less the client consents after consulta- to.” I would also extend the obligation participating in the legislative tion, except for disclosures that are im- and risk to situations where another process, creating educational pliedly authorized in order to carry out Even if one were able to conclude person connected or related to the at- programs and material, and the representation, and except as stated that the relationship would not be ad- torney, such as a spouse, should not demonstrating and promoting fair in paragraph (b).” versely affected, one could not obtain participate as a broker in a transaction dealing and good fellowship among Combined with that requisite is the “informed consent” through “consulta- in which the lawyer represents a party members of the real estate bar. language set forth in Rule 1.8(b) that a tion.” Consultation is defined as that without full disclosure of the relation- “lawyer shall not use confidential infor- which “denotes ships and the nature of the fees and MENTORING STATEMENT mation relating to representation of a communication commissions to be obtained. In these To promote the improvement of the client to the disadvantage of the client of information circumstances, the attorney benefits practice of real estate law, the men- or for the lawyer’s advantage or the ad- reasonably suffi- from the income derived by the spouse toring of fellow practitioners is the vantage of a third person, unless the cli- cient to permit resulting from a commission. With- continuing professional responsibility ent consents after consultation, except out full disclosure, the client will not of all REBA members. The officers, as Rule 1.6 or Rule 3.3 would permit or be able to appreciate that the tug and directors and committee members require.” pull of the desire to generate income are available to respond to member- In combination, the risk both that via one’s spouse is sufficient to make ship inquires relative to the Asso- one would not be able to zealously rep- a client wonder if the lawyer is ciation’s Title Standards, Practice resent the interests of one’s client be- fully engaged on behalf of the Standards, Ethical Standards and cause the desire to get paid a broker’s client or whether his/her at- Forms with the understanding that commission fundamentally interferes tention and fiduciary duty advice to Associations members is with the obligation to provide indepen- is adversely affected by the not, of course, a legal option. dent legal advice and judgment to and “second master’s” voice. See, on behalf of the client. See, for example, for example, Matter of Stan- Matter of Lake (lawyer failed to disclose ton lawyer handled the pro- © 2012 The Real Estate Bar Association conflict in serving as estate’s real estate bate of an estate and his wife for Massachusetts. Materials July not be broker and attorney resulting in some was the broker on the sale of reproduced without permission. limited harm to estate); and Matter of estate property. Her financial Standard bulk postage paid at Boston MA, Lupo, in which the attorney was also the interest in the completion of 02205. Postmaster: Send address changes broker. In that instance, issues also arose the sale created a conflict for to REBA, 50 Congress St., Boston MA, 02109 under Rule 1.8(a): “A lawyer shall not the lawyer) enter into a business transaction with a . client or knowingly acquire an owner- Jim Bolan is a partner with the ship, possessory, security, or other pecu- Newton law firm of Brecher, niary interest adverse to a client unless: Wyner, Simons, Fox & Bolan, ◆◆ the transaction and terms on which LLP, and represents and advises 280 Summer Street, 8th Floor the lawyer acquires the interest are lawyers and law firms in ethics, Boston, MA 02210-1131 fair and reasonable to the client and bar discipline and malpractice (800) 356-8805 are fully disclosed and transmitted matters. He can be reached at www.thewarrengroup.com in writing to the client in a manner [email protected]. SEPTEMBER 2012 REBAnews PAGE 3

COMMENTARY You don’t know what you got til it’s gone

BY PAUL F. ALPHEN 10.2 percent. Downtown is quiet but for ployment rate in the Boston-Cambridge be happy you don’t live in Detroit, and scam artists and never-use-the-meter area is only 5.8 percent. get out to Cleveland now to visit the cab drivers. To its credit, on game day Earlier this year The Boston Globe re- Rock and Roll Hall of Fame before hotel A few years ago we could not get a reservation at Roast, ported that the pace of construction of prices go back up. my two sons and I a restaurant run by Food Network star office buildings had increased substan- took a tour of the Michael “Iron Chief ” Symon. tially at the end of 2011. According to REBA’s president in 2008, Paul Alphen current- brand new Yankee Cleveland was a surprise, how- the CoStar Group, there were 4,893,834 ly chairs the association’s long-term planning Stadium while in ever. My son Chris and I have been to square feet of office space under con- committee. A frequent and welcome contribu- NYC for a Celtics– Cleveland for a wide variety of Red struction at the end of the second quar- tor to these pages, he is a partner in Balas, Al- Knicks game. After Sox and Celtics games, primarily ter of 2012. Things are beginning to im- phen and Santos, P.C., where he concentrates the tour we decided prior to three years ago. According prove, and construction is in commercial and residential real estate de- PAUL ALPHEN to swing by the rela- to the Bureau of Labor and not limited to downtown. velopment and land use regulation. Paul can tively new Citi Field, Statistics, the unemployment Even out here in the Route be reached at [email protected]. home of the NY rate in greater Cleveland is 9.0 495 hinterland, a variety of Mets, in the hard-to-describe Willets percent. The unemployment major commercial projects Point section of Queens. While driving rate manifested itself in the are under construction in over the Triborough Bridge, my oldest form of numerous empty not- Littleton and Westford. son Paul asked: “How long would it take so-old office towers in the heart The moral of the story: to see a game in every Major League of downtown. Walking around Greater Boston is in pretty ballpark?” My sons can read me like a the city on a Friday afternoon, good shape, things are book, and Paul knew the response before we saw little evidence of active slowly getting even better, I said: “Let’s find out.” commerce (with the exception We had a head start at that point, of those headed to the and now we have been to 17 out of 30. Indians–Red Sox game). This year we went to Citi Field (again), How many completely PNC Park in Pittsburgh, Comerica vacant office towers have Park in Detroit, and Progressive Field in you walked Cleveland (for about the seventh time). past in the We always make a point of visiting mu- heart of seums, neighborhood restaurants and downtown other points of interest in each city we Boston visit. lately? Per- We all anticipated that Detroit haps none. would be less appealing than during our Accord- last visit to the city in 2003 for the North ing to the American International Auto Show. We Bureau of were correct. According to the Bureau Labor and of Labor and Statistics, the unemploy- Statistics, ment rate in the greater Detroit area is the unem- PAGE 4 REBAnews SEPTEMBER 2012 Trio of cases breathes new life into old easements

BY GORDON M. ORLOFF in which certainty and predictability are Cater the burdened land was developed, parcels in Hyannis, filed a case in Land significant and valuable forces.” it had not been developed in a way that Court claiming that they had implied and Massachusetts courts appear to be join- This summer, Kafker’s view have come was inconsistent with the Caters’ deeded prescriptive easements to use a nearby ing the popular zombie trend by declaring to the fore in three cases. These cases also right of way. The SJC also concluded that, beach on Lewis Bay. The defendants, who long-dormant easements undead. This is provide a good review of various aspects of because the Caters’ parcel was landlocked own lots on the beach, argued that their a bit of a reversal, as just a few years ago easement law. (except on one side where there is water), right to use the beach was exclusive. The things didn’t look so good for old ease- an easement over the burdened property is Land Court sided with the plaintiffs, ments. In 2009, the CATER V. BEDNAREK the shortest route to a public street. There- ruling that the circumstances surrounding Appeals Court con- fore, it would not have been reasonable a 1929 transaction – in which the then- sidered an unused First, in mid-June, the Supreme Judicial for the burdened owners to infer from the owner of a large tract that included both easement in The 107 Court (SJC) decided Cater v. Bednarek, holder’s silence an intention to terminate sides’ properties sold lots adjoining the Manor Avenue LLC v. 462 Mass. 523 (2012). The way at issue in that route. beach – created an implied easement in Fontanella, 74 Mass. Cater, which was created by deed in 1899, favor of the non-waterfront properties to App. Ct. 155 (2009). makes the 1940 easement in Fontanella RICHARDS V. JACKSON continue using the beach. The Appeals That case addressed look fresh-faced by comparison. What’s Court affirmed. Gordie Orloff the ongoing viability more, the 1899 deed didn’t specify the In late June, the Appeals Court affirmed Despite the fact that the original deeds of an easement in a location of the easement, the easement another Land Court decision that opened at issue did not contain language grant- paper street created went over lots that had been subdivided, a 29-acre wooded parcel for development. ing a beach easement, both courts found in a 1940 subdivision. The street was never and no one had created a way on the Richards v. Jackson, 82 Mass. App. Ct. 1104 evidence of the owner’s intent to grant constructed or used as such, and a stone ground or otherwise used the easement (2012). Richards bought the parcel in 2001 the beach easement in large part due to wall on the plaintiff ’s property had blocked since its creation. The Caters purchased and (represented by my colleague, Don newspaper advertisements from the 1890’s the paper street since the time that the the vacant land in Truro benefitted by the Pinto) filed suit in 2007 to establish legal which referred to all the lots in this devel- easement was created. A stockade fence of easement in 1979, and then filed an action access. The Land Court had ruled that an opment as “shore lots” featuring a “[c]ool unknown origin also blocked the easement, in Land Court in 1998 seeking to establish 1840 division of family land in Tisbury, on breeze all the time, good bathing, boat- and the easement area was used by parties that they had a right to build a road on the Martha’s Vineyard, created an easement ing and fishing, nice beach, no undertow, as part of their respective lawns. easement. by necessity over adjoining land to reach shade trees on several of the lots.” The The Appeals Court recited the settled The owners of the land burdened by a nearby public way. Justice Alexander H. Appeals Court affirmed the Land Court, law that abandonment of an easement is the easement argued that the easement had Sands reviewed the law of easements by finding that these ads established a “com- a question of intention to be ascertained been extinguished long ago by abandon- necessity: mon scheme for a vast subdivision with from the surrounding circumstances and ment or estoppel. They apparently did not “An easement by necessity may be exceptional beach and bathing facilities,” the conduct of the parties, and that mere appeal the Land Court’s rejection of their implied if the court can conclude that the and that “the existence of the beach was an nonuser of an easement is not enough to abandonment claim because there was grantor and grantee would have wanted to important feature in [the owner’s] attempt establish an intent to abandon. no evidence of any conduct by the Caters’ create such easement had they considered to sell the nonwaterfront lots located in However, the Appeals Court relied predecessors showing an abandonment. the matter. … Proponents bear the burden the … subdivision.” The Appeals Court on the easement holders’ use of another Instead, on appeal the burdened owners of proof to show that an easement by ne- also upheld the Land Court’s ruling that way for access, their lack of any steps to relied on the doctrine of estoppel. cessity exists. … Proponents must show (1) the implied easements created in 1929 had remove the stone wall or stockade fence The SJC recognized that an ease- common ownership between the dominant not been abandoned (because some of the blocking access to the easement and their ment may be extinguished by estoppel, and servient estates, i.e. that unity of title easement holders had used the beach) or use of the paper street as part of their and adopted the elements required for a existed; (2) unity of title was severed by extinguished by virtue of adverse posses- own lawn as evidence of an intention to finding of estoppel set forth in Restate- conveyance; and (3) necessity arising from sion by the defendant (because it had not abandon the easement. Accordingly, the ment (Third) of Property (Servitudes) that severance, all considered ‘with refer- expelled others from the beach and its uses majority reversed a Land Court summary § 7.6 (2000), titled, “Modification or ence to all the facts within the knowledge were not irreconcilable with the easement judgment in favor of the easement holders Extinguishment by Estoppel.” The SJC of the parties respecting the subject of the holders’ rights). and ordered that summary judgment enter held that, in order to show extinguish- grant, to the end that their assumed design Each of these cases has different facts against them. Significantly, the Appeals ment of an easement by estoppel, there may be carried into effect.’” – and the facts in a particular case remain Court stated that its conclusion that the must be a communication by the easement Sands concluded that Richards had critical in establishing easements and easement was abandoned was “consistent holder – including through silence – to the provided evidence to satisfy each of these determining whether they have been aban- with the trend toward allowing the elimi- landowner burdened by the easement of factors and held that an easement by ne- doned or otherwise extinguished. That said, nation of useless easements generally.” the holder’s intent to modify or terminate cessity had been created in 1840. the 2012 cases may demonstrate a different In his dissent, Justice Scott L. Kaf- the easement, in circumstances where it’s In a Rule 1:28 Decision, the Appeals orientation toward easements than that ker pointed out that proof of intent to reasonable to foresee that the burdened Court affirmed the Land Court decision. shown by the majority in Fontanella. That abandon must be by “acts by the owner party will substantially and detrimentally Adding insult to the injury already suffered majority focused on eliminating unused of the dominant estate conclusively and rely on that communication. The SJC by the burdened defendant, the Appeals easements. In contrast, this summer’s crop unequivocally manifesting either a pres- noted that silence alone may communicate Court emphasized that the fact that the of cases looks to preserve easements and ent intent to relinquish the easement or an intent to modify or terminate an ease- Land Court did not specify the location of the value that they create in the benefit- a purpose inconsistent with its further ment, but only where one, the the easement was not a problem: ted parcel. These new cases remind us that existence,” quoting Dubinsky v. Cama, easement holder knows that “[A]lthough the trial judge determined easements which may have been inactive 261 Mass. 47, 57 (1927). Kafker the burdened party intends that the easement was located “from Lo- for decades, or even centuries, are not noted that easement holders have to develop his property in cus to Stoney Hill Road over the Jackson necessarily dead. To the contrary, careful the right to enter onto the burdened a manner “fundamentally Parcel,” he made no more specific findings and persistent lawyers may unearth and, if estate to improve an easement, and inconsistent” with the con- regarding the exact placement of the ease- required, use litigation to breathe new life that the record showed only that tinued existence of the ment. However, “[t]he mere fact that the into easements in order to add real value to the easement holders had not easement; and two, it is precise location is undefined does not ne- their clients’ land. yet chosen to exercise foreseeable that the bur- gate the existence of the right of access.”… their right to do dened party will interpret Furthermore, “the parties are free to locate Gordie Orloff has been practicing real estate so. that silence as assent and a previously undefined right of access, or in and land use litigation at Rackemann, Sawyer proceed with the develop- the absence of agreement by the parties as & Brewster since the mid-1980s. He has been ment. to its location a court may fix the bounds a lecturer on easements and other real estate However, of a right of way not located by the instru- topics for MCLE and is a member of REBA’s the SJC re- ment creating it.” Litigation Committee. He is a contributor to the He also observed jected the blog Massachusetts Land Use Monitor, which that the majority’s estoppel LEAHY V. GRAVELINE reports on new developments in real estate holding represented argu- and land use law. Full copies of all of the cases “a departure from ment on July brought yet another decision involving referenced in this article are available by click- Massachusetts law the facts an old easement. In Leahy v. Graveline 82 ing on the topic “Easements” at massachusett- that risks creating before it. Mass. App. Ct. 144 (2012), the plaintiffs, slandusemonitor.com. Orloff can be reached at uncertainty in an area Although in who own non-waterfront subdivision [email protected]. Your advertisement goes right here.

For advertising opportunities call (617) 896-5344 or e-mail [email protected] SEPTEMBER 2012 REBAnews PAGE 5 New Tax Rules Catch CRE Industry By Surprise Temporary Regs May Crimp Property Owners’ Bottom Lines

BY JONATHAN FARRELL been used elsewhere. Th is year, the same elevators to plumbing. to consult your advisor regarding the new AND PATRICK BEVINGTON project must be capitalized and depreci- Th e IRS still has some work to do on regulations as part of your planning. ated over a 39 (commercial) or 27.5 (resi- these temporary regulations, particularly dential) year period. Th is results in only a when it comes to determining whether CPAs Jonathan Farrell and Patrick Bevington New repair versus capitalization $2,000 or $3,000 current tax savings. something is a repair or an improvement. are advisors in the real estate practice group regulations have some property owners Th e result is that companies may be Unfortunately, there are lots of cases where at DiCicco, Gulman & Company in Woburn. scratching their heads, while others are facing larger tax bills and feeling the im- the distinction between an expense and a still unaware of the temporary regulations pact on their bottom line. Th ere are, how- deduction is less clear. Th e IRS they should now be following. From an ever, some signifi cant planning opportuni- is expected to provide clearer accounting perspective, however, signifi - ties, thanks to provisions that allow tax- guidance in the future on how cant changes in the tax treatment of prop- payers to write off items that were replaced taxpayers can distinguish be- erty repairs and improvements could have before being fully depreciated. tween the two. a direct impact on the bottom line this Th e rules may say a new roof is to be year and in future years for those in the depreciated over 39 years, but it is unlikely TAKE HEED real estate industry. that any roof will last that long. Under the Under new temporary regulations is- new temporary regulations, taxpayers who Because the IRS is still sued by the Internal Revenue Service, can determine the value of the old roof can seeking comment on this projects ranging from the installation of a now write off the remaining carrying value particular aspect of the new roof to the replacement of an aging when that roof is replaced. regulations, some taxpay- furnace will likely no longer be deductible. Taxpayers who capitalized rather than ers may be tempted to Instead, such projects will have to be capi- deducted their repairs and improvements ignore the temporary talized and depreciated, thus diluting the may now be able to reach back and de- rules until the fi nal ver- tax advantages of many property improve- duct the remaining carrying value as an sion is approved. How- ments. expense. Th e challenge is determining the ever, the major issue Th e new temporary regulations came value of the item that has been replaced, – determining the as a bit of a surprise to the real estate in- whether it was a roof, a furnace, electri- defi nition of a unit dustry. Although these rules have been cal wiring or a security system. Th is will of property for which under review for nearly a decade, absence change the way companies internally ac- improvements must be of clear guidelines previously allowed count for everything. capitalized – is unlikely to change. property owners to claim many improve- Purchasers of a building who in the Th e implementation of these ments as repairs, making the total cost de- past typically never bothered to identify temporary regulations does not ductible in a single year. Last year, for ex- the cost of individual components of that mean that property owners ample, a new roof that cost $200,000 may building should now track everything. For should forego necessary repairs have been claimed as a deductible expense, real estate, the IRS defi nition of a unit of or delay improvements. In fact, creating a tax savings of $80,000 for a tax- property is very specifi c, including a build- they should conduct business as payer in the 40 percent bracket. Th at cash ing, its structural components and nine usual. Th ey will just have to ac- could have gone back into the company or separate building systems ranging from count for it diff erently. Be sure SOFTPRO SM

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www.softprocorp.com ©2011 First American Financial Corporation and/or its affiliates. All rights reserved. PAGE 6 REBAnews SEPTEMBER 2012 2012 Annual Meeting & Conference Monday, October 29th 2012 • 7:30 a.m. – 3:00 p.m. Best Western Royal Plaza Hotel 181 Boston Post Road West, Marlborough, MA Schedule of Events

7:30 a.m. – 8:30 a.m. Registration and Exhibitors’ Hour 8:30 a.m. – 1:15 p.m. BREAKOUT SESSIONS Our speakers will address the legal standards, process, and practical strategies for obtaining special permits and variances. The program will cover the general legal standards for special 8:30 a.m. – 9:30 a.m. Salon A permits under G.L. c.40A, s. 9, and the substantial discretion afforded to local special permit 9:45 a.m. – 10:45 a.m. Salon A granting authorities (SPGAs) in granting or denying special permits. We will also cover the more stringent legal standards for variances under G.L. c. 40A, s. 10, and the decidedly limited Priority, Enforcement & Foreclosure of discretion that ZBAs possess in granting variances. It will also cover procedural steps seeking Condominium Liens these forms of zoning relief, and practical strategies in presenting an application before the Robert W. Anctil; Henry A. Goodman; Dean T. Lennon local SPGA or ZBA.

Our speakers will review condominium priority lien enforcement procedure under MGL c. 9:45 a.m. – 10:45 a.m. Salon E 183A. The seminar begins with a review of the procedure set forth in the statute to obtain a 11:00 a.m. – 12:00 p.m. Salon E priority lien and of the related practical considerations. In part two, the ins and outs of condo lien foreclosures will be discussed in detail. The final segment of the seminar will review recent CFPB Proposes an Integrated Truth in Lending and RESPA Form: case law interpreting the condo statute and some of the difficulties faced by condominium What Will This Mean to Your Real Estate Practice? lawyers as a result of those decisions. Marissa Aquila Blundell; Steve Gottheim; Richard A. Hogan; Joel A. Stein

8:30 a.m. – 9:30 a.m. Salon B The CFPB recently released its long-awaited proposal to consolidate the application and 9:45 a.m. – 10:45 a.m. Salon B closing disclosures required by the Truth in Lending Act and RESPA. The proposal is almost 1,100 pages long and creates a new three-page loan estimate form and a new five-page Recent Legislation Affecting Real Estate Lawyers closing disclosure form. In addition to the new forms, the proposed rule significantly amends Elizabeth J. Barton; Roger D. Donoghue; Francis J. Nolan the requirements governing mortgage practices. This program will provide a summary of the proposed rule and its likely impact on real estate attorneys in the commonwealth. This legislative update will incorporate recent revisions to the MUPC, the foreclosure legislation and the community preservation act, as well as any other state house news and 8:30 a.m. – 9:30 a.m. Seminar Room updates. They panel will also discuss legislation to fix the SJC’s Bishop case, which interpreted 9:45 a.m. – 10:45 a.m. Seminar Room c. 186, s. 19 as applicable to commercial landlords, making them liable in tort for unsafe conditions that tenants were obligated to repair. Professional Liability Insurance: Claim & Underwriting Considerations Jennifer L. Markowski; Matthew F. Probolus 8:30 a.m. – 9:30 a.m. Salon C 9:45 a.m. – 10:45 a.m. Salon C The panelists will offer guidance in responding to questionnaires and completing applications and offer real-life examples of instances requiring notice to a carrier. Recent Trends in Eminent Domain Takings Joseph S. Callanan; James D. Masterman; Kathleen M. O’Donnell 12:15 p.m. – 1:15 p.m. Salon E

Our speakers will provide a general overview of eminent domain takings, including the Recent Developments in Massachusetts Case Law statutory basis and authority for this significant governmental power, the substantive legal Philip S. Lapatin standards that must be met to authorize a taking, the procedural steps involved in effecting the taking, compensation and remedies available to property owners, issues involved in calculating Now in his 34th year at these meetings, Phil continues to draw a huge crowd with this condemnation awards, and strategies and defenses that property owners can employ in session. His presentation on the Recent Developments in Massachusetts Case Law is a must challenging eminent domain takings (or to maximize their compensation). We will also include a hear for any practicing real estate attorney. Phil is the recipient of the Association’s highest discussion of recent trends in the use of eminent domain powers. honor, The Richard B. Johnson Award. There will also be a simulcast of this session in the Seminar Room. 8:30 a.m. – 9:30 a.m. Salon D 9:45 a.m. – 10:45 a.m. Salon D 1:20 p.m. - 3:00 p.m. LUNCHEON PROGRAM Putting Eaton into Practice – A Practical Skills Session Eugene Gurvits; Robert J. Moriarty Jr. 1:20 p.m. – 1:40 p.m. President’s Welcome & Remarks Join us for a walk through the holding of the Eaton case, an outline of the new practical Christopher S. Pitt requirements and procedural steps for lenders when foreclosing on a mortgage, and what title and conveyancing attorneys representing purchasers of, or issuing policies on, foreclosed 1:40 p.m. – 2:00 p.m. properties, must look for in reviewing and evaluating the title. The program will cover, among Report of the REBA Title Standards Committee other things, new title insurance underwriting standards for compliance with the Eaton decision, Presented by Co-chairs, Richard M. Serkey and Nancy Weissman as well as proposed REBA form of affidavits that lenders must record to evidence compliance. 2:00 p.m. – 2:20 p.m. 11:00 a.m. – 12:00 p.m. Salon D Presentation of the Richard B. Johnson Award Introduced and Presented by the Honorable Rudolph Kass (ret.) Basics of Mechanics Liens – A Practical Skills Session Bradley L. Croft; Charles E. Schaub Jr. 2:20 p.m. – 2:40 p.m. Luncheon Keynote Address by ALTA’s Steve Gottheim This nuts and bolts session on Mechanics Liens will include a statutory overview and will also cover the technical procedures for creation/perfection. Our speakers will also discuss how to 2:40 p.m. – 3:00 p.m. address and dispose of them as a matter of title, liens of leasehold improvement contractors, Passing of the Presidential Gavel and more. Christopher S. Pitt and Michael D. MacClary, 2012 President-Elect

8:30 a.m. – 9:30 a.m. Salon E 3:00 p.m. 11:00 a.m. – 12:00 p.m. Seminar Room Adjournment Zoning Special Permits and Variances For information on conference registration and exhibitor/sponsorship Paul F. Alphen; Brian C. Levey opportunities visit www.reba.net. SEPTEMBER 2012 REBAnews PAGE 7 General Information ◆ Registrants are welcome to attend any Everyone attending the 2012 Annual at the registration desk, located in the Registrations cancelled on or after breakout session at any time and are not Meeting & Conference must register. The hotel foyer. October 22, 2012, will not be honored; required to preregister for sessions. registration fee includes the cost of the however, substitutions of registrants breakout sessions, the conference written attending the program are welcome. ◆ Registration forms and the appropriate materials, and the luncheon. We cannot Conference written materials will be ◆ Premium credit for professional liability fee should be sent by email, mail or offer discounts for persons not attending mailed to those who registered but could insurance and continuing legal education fax, or submitted online at www.reba. the luncheon portion of the program. not attend within four weeks after the credit in other states may be given for net, and should arrive prior to October program. attending properly documented CLE 22, 2012, in order to guarantee a programs. Call (617) 854-7555 or email ◆ Please submit one registration per reservation at the Annual Meeting & [email protected] for details. person. Additional registration forms are Conference. Registrations received after ◆ The use of cell phones is prohibited in available at www.reba.net, by request October 22, 2012, will be subject to a the meeting rooms during the breakout to Andrea Morales at morales@reba. late registration processing fee of $25. sessions and luncheon meeting. Please ◆ Registration to REBA’s 2012 Annual net, or by calling (617) 854-7555. Registrations cancelled in writing before be sure to visit the lounge areas, located Meeting & Conference is open to Confi rmation of registration will be sent October 22, 2012, will be honored in the Princess Room, the Duchess members in good standing, their guests to registrants by email. Name badges and charged a processing fee of $25. Room, and the hotel’s courtyard foyer. and non-members (for an additional fee). and a list of attendees will be available No other refunds will be permitted. Refreshments will be served. Driving Directions

FROM WORCESTER: FROM STURBRIDGE: FROM I-495 NORTH/SOUTH: FROM CONNECTICUT: Route 290 East to Exit 26A (I-495), Mass Turnpike (I-90) Take I-495 to Exit 24B (US-20 West), Route 84 North to Mass Turnpike (I-90) I-495 South to Exit 24B (US-20 West), East to Exit 11A (I-495 N), Turn right onto Royal Plaza Drive, East I-90 East to Exit 11A (I-495 North), Turn right onto Royal Plaza Drive, I-495 North to Exit 24B (US-20 West), Keep straight past the Trade Center, I-495 North to Exit 24B (US-20 West), Keep straight past the Trade Center, Turn right onto Royal Plaza Drive, Hotel is at end of Royal Plaza Drive. Turn right onto Royal Plaza Drive, Hotel is at end of Royal Plaza Drive. Keep straight past the Trade Center, Keep straight past the Trade Center, Hotel is at end of Royal Plaza Drive. Hotel is at end of Royal Plaza Drive.

Registration

COMPLETE AND RETURN THIS REGISTRATION FORM WITH THE APPROPRIATE FEE TO: REBA Foundation, 50 Congress Street, Suite 600, Boston, MA 02109-4075 TEL: (617) 854-7555 | [email protected] | FAX: (617) 854-7570

By October 22nd After October 22nd

YES, please register me. I am a REBA member in good standing. $195.00 $220.00

YES, please register me as a guest. I am not a REBA member. $235.00 $260.00

NO, I am unable to attend, but I would like to purchase conference $190.00 $190.00 materials and a CD of the breakout sessions and luncheon address. (Please order by 10/31/12 and allow four weeks for delivery) $ $

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Roasted 8 oz. Prime Rib Served with Au Jus Chicken Breast with Apple and Cranberry Stuffi ng

Grilled Salmon Served with a Papaya Salsa Butternut Ravioli in a Shallot Brandy Cream Sauce THE REAL ESTATE BAR ASSOCIATION for Massachusetts None, as I am unable to stay for the Luncheon PAGE 8 REBAnews SEPTEMBER 2012 Economic Development Act of 2012 CONTINUED FROM PAGE 1 We’ve Grown. THE 40R SMART GROWTH TRUST FUND construction jobs and purchases to the calculation of new state tax revenues in- $4 million in one-time settlement cludable to fund I-cubed financing. Have You? payments have been redirected from the Stabilization Fund to the Smart Growth STATE REGULATORY Trust Fund, encouraging municipalities, OMBUDSMAN landowners and developers to use 40R smart growth zoning. The secretary of EOHED will ap- point a regulatory ombudsman, working NEW LOCAL in partnership with the existing permit- INFRASTRUCTURE ting ombudsman, to provide assistance to DEVELOPMENT PROGRAM businesses in regulatory compliance.

The act authorizes and establishes the ABUTTER NOTIFICATION procedures for creating local development REQUIREMENTS UNDER THE zones (which may be in a single munici- WETLANDS ACT pality or in abutting areas of adjoining municipalities). Abutters who must receive notice for Within the new local development projects involving land under water bodies zones MassDevelopment may issue bonds or waterways or on a tract of land great- to finance infrastructure investments. The er than 50 acres now include only those debt obligation will be repaid through within 100 feet of the proposed project betterment assessments on benefited site, not within 100 feet of the property properties in the zone, so no existing local bounds of the property within which the or state funds are encumbered. work is to be done. The program is a strictly local option But in the case of linear-shaped proj- (by vote of the board of selectmen. in ect sites more than 1,000 feet in length, towns) upon petition of all of the land- notification must be given to all abutters owners in a proposed zone. within 1,000 feet of the proposed project site. Linear project work within easements THE I-CUBED PROGRAM now also requires notice to the fee owner. Section 50 of the act also authorizes The act increases the number of I- the DEP to adopt Wetlands Act regula- cubed projects in any community from tions and issue authorizations for emer- two to three, and increases the available gency response actions related to geo- funding from $250 million to $325 mil- graphically wide-spread storm damage. At Old Republic Title, we haven’t let an uncertain lion. economy keep us down. In fact, we’ve expanded. It also adds parking garages to the Greg Peterson is co-chair of the REBA land definition of public infrastructure im- use and zoning committee. He can be With a commitment to doing business with integrity, provements, and adds taxes generated by reached at [email protected]. Old Republic Title provides exceptional underwriting support, unparalleled products and services, and most importantly - peace of mind. For an underwriter who supports your growth, you can count on Old Republic Title. Call us today!

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*Underwriters in the Old Republic Title Insurance Group, Inc. are: Old Republic National Title Insurance Company, www.cammett.com Mississippi Valley Title Insurance Company and American Guaranty Title Insurance Company. SEPTEMBER 2012 REBAnews PAGE 9 Ibanez, Eaton, and An Act to Prevent Unnecessary Foreclosures A title perspective BY EUGENE GURVITS of M.G.L.c. 244 that further regulates good faith effort to avoid foreclosure. set aside on ac- the steps that the mortgage assignee The creditor will have to analyze the count of such fail- In the course of must take prior to the foreclosure. As value of the property, the borrower’s ure.” As the record the last several years, of Nov. 1, the notice under Section 14 current ability to repay the modified title will never be our understanding of will have to include the recording infor- mortgage, and the availability of loan clear on the issue of foreclosure laws has mation of the chain of assignments that modification programs to assist the which mortgage se- evolved with a speed resulted in the mortgage being held by borrower in that regard. cures a certain mortgage usually not seen in the foreclosing entity. The amendment The act requires the creditor to give loan, titles to all mort- the legal field. In Re goes on to say that the notice (and the the borrower a notice of the borrower’s gages where the first no- Schwartz, Ibanez, resulting sale) is void unless the assign- rights to pursue a modified mortgage tice of sale was published Gene Gurtvits Bevilacqua, Eaton, ments are recorded prior to the notice loan. The notice will have to be sent on or after Nov. 1 should and other judicial and the recording information is ref- concurrently with the notice of default contain the affidavit of com- and legislative de- erenced in the notice of sale. Since the as required by M.G.L.c. 244, §35A. pliance with this section. The velopments upended long-held under- overwhelming majority of mortgages Prior to the commencement of the affidavit should be recorded standings and forced even experienced are assigned prior to them being fore- foreclosure for these loans, the credi- prior to the date real estate attorneys to question each closed, a conveyancer will have to scru- tor will need to execute and record See EATON, page 11 aspect of the foreclosure process with tinize the record title to make sure that an affidavit of compliance with the greater scrutiny. The recently passed it matches the assignment information provisions of this section. Under Chapter 194 of the Acts of 2012, An contained in the notice of sale. the statute, this affidavit will con- Act Preventing Unlawful and Un- A new section of Chapter 244, Sec- stitute conclusive evidence in necessary Foreclosures, continues the tion 35B, was created under the act to favor of third party purchasers evolution and represents yet another enable some borrowers of “certain mort- that the creditor has com- significant change in the way convey- gage loans” to negotiate pre-foreclosure plied with the provisions of ancers will have to review titles based workouts. “Certain mortgage loans” are Section 35B. The statute on foreclosure sales. Effective on Nov. defined statutorily as loans on owner is clear that “the arm’s- 1, 2012, lenders who wish to foreclose occupied one- to four-family residential length third party pur- on their mortgages will have to com- properties that fall within one of seven chaser for value relying ply with several new requirements and categories. Essentially, these are loans on such affidavit shall procedures. The act also codifies (and that contain one or more of the follow- not be liable for any modifies) the steps necessary to effectu- ing features: failure of the fore- ◆◆ ate compliance with the Supreme Judi- A low “teaser rate” closing party ◆◆ cial Court (SJC) decisions in the Ibanez Payment of interest only for a pe- to comply and Eaton cases. riod of time and title ◆◆ The Ibanez decision made it clear No income verification requirement to the ◆◆ that, while the foreclosing party must Severe prepayment penalties real ◆◆ hold the mortgage at the time of the Above 90 percent loan to value ratio. property foreclosure, the mortgage assignment thereby need not be in recordable form. The act For these loans, the lenders will be acquired contains an amendment to Section 14 required to take reasonable steps and shall not be Protecting your life online Small changes reap big rewards in the wide world of the web

BY SARAH A. DOWNEY others from snooping on your wire- ing areas of your life: people you trust, make sure to uncheck the box next to less connection. It’s particularly useful signups for online accounts, signups for “add a location to my tweets.” Many Surfing the web when you’re using insecure wireless con- offline accounts, legal, work, and -ac smartphones record the GPS location has become a part of nections, like those in cafes or airports. quaintances (or any other category you’d where you snapped a photo and append- everyday life, so these You’ll know that a site is secure and using like to create). That way, one email get- ing it to that photo’s metadata. Disabling days almost everyone HTTPS when you see a lock icon next to ting hacked or compromised won’t affect this feature depends on your specific de- has a digital foot- the URL of the site you’re visiting. the others. vice, but one general safety tip is to turn print. As you browse The Electronic Frontier Foundation Notable free email services with off your phone’s GPS connection when the web, you are con- (EFF) offers a helpful and free tool for good privacy protections include Hush- you don’t need it. stantly leaving behind Chrome and Firefox call ed “HTTPS mail, Lavabit or Vmail. Sarah Downey a trail of personal in- Everywhere.” You can also use a paid Use different profile photos for Sarah Downey is an attorney, privacy advo- formation whether virtual private network (VPN) service to different areas of your life.You can be cate, and writer. She joined Abine in 2010 you know it or not. If securely encrypt all your web traffic. Pri- found through existing photos of your- after receiving her J.D. from the University you’ve got only a few minutes, you can vateWiFi and AirVPN are particularly self with reverse image searches such of Connecticut School of Law, where she re- drastically improve your privacy with good choices. as TinEye or Google. Reverse image ceived a certification in intellectual property these seven tips. Delete your info from data collec- search works by looking for photo fin- and was a Pudlin First Amendment scholar, Be careful on social networks. Al- tion sites. The phone book used to be gerprints, exact matches of existing pho- and holds a B.A. in Psychology from Ham- most everything you say and do on social just that – your name and phone number. tos. If you’re worried about reverse image ilton College. A vocal proponent of privacy networks is public by default. Facebook But today literally hundreds of phone- search, use different images for different rights, she writes Abine’s privacy blog and has dozens of privacy settings that allow book-like data websites collect much contexts. Don’t use the same photo on much of the website content and manages you to be more private. To get started, more, including your net worth, value of your employer’s profile page that you media relations. turn OFF tag suggestions and turn ON your home, family members names, so- have as your Facebook profile picture. tag and profile review. By doing these cial media content, employment history, That way, someone doing a reverse two things you’ll be able to control what your home address, email, and more. This search with a particular image will others post about you. information is largely available to any- only find a limited set of results: the Stop secret web tracking. Hundreds one with a computer, including criminals ones you’ve chosen to associate with of different companies, including social such as ID thieves. that image. networks and ad companies, follow all Learn how to remove yourself from Stop broadcasting your geo- your activity across the web, building up these websites at abine.com/optouts.php. location. Facebook Places, Four- a detailed profile about what you read, Or use your special discount for REBA square checkins, and Twitter may like, click and buy to sell to advertisers. members on premium privacy service, be giving out your location, and Free browser tools like DoNotTrackPlus DeleteMe, which removes you and your some third-party apps can access (DNT+) stop this tracking and make in- family’s information from 50+ of the your public social network check- visible trackers visible with a click of a largest websites that collect, share, and ins and literally put you on the button. Download for free at abine.com. sell it. Check it out here: abine.com/reba. radar. Use secure browsing (HTTPS) Use multiple email addresses. Have To turn off geotagging on whenever possible. HTTPS prevents a different email for each of the follow- Twitter, go to Settings, then PAGE 10 REBAnews SEPTEMBER 2012 New Economic Development Act fixes SJC leasing decision

BY EDWARD M. BLOOM usually belongs to the party who is in the skills, financial resources and incen- Most commercial lawyers took it as control of the area where the incident tive to improve the leased premises. The a given that the statute applied to com- In Section 54 of occurred. Typically if within the demised court thus concluded that the residential mercial leases, but assumed that if the Chapter 238 of the premises, liability falls on the tenant; if landlord is in a better position to make commercial tenant was responsible for Acts of 2012 (the occurring in the common areas, it falls repairs and prevent injuries. maintenance and repair of its demised 2012 Economic De- on the landlord. Over the following 26 years, the premises, the statute would not apply velopment Act), a In the 1980 case of Young v. Gar- courts in 1985, 1988, 1989, 1991 and because any unsafe condition would minor correction to wacki, the SJC changed that rule with 2006 refused to extend the Garwacki have been caused by the tenant as a re- G.L.c. 186, §19 re- respect to residential premises and de- rule to commercial tenancies. sult of its failure to properly maintain its solves a serious prob- cided that “even in the absence of an ex- In March 2011, however, the SJC premises. Ed Bloom lem for commercial press agreement to keep rented premises muddied the waters in its Bishop deci- But the SJC held that if lease provi- landlords that was in repair, a lessor of residential premises sion. The court essentially took this case sions making the tenant responsible for created by the SJC in has a duty to exercise reasonable care to to determine whether the statutory duty all repairs to the demised premises mean its 2011 decision of Bishop v. TES Realty assure that persons legitimately on the of a landlord under G.L.c. 186, §19 to that the tenant cannot send a notice to Trust. premises were not subject to unreason- exercise reasonable care to correct an the landlord of an unsafe condition, then It is a basic principal of property law able risk of harm. The reasons behind the unsafe condition described in a written the lease provisions would effectively that when a third party is injured court’s change in the law were based on notice from a tenant applies to com- constitute a waiver of Section 19, which on rented real estate, the recognition that the residential ten- mercial leases. This particular statute was is not permitted by the terms of the stat- the liability ant is typically in a weaker bargaining enacted in 1972, but had never been in- ute. By assuming that the tenant was re- position than his landlord, his tenancy terpreted by the courts in the almost 40 sponsible for the repair and maintenance is often brief and he generally lacks years it was on the books. of the demised premises but that §19 The statute provides that a landlord still required the landlord to respond to of any real estate (except an owner-oc- the letter from the tenant of an unsafe cupied two- or three-family dwelling) condition in the premises and correct within a reasonable time after receipt the same, the SJC created the very prob- of a written notice from a tenant of an lem that it avoided when it refused to unsafe condition, not caused by the ten- extend the Garwacki rule for residential ant, his invitee or anyone occupying under tenancies to commercial leases. the tenant, shall exercise reasonable care The Garwacki rule is workable for to correct the unsafe condition. If land- residential tenancies because all resi- lord fails to correct the unsafe condition dential leases are used for habitation, so within a reasonable time, the landlord a landlord can determine if there is an could be liable in tort for any injury to unsafe condition on the leased premises. the tenant or any person on the tenant’s When you shift to commercial leas- premises. See LEASING DECISION page 11 Understanding the Massachusetts condominium conversion law

BY SAUL J. FELDMAN a master deed and of the owner’s intent to Relocation payments: $750 for the Municipalities may regulate conver- terminate their tenancy and their rights tenant, unless tenant is a “protected ten- sions even without a condominium con- The burgeon- under Chapter 527. Most tenants have ant,” in which case it is 1,000. This is a version ordinance or by-Law ing number of rental one year before they must leave. Three mandatory payment. A municipality might not have a apartment buildings categories of tenants have longer: Handi- Penalties: Fine of not less than separate ordinance or by-law covering now under construc- capped tenants; elderly tenants (over 62); $1,000 or imprisonment of not less than condominium conversions. However, a tion in Massachusetts and low or moderate income tenants. 60 days. municipality, under enabling legislation, may be followed by a These protected classes have two years Chapter 527 prohibits evictions for may provide that if a special permit has wave of condominium or longer (up to two more years) if they the purpose of converting a building to to be obtained from the special permit conversions after the cannot find comparable rental housing in condominiums. However, a tenant may granting authority to build more than a Saul Feldman condominium market the same municipality. be evicted for any violation of the lease, certain minimum number of units, con- revives. A tenant is protected if there is merely including non-payment of rent, provided version to condominiums may not occur Developers of an intent to convert. For example: a mas- that this is not merely a pretext for a con- without obtaining an additional special these apartment buildings should be ter deed is prepared, Purchase and Sale dominium conversion eviction. permit from the special permit granting aware of the Massachusetts Condomini- Agreements are prepared, there are in- authority. Therefore, conversions in such um Conversion Law (Chapter 527 of the spections, measurements, surveys, show- LOCAL ORDINANCES OR a municipality clearly are governed by Acts of 1983). ings, advertising, etc. BY-LAWS Chapter 527 and would also be governed This article covers three topics: first, Buildings of less than four residential by the requirement of an additional spe- the Massachusetts condominium conver- units are exempt. In determining whether In addition to Boston, the following cial permit! sion statute, Chapter 527 of the Acts of the four units minimum is met, units in municipalities have adopted by-laws or 1983; second, the by-laws or ordinances two adjacent buildings with common ordinances: Abington, Acton, Amherst, THE FUTURE regulating condominium conversions by ownership will be added together. Brookline, Haverhill, Lexington, Malden, local Massachusetts cities or towns; and A limit on rent increases: consumer Marlborough, New Bedford, Newbury- Today’s weak condominium market third, the regulation of condominium price index or 10 percent, whichever is port and Somerville. Just to complicate has caused some developers to deliber- conversions by a city or town that does greater. things, a few of these municipalities have ately reserve a part of a building to rent- not have a special condominium ordi- Tenant’s right to purchase: a tenant statements in the ordinances or by-laws als while selling the balance of the build- nance or by-law, but has been granted has a 90-day period to purchase on the that specifically state that Chapter 527 ing as condominiums. Chapter 527 will special enabling authority in a narrow same terms as or more favorable terms as and the local ordinance or by-law both apply to this type of building when the context as to conversions. those which will be extended to the gen- apply to condominium conversions. A market turns around and the developer eral public. I have had tenants execute a municipality may adopt a more-stringent wants to sell off the rental part of the THE STATUTE waiver of the tenant’s right to purchase or less-stringent law than Chapter 527. building. Developers anticipating that a rental unit. The tenant, in the waiver, For example, the Boston ordinance they may want to start selling units again The Massachusetts Condominium acknowledges that he received a pur- gives elderly, handicapped and low in- may want to allow more vacancies in or- Conversion Law applies to every munici- chase and sale agreement executed by the come tenants five years, but says that the der to be able to sell units free of tenant pality in Massachusetts unless a munici- owner of the apartment building and that notice period may be extended by future interference. pality has adopted its own ordinance or he was notified that the terms and condi- legislation, possibly leading to indefi- by-law covering condominium conver- tions of the agreement were substantially nite protection. While its intentions are Saul Feldman is co-principal of the Law Of- sions. the same as or more favorable than the laudable, the Boston ordinance may lead fices of Feldman & Feldman, P.C., which spe- A moratorium against evictions: The terms and conditions which will be of- owners to try not to rent to such people cializes in real estate and condominium law. converter must notify tenants by delivery, fered to the general public during the 90- if the owner intends at some point in the Contact him at 617 523-1825 or by email at certified or registered mail, of the filing of day purchase period. future to convert the building. [email protected]. SEPTEMBER 2012 REBAnews PAGE 11 Recent decisions rapidly changing foreclosure fi eld

CONTINUED FROM PAGE 9 of the fi rst publication of the notice of is the holder of the note (or its autho- proof of the note ownership only as to addressing all of such concerns (titles sale. rized agent). Prior to the publishing of the foreclosures commenced on or after aff ected by the Ibanez decision, for ex- the notice of foreclosure sale, the credi- that date. As to the foreclosures com- ample, continue to languish without a COMPLICATIONS OF EATON tor will have to record an affi davit of menced between June 22, 2012 (the comprehensive solution), nevertheless compliance with this section based on date of the Eaton decision), and Nov. 1, manifests the importance of REBA to Th eEaton case was decided by the its review of its business records. Th is 2012, confusion continues to reign. continue its position of leadership in SJC almost simultaneously with the affi davit is also conclusive in favor of In the coming months and years, this ongoing process. passage of the act. While the court in third party purchasers that the credi- as foreclosures continue to occur with the Eaton case defi ned mortgagee as tor has complied with the provisions of alarming regularity, challenges to the Currently vice president and special coun- the party who holds the mortgage and Section 35C. Like Section 35B, Section existing procedures will undoubtedly sel, Gene Gurvits has served First American either holds the note or acts on behalf 35C also goes on to specifi cally state result in more court decisions that will Title Insurance Company in various under- of the holder, it did not clarify how the that “the arm’s-length third party pur- surprise the conveyancing bar and chal- writing positions for 25 years. REBA Presi- record title should refl ect the identity of chaser for value relying on such affi da- lenge our understanding of the law. It dent Chris Pitt recently appointed Gene to the holder of the unrecorded note. vit shall not be liable for any failure of becomes more critical for us to main- a three-person working group to coordinate Another new section of the fore- the foreclosing party to comply and ti- tain a dialogue with the legislature to and articulate the association’s position on closure statute added by the act puts tle to the real property thereby acquired ensure that our concerns for the integ- foreclosure legislation in the recently-con- much-needed clarity into the situation. shall not be set aside on account of such rity of real estate titles do not get lost cluded two-year session of the legislature. Section 35C of Chapter 244 requires failure.” As the eff ective date of the act in the tug of war between the lenders Gene can be contacted by email at ggurvits@ the creditor to certify that the creditor is Nov. 1, the affi davit will be conclusive and the mortgagors. Th e act, while not fi rstam.com. EDA addresses commercial landlord injury issues

CONTINUED FROM PAGE 10 es, the range of tenant uses can be in- business, cannot be reasonably expected it could be the landlord’s as well as the maintenance and liability provisions of fi nite. How is a landlord to know what to insure that any OSHA requirements tenant’s. the lease being negotiated. Th is amend- is an unsafe condition for retail use ver- applicable to a tenant’s workplace are Th e new Economic Development ment restores the basic principles of sus storage use versus offi ce use versus being satisfi ed, so how does a landlord Act simply amended one sentence in freedom of contract and the commercial manufacturing use versus research and comply with a §19 letter in these situ- Section 19 by adding three words so as to certainty that are necessary to a robust development use? It is up to a tenant ations? read: “Any waiver of this provision in any business climate in the commonwealth, to provide a safe working environment Th e upshot of the Bishop case was lease or other rental agreement for resi- which the SJC Bishop case had impaired. for its employees, and the tenant is in a to completely muddy up the simple test dential use shall be void and unenforce- much better position than the landlord that whomever controls the area where able.” Th is simple amendment will now Ed Bloom is partner in the real estate de- to decide what repair and safety require- an injury occurs is the party with liabil- allow commercial landlords and tenants partment at Sherin and Lodgen, and the im- ments are necessary for its own business ity. If it occurred in the demised premises (but not residential landlords and ten- mediate past president of Real Estate Bar operations. A landlord, who is really an of a commercial tenant, the liability was ants) the freedom to negotiate whether Association of Massachusetts. He can be outsider to the way a tenant operates its almost always the tenant’s. After Bishop, or not c.186, §19 will apply to the repair, reachde at [email protected].

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M.I.T.E.A. www.northernne.fntic.comwww.northernne.fntic.com www.northernne.fntic.comwww.northernne.fntic.com PAGE 12 REBAnews SEPTEMBER 2012

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