Articles by Goldman & Pease

NEWS ALERT FOR AIR BNB RENTALS

On June 13, 2018, the Boston City Council passed a new Ordinance that will prohibit investors from engaging in short-term rentals of their units. Homeowners, on the other hand, will still be allowed to rent out their homes by the night, and owner-occupants of two-family and three-family houses will be permitted to rent out one unit.

airbnbThe short-term rental business is rapidly growing in Boston, and websites such as Airbnb are becoming increasingly popular. As a result, more and more homes are being rented to tourists for short periods of time rather than to tenants on a traditional 12-month lease. The new rules limiting short-term rentals are an attempt to make more units available in the tight housing market.  Over 2000 units were estimated to have been removed from normal rentals due to the profitability of the short- term rentals and the new Ordinance sought to bring those rental units back to the market for normal rentals.

The new rules go into effect on January 1, 2019. However, the regulations will not apply to current short-term rental hosts until September 2019. Policing who is an investor and who is an owner will be a challenge for the City of Boston.  Other large cities, such as Brookline and Cambridge, may also enact restrictive ordinances to limit investors to buy and use their real estate for short term rentals.

For more information, please read this article from the Boston Globe.

Shared Living in the Small Condominium Setting: Rights and Obligations of Unit Owners and Trustees

By Howard Goldman –

With the rising cost of real estate and lack of affordable housing in many communities, people are searching for ways to maximize their investment through shared living. Whether it be by including an in-law suite for an aging parent, a basement apartment for a long-term tenant or sprucing up a guest room to rent via AirBnB, many homeowners are embracing shared living as the way of the future.

Room for rentShared living arrangements provide many benefits to individual homeowners but may be bothersome to neighbors who are worried about health and safety, parking, and security risks. These concerns are compounded in the condominium setting where there are so many people living in a condensed area.

Recently, Goldman & Pease has handled a number of disputes arising out of shared living arrangements in smaller condominiums that are self-managed.  This article will discuss issues related to shared living arrangements in the condominium context and the rights and obligations of unit owners and trustees with respect to striking a balance between allowing unit owners freedom to use their homes as they see fit and protecting the condominium community from the risks associated with certain shared living arrangements. [Read more…]

Condominium Meeting Minute Guidelines

This article will discuss policies and protocol for taking and retaining board meeting minutes. It will explain what must be included, what can be included, and what should not be included in minutes. Included should be information on who has access to full minutes, where and for how long records should be stored, etc.

Questions to answer:

Who should be taking minutes at Board meetings? Does it always work out that way, or does someone else (like the manager) end up doing it? Why is it the responsibility of the named person – what’s the reasoning?

The Condominium Documents are often unclear on who is the person responsible for taking minutes at a Board meeting. Obviously, in a condominium where the Trustees hold positions such as President, Vice President, Secretary and Treasurer, it would be the Secretary’s responsibility to take the meeting minutes. Often, however, Condominium Boards, especially in smaller condominium communities, do not require that the Trustees hold certain elected positions and the Trustees tend to take on responsibilities based on their own personal strengths. For example, a Trustee who is an accountant may volunteer to keep the financial records of the Condominium, and a very organized Trustee may volunteer to take the meeting minutes. If the property manager attends the board meeting, they may end up taking the meeting minutes.

What should be included in minutes? Actions? Discussions? Comments? Direct quotes?

Massachusetts General Laws do not have a requirement that meeting minutes must be kept, and many Condominiums do not have a requirement for keeping meeting minutes. Whether to keep detailed meeting minutes is a complicated decision that should be weighed by the Condominium Trust. On one hand, keeping detailed meeting minutes provides the Trust a record of what agenda items were discussed and how each board member voted on a particular issue. Meeting minutes allow new board members to get up to speed on pending and past issues and ensure both board members and unit owners have access to the same information which promotes an open and ongoing dialogue and could encourage more people to become involved in the condominium management. On the other hand, all meeting minutes automatically become part of the condominium books and records, which must be made available to unit owners upon request. These meeting minutes could open the Condominium up for litigation against it by a unit owner who is not in agreement with the majority of the board. For example, if a condominium had many unit owners raise an issue of slippery stairs due to insufficient snow removal or slippery conditions in the lobby on a rainy day, and those complaints were logged in the minutes, that could open the condominium up for liability in a future slip and fall lawsuit because it would be evidence showing the condominium had prior notice of unsafe conditions. [Read more…]

Real Estate Legal Update 2018

By Howard Goldman –

      I.            Introduction

Changes resulting from the Tax Cuts and Jobs Act of 2018, may make this new tax year a true game changer for the real estate market.  Our update prepares you with an understanding of the key changes and how they affect the real estate market.

Looking at buying a new property?  In the digital age, emails and texts can blur the lines between informal communications and a formal contract.  Follow the Five Commandments of texting and emailing to become tech-communication savvy and avoid legal pitfalls.

Zoning board approvals are a vital point to consider when buying or selling a property you plan to tear down.  Don’t get zoned out: Use our five-point checklist to make sure you meet all the legal requirements.

   II.            Tax Cuts and Jobs Act of 2018

TaxWith the recent passage of the Tax Cuts and Jobs Act of 2018, there is much concern as to how it affects Real Estate.  Let’s examine two questions:

  1. What are some key changes?
  2. How will they affect the real estate market?

[Read more…]

Commercial Real Estate Leases: Planning Ahead for Early Termination

November1-17Long term leases of commercial real estate offer landlords a steady and reliable stream of income and provide tenants with an established business presence in a particular neighborhood. However, those benefits may be short lived in the event of an early termination of the lease.

Early terminations are typically caused by tenants who default under lease provisions but they may also be caused by landlords who choose to sell the property during the term of the lease. This article will address the ways landlords and tenants may protect themselves at the inception of the lease.

Commercial Landlords:  Rent Acceleration Clauses

Where an early termination results from a tenant’s default under the terms of the lease, the landlord is faced with the difficult task of re-letting the space to a new tenant.

A number of factors may influence the length of time that the commercial space remains vacant, including but not limited to, current market trends, the location of the space, and whether improvements were made to the space for the benefit of the long-term tenant that make the space more or less desirable to new tenants.  Thus, at the inception of the lease, it is important for landlords to take care to protect their interest in the event of a default by a tenant.

One of the best ways for landlords to protect their interests in the event of default by a long-term tenant is to include a liquidated damages clause in the lease.  Liquidated damages clauses specify a predetermined amount of money that must be paid in the event of a breach of the lease.  In the commercial lease context, a liquidated damages clause may provide for an acceleration of future rents owed following the early termination of the lease (“Rent Acceleration Clauses”).

Rent Acceleration Clauses provide landlords with security that they will obtain the full value of the lease in the event of an early termination from the defaulting tenant.  However, from the tenant’s perspective, Rent Acceleration Clauses constitute a significant penalty to pay for early termination of a lease.

November2-17Recently, Goldman & Pease represented a franchisor in a case where a franchisee tenant defaulted in a lease that contained a Rent Acceleration Clause, resulting in over $1 million owed to the landlord.  Even though the franchisor was not a party to the lease, the franchisor took significant steps to mitigate the landlord’s damages because the franchisor had an interest in maintaining its business presence at the leased premises.  [Read more…]

Real Estate in the Digital Age

Preventing the Simple Email or Text from Becoming a Formal Contract

I. Introduction

home-for-saleGone are the days when parties brokering a real estate transaction entered into a
formal, written contract by first reaching for paper and ink. Today, a cell phone and a
zealous broker is all that it may take to enter into a binding agreement. The ubiquity of technology has made communications via email and text message both convenient and now, with recent case law, potentially risky. In a mere click, tap or swipe a person who believes that she or he may be having a casual or conversation or negotiating a better deal, may end up with a lawsuit instead.

II. Examining the Offer and Acceptance

In the significant McCarthy v. Tobin case, the Supreme Judicial Court (SJC) of Massachusetts upheld an Appeals Court decision that a buyer’s offer to purchase was a firm offer that became a binding contract the moment it was accepted by the seller. The SJC ruled that the Purchase and Sale Agreement amounted to a mere memorandum of the already binding contract, since the parties had already agreed on the material terms within the offer to purchase.

In contrast to McCarthy, the Massachusetts Land Court in the Singer v. Adamson case held that an email communication between a potential buyer and the seller’s broker did not meet the requirements of the Statute of Frauds, due to the generic nature of the email, and the lack of such previous communications between the parties. As such, though a legally binding offer and acceptance can be made via email, it must include the material terms of the offer, and overall indicate that a valid offer and acceptance is the intention of the parties. [Read more…]

Drones Take Off: What Condo Leaders Need to Know

By:  Howard S. Goldman, Esq.

I. Introduction

droneDrones are no longer the military robots or science fiction creations that we once imagined them to be. In fact, in 2016, according to the Consumer Technology Association, an estimated 3 million drones were purchased for use by hobbyists and businesses alike. Non-military drones are generally used either commercially or by hobbyists. All drone usage is regulated by the Federal Aviation Administration, or FAA, but hobbyists are only required to obtain a $5 registration, and can be as young as 13 years old. Businesses operating small drones are regulated by stricter standards.

II. Drones and the Law: An Overview

The FAA’s rules regulating drone usage are known as “part 107”. Under part 107, all drones must be registered if they weigh between .55 and 55 lbs. Drones over 55 lbs. must be registered through the FAA’s Aircraft Registry.

In Massachusetts, commercial drone operators must be 17 years old, be certified to fly a drone by the FAA, stay out of airport space and other controlled airspace, operate during daylight hours only, fly no more than 400 feet above the ground at no more than 100 miles per hour, and not fly over any person not directly involved in flying the drone.

Several federal bills have been proposed to help regulate drone usage. These have all been within the privacy rights and expectations of privacy guaranteed under the Fourth Amendment, and would create a much stricter standard for everyday drone usage. [Read more…]

Condominium Insurance: Waiver of Subrogation

I. Introduction

water-condoImagine arriving home to your condominium after a long day of work, opening the door to your unit, and being confronted with several inches of standing water. You enter your unit to the sound of dripping and look up to see that the ceiling in your living room is completely saturated with water. Upon further investigation, you discover that a leaking water supply valve in your upstairs neighbor’s unit has caused the serious water damage.

Who is responsible for the costs to repair the damage?

II. Condominium Insurance

Condominium ownership is unique in that it involves competing interests in real estate. Each condominium unit owner enjoys complete ownership of his or her unit and a shared interest, along with all of the other unit owners, in the condominium building and common areas. Typically, a portion of each unit owner’s monthly condo fee is used to pay for the condominium association’s insurance policy, which covers the condominium building, commonly owned property and liability insurance for the association (“Master Policy”).

However, the Master Policy does not usually cover damage to the interior of a unit. The Master Policy typically doesn’t cover damage to the unit owner’s personal possessions and liability for damage to other units .

Many unit owners, therefore, elect to purchase a separate insurance policy – often referred to as an H06 policy – which covers losses to any personal property and any structure and damages to any fixtures or upgrades added by the unit owner since the move-in date (“H06 Policy”).

In fact, more and more condominium associations have amended their By-laws to require each unit owner to purchase an H06 Policy in order to ensure that the unit owner will be reimbursed for damage to the unit, regardless of fault. Requiring unit owners to purchase an individual H06 Policy for the unit is especially beneficial in the scenario where the cost to repair damage to an individual unit is less than the deductible on the Master Policy. [Read more…]

Unit Owner Voting

Question:  

For the annual meeting, there are seven people running for five positions. The management company sent a proxy to all owners and requested that it either be mailed to them or dropped in the mailbox in the building lobby. This mailbox is accessed by current board members and items reviewed. Is this ethical to have those members who are on the ballot, receiving them and reviewing them before the meeting?

Answer:

ballot-box           Unit owner voting at annual or specially held meetings is subject to various rules and regulations.  Chief among the regulations is that a quorum, being a majority of all unit owners, must participate in order to have a binding resolution. Obtaining the quorum is difficult due to unit owner apathy, and to overcome this, the condo documents permit voting by proxy.  But the proxy documentation should be authenticated by either signature of an attesting witness and/or by notarization.  Such proxies should be of a limited duration and may authorize voting on the unit owner’s behalf for any and all matters (i.e. vote on all matters presented) or be restricted to vote on a specific matter only (i.e. vote for candidate X).

The question posited does not disclose whether the completed proxies are general or specific in nature, whether a specific person is designated to vote on behalf of the unit owner, or whether such proxies have been authorized by a unit owner or by a notary public.  Regardless, Associations are active, functioning governing bodies that must be flexible for requirements of its unit owner members to facilitate decision making, such as “dropping off the proxy at the mail box.”   Such drop-off process would be aided by adding ‘Confidential/For Management Only” and delivered in a sealed envelope.  Board elections can be contentious and personal, so Associations would be well advised to designate the management company to act as the independent party to directly oversee election results.

Required Deleading in Condominiums and Rental Properties

What Owners, Landlords, and Property Managers Need to Know

By: Howard S. Goldman, Esq.

While lead-based paint, having been banned in 1978, may seem like a distant memory for most of us, the presence of lead-based paint in older condominiums and apartment buildings poses some very real challenges for landlords and property managers today. The state and federal laws with respect to lead-based paint set up a strict set of rules for residential property owners and managers which must be adhered to closely in order to avoid large fines and other potential legal ramifications.

hazardThe lead-based paint laws (“Lead Laws”) require that lead paint hazards must be remediated in residences built before 1978 if a child under six years old lives there. The process of lead remediation (“deleading”) requires that a certified lead inspector perform an evaluation of the residence and thereafter certain discovered lead paint hazards must be deleaded in accordance with the Lead Laws. The remedy varies depending on the type of surface that is found to contain lead and the concentration of lead on that surface. Not all lead paint requires deleading. In general, surfaces which are impacted, such as window sills and door frames, along with surfaces that can be accessed by a small child must be deleaded only if the lead concentration is higher than 1.0 mg/cm2. Lead hazards on other surfaces, such as metal or those which are impossible to be accessed by children, only need to be made intact so that paint chips and dust do not contaminate the residence— for these no deleading is required.

These requirements pose a variety of problems for property owners and managers. In addition to the requirements of deleading, the Lead Laws also prevent any landlord or property manager from evicting or refusing to rent to a family that has a child under the age of six. This provision was added to the law to prevent housing discrimination. Landlords who are found to be in violation of this provision can be subjected to significant financial penalties. [Read more…]

Estate Planning – Is it for you?

By Howard S. Goldman, Esq.

Some people think that estate planning is only for wealthy individuals subject to large taxes. But minimizing estate tax liability is only one reason for estate planning. Consider these six additional reasons for completing an estate plan:

1. Determining who shall receive a share of your assets;
2. Deciding how and when your beneficiaries shall receive their inheritance;
3. Selecting an executor for your estate and a guardian for your children:
4. Providing for the orderly continuance or sale of your family business;
5. Creating a living trust; and,
6. Planning in case of your permanent disability.

In the absence of a valid executed will, state laws determine who inherits your assets and when they receive them. Further, the Probate Court will appoint a guardian for your children and an administrator for your estate. Accordingly, your wishes will not control disposition of your own estate and your estate may incur unnecessary taxes and administrative costs. [Read more…]

Occupancy Restrictions in Condominiums

familyWhen my wife and I bought our condominium a few years ago we had only one child. Now we have three kids and our condo board says that the bylaws limit the number of people in a unit to two per bedroom. While this is not the ideal situation for our family, we cannot afford to move to a bigger home at this time. My kids are small and they don’t cause any problems. Can the board enforce this bylaw and make us sell our home?

Answer:

You are right to explore all of your rights as a condominium owner with respect to these enforcement issues. This is a complicated question without a clear cut answer.

The condominium board does have the authority to enforce any rules set forth in the condominium documents (ie the Master Deed, Declaration of Trust, Bylaws and Rules and Regulations). Therefore, if the condominium documents include an “occupancy restriction” or a limit on the number of occupants allowed to reside in each bedroom, the board has the authority to enforce it. Legitimate reasons for enacting and enforcing such a restriction are to ensure that the building septic system can handle the needs of all of its residents, and to ensure the building is in compliance with city and state building and sanitary codes. In Massachusetts, for example, 105 MCR 410:400, the state sanitary code, requires 150 square feet of living space for the first occupant and at least 100 square feet for additional occupants. [Read more…]

Condominium Unit Rental Restrictions and Bans: Pros, Cons and Considerations

By: Howard S. Goldman, Esq. and Rebecca A. Erlichman, Esq.

The issue of how to handle condominium unit rentals is one that remains relevant to all condominium associations. It is up to the condominium association to protect the interests of all of the unit owners – both those who want to avoid an undue concentration of tenants to protect the character of the community and those who wish to rent out their units.

CondosThere are pros and cons to allowing rentals. Tenants are more likely to abuse common areas and amenities, violate condominium association rules, and be less conscientious caretakers of the units they occupy as compared to homeowners. A large concentration of tenants will significantly change the nature of a condominium community and could potentially lower the market price and affect the ability of owners to refinance. On the other hand, however, certain condominium unit owners value the ability to rent out units as a financial investment and want the flexibility of being able to rent out the unit during a short term geographical relocation.

Whether the condominium association chooses to ban rentals altogether, or allows them, it is clear that the bylaws should containing language pertaining to rentals to clarify the rules and avoid conflict. This article will discuss a number of factors condominium associations should consider with respect to updating its bylaws to address the issue of tenants.

Condominium Associations Have Authority to Implement New Rules on Rentals

In general, condominium associations have broad latitude to create rules and regulations intended to better the community. These broad powers emerge from the basic notion of condominium ownership: in exchange for the benefits of association with one’s neighbors, an owner “must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property.” Where use restrictions are placed on unit owners, such measures of control must be contained within the condominium’s master deed or by-laws and not its rules and regulations. Johnson v. Keith, 368 Mass. 316, 320 (1975); M.G.L. 183A § 8(g) (requiring that restrictions on the use of condominium buildings be contained within the master deed); M.G.L. 183A § 11(e) (requiring that use restrictions not detailed in the master deed be contained in the by-laws). See Granby Heights Association, Inc. v. Dean, 38 Mass. App. Ct. 266 (1995) (where a condominium rule against pets was ruled invalid because it was not contained within the by-laws or master deed). [Read more…]

The Rise Of Airbnb: What Condominium Associations Need To Know About Short Term Rentals

I. Introduction

airbnbInstances of home-sharing or short term rentals have skyrocketed in recent years due to the rise in popularity of websites such as Airbnb.com, homeaway.com and vrbo.com. For a small fee, these websites connect homeowners with potential renters who are interested in finding a place to stay for as little as one night at a time. Homeowners can make a significant profit by allowing renters nightly use of their entire home or even a single bedroom therein, especially in major cities like Boston where nightly rates of hotel rooms are expensive and heavily taxed. But conflicts arise when the homeowner is the owner of a condominium unit because the unit owner’s decision to rent out all or a portion of the unit impacts all of the residents of the condominium and may not be permitted under the condominium bylaws.

II. Condominium Associations Should Be Wary of Short Term Rentals

The rise in use of Airbnb.com and similar websites raises significant concerns for condominium boards, unit owners and property managers. First, there is the issue of safety within a shared living space. When a condominium unit is rented, the renter gains access to common area facilities such as common hallways, gymnasiums, rooftops and lobbies. The Airbnb.com renters are not responsible for paying common area maintenance fees, create excessive water usage, and may misuse shared equipment or otherwise take advantage of amenities reserved for homeowners. These communally accessible areas of the condominium then lose their exclusivity and other unit owners may even feel threatened by the presence of strangers in their space who most often are uninformed of the specific rules surrounding the use thereof.

There are also the issues of noise and pollution. Residential condominiums in urban areas are often rented to tourists who are on vacation and may stay up late, play loud music and engage in illicit activities, such as smoking, while staying at the unit. These activities are generally subject to fines, but transient renters will be gone by the time the fine is issued and, therefore, be more likely to engage in disruptive activities.paid-slip-and-fall-image [Read more…]

Risky Business: Why Employers Should Beware of Hiring Independent Contractors

I. Introduction

FreelanceOver the past several decades, the number of employers hiring independent contractors, consultants, freelancers, temps, part-timers, and contingent employees has increased significantly. Hiring independent contractors tends to provide employers with substantial financial savings, flexibility in staffing projects and greater efficiency due to the specialized expertise of the worker. Additionally, many workers prefer independent contract work because they reject the traditional 9-5, long-term employment under one employer in favor of the flexibility, diversity and freedom that comes with working as an independent contractor.

Notwithstanding the many benefits of the independent contractor relationship to both the employer and the worker, employers must be cautious when classifying a worker as an independent contractor. Serious civil liability may result from misclassifying workers as independent contractors under Massachusetts wage and hour laws, including mandatory treble damages and attorneys’ fees, costs and interest.

II. The Independent Contractor Statute – M.G.L. c. 149, § 148B

Like many states, Massachusetts has enacted legislation defining which workers may properly be classified as independent contractors, M.G.L. 149, § 148B (“Independent Contractor Statute”). Under Massachusetts Independent Contractor statute, a worker is presumed to be an employee, unless the employer can prove that the worker:

  1. Is free form the employer’s control and direction in connection with the performance of services;
  2. Performs services outside the usual course of business of the employer; and
  3. Customarily engages in an independently established trade, occupation, profession or business.

Unless a worker meets all three of these rigid requirements, the Independent Contractor Statute classifies such worker as an “employee” for purposes of Massachusetts wage and hour laws, regardless of whether the worker prefers to be classified as an independent contractor. [Read more…]