Appeals Court Holds Condominium Developer’s Lender Cannot Foreclose on Common Areas

Earlier this month, the Massachusetts Appeals Court held that a bank that loaned money to a condominium developer and gave each unit buyer a partial mortgage discharge upon purchase did not have a remaining mortgage interest in undeveloped common areas of the Condominium. Specifically, in Trustees of the Beechwood Village Condominium Trust vs. USAlliance Federal Credit Union, No. 18-P-89, the Massachusetts Appeals Court stated:

“We conclude that all of the land associated with the condominium development, including the common area, was submitted to the provisions of G.L.c. 183A, the Condominium Act (act or statute), by the master deed, and that the effect of the subsequent mortgage discharges by the relevant lenders upon the sale of each unit was to release the lenders’ mortgage interest in all of the common area . . . .The unit owners became the fee simple owners of all of the common area as tenants in common, including the undeveloped common area.”

For the full text of this important decision, please visit: https://www.mass.gov/files/documents/2019/05/15/18P0089.pdf

As a landlord, am I able to reinvest a tenant’s security deposit into my property?

security depositNo, residential landlords are not allowed to use any portion of a tenant’s security deposit during the term of the tenancy. After the tenancy has ended, the landlord can only apply the security deposit to damages to the apartment caused by the tenant (more than wear and tear) and unpaid rent.

In Massachusetts, residential landlord’s duties and responsibilities for holding/applying security deposits are governed by M.G.L. c. 186 §15B. Upon inception of a tenancy, landlords are only allowed to accept the following from a tenant:

1. First month’s rent;
2. Last month’s rent;
3. Security deposit; and,
4. Cost of purchase and installation of key and lock.

If a landlord collects security deposit from a tenant then a legally sufficient Apartment Condition Statement which conforms with the strict language of the statute must be completed and signed by the landlord and tenant at the time of move in. Moreover, landlords must keep and hold the security deposit in a separate, interest-bearing account at a bank located within the Commonwealth of Massachusetts. The prevailing interest rate of the bank holding the security deposit is deemed the property of the tenant and should be left in the account until the appropriate time. The landlord is responsible for providing certain documentation evidencing this to the tenant within 30 days after commencement of the tenancy.

During the time the tenant has possession of the apartment, a landlord cannot access these funds as they are treated as the tenant’s property. After the tenant has vacated and the landlord has inspected the apartment for damage by comparing the aforementioned Apartment Condition Statement then the landlord may retain only the portion of the security deposit that is used to: (1) repair damage caused by the tenant to the apartment, the damage must be more than normal wear and tear, and (2) recoup any unpaid rent. If the landlord is retaining the security deposit to repair damage caused by the tenant then landlord must provide specific documents to the former tenant itemizing such repairs. These documents and the remaining security deposit plus interest must be provided to the former tenant within 30 days after the tenant has moved out.

The security deposit statute is very specific and a cause for headaches among landlords. The penalties for violation can result in substantial monetary damages to the landlord. If you have any questions regarding your obligations as a landlord or if you want to ensure you have the tools you need to insulate yourself from the pitfalls of holding a security deposit, please contact our office to speak with an attorney.

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…]

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…]