This article appeared in the July 1999 issue of the
© 1999 Massachusetts Bar Association
Paula M.Devereaux is a partner in the Boston firm of Rubin & Rudman where sheconcentrates in commercial real estate. She is council member of theMassachusetts Bar Association Property Law Section, an editor for SectionReview, and a member of the Massachusetts IOLTA Committee and New England Womenin Real Estate.
Between July 1998 and March 1999, the MassachusettsSupreme Judicial Court and the Appeals Court issued a number of decisions thatare of interest to real estate lawyers. I have attempted to highlightnoteworthy decisions that affect real estate law, however, my choices arearbitrary, and the following discussion may omit types of cases which relate toreal estate law (e.g., eminent domain, tax appeals and environmental cases).This discussion is not meant to be an authoritative analysis of the decisions,just a synopsis of the case and decision.
Landlord and tenant law Peterson v. Silva This was a busy practice area for both courts. In Petersonv. Silva, 428 Mass. 751 (1999), the SJC had occasion to review the issue oftenant negligence. The plaintiff's insurance company alleged that thedefendant tenants negligently started a fire in a residential apartmentbuilding. The question presented in this case is whether, under what appears tobe fairly standard indemnification provisions in a written lease, the insurancecompany could recover from the tenants based on a negligence theory. The courtheld that the insurance company could not recover from the tenants and that thegeneral indemnification language contained in a lease does not cover this sortof liability. "Absent an express provision in a lease establishing atenant's liability for loss from a negligently started fire, thelandlord's insurance is deemed to be held for the mutual benefit of bothparties." Id. at 753.
Boston Housing Authority v. Bell The SJC reviewed Boston Housing Authority evictionpractices in two cases, each with a different outcome. In Boston HousingAuthority v. Bell, 428 Mass. 108 (1998), the BHA sought to evict a tenantbecause the tenant's son had assaulted a BHA police officer while thatofficer was making an arrest. The lease contained language that allowed thetermination of a tenancy if a member of a tenant's household threatenedthe health or safety of a BHA employee. The court concluded, "a tenantshould not be evicted if special circumstances negate the inference that shecould have averted the lease violation." Id. at 110. Thus, if the tenantshowed that she could not have foreseen the violation, the BHA had no cause toevict.
In Boston Housing Authority v. Cassio, 428 Mass. 112(1998), the court allowed an eviction because the tenant had signed an agreementfor judgment in an eviction action in Boston Housing Court, which provided thatthe tenant would "assure that all household members, including but notlimited to [tenant's daughter], will refrain from harassment of otherindividuals lawfully on BHA property." Id. at 113. The courtdistinguished the Bell case because, in this case, the language under which theBHA sought to evict the tenant was not contained in the lease, but in anagreement for judgement filed and approved by the Housing Court.
Rizika v. Donovan Rizika v. Donovan, 45 Mass. App. Ct. 159, cert. denied,428 Mass. 1104 (1998), involved negotiations between the plaintiff landlord andthe defendant tenant. The tenant had agreed, in a written term sheet, to leasecertain space in the property located at 600 Memorial Drive in Cambridge, whichthe landlord was negotiating to buy. The landlord and tenant executed a leaseterm sheet detailing the major business points of the lease including therental amounts, the improvement allowance, the expansion option, and a term ofat least 10 years. The tenant then informed the landlord that it would not gothrough with the deal because by then the tenant was itself negotiating for thepurchase of 600 Memorial Drive.
The jury found that the executed lease term sheetcontained the major business terms for the lease and was thus binding. However,the Superior Court judge found that because the term sheet omitted an essentialterm—the ownership of the property—enforcement was barred by theStatute of Frauds.
The Appeals Court disagreed and held that the term sheetwas enforceable. Although the term sheet made no reference to the ownership ofthe 600 Memorial Drive property and had no contingency if the landlord couldnot purchase the property, the court found that the landlord was asophisticated buyer who could assume the risk of liability to the tenant if thedeal for the property did not go through. "We conclude that a party maybind itself to lease property that it does not own, taking the risk of liabilityfor damages to the tenant should it not acquire ownership of the leasedpremises by the time of the commencement date of the lease." Id. at 160.
Tamber v. Desrochers The Appeals Court also had the opportunity in 1998 toreview matters relating to the appeal bond mandated by G. L. c. 239, § 5in summary process actions. In Tamber v. Desrochers, 45 Mass. App. Ct. 234(1998), both a District Court and a Superior Court judge denied atenant's application to waive the appeal bond required by the statutewithout an explanation of the judge's findings.
The Appeals Court held that the Superior Court must makesome findings when it denies the waiver of the appeal bond. The decision alsodiscusses the evidence that needs to be brought by a tenant to show that its appealis not frivolous. In these hearings, the landlord must also offer evidence toshow that the appeal is frivolous. In this case, the lower court'sdismissal of the tenant's appeal was reversed, and the denial of themotion to waive the bond was also reversed. In Home Savings Bank of America,FSB v. Camillo, 45 Mass. App. Ct. 910 (1998) (rescript), the Appeals Court,citing the Tamber case, reversed the denial of a waiver of the appeal bond in asummary process action. The court once again reviewed the factors involved indetermining the frivolousness of an appeal and determined that frivolousnessmust equal futility. In this case, the owner was being evicted afterforeclosure. The defendant owner/tenant alleged that the appeal was notfrivolous because the bank had amended the foreclosure language in the mortgageand various courts had differed in the interpretation of this amendment.Because the interpretation question could affect of the propriety of theforeclosure, and the summary process action brought by the bank to evict theowner, the Appeals Court held that this was enough evidence to show that theappeal was not frivolous.
Tuchinsky v. Beacon Property Management Corporation In Tuchinsky v. Beacon Property Management Corporation, 45Mass. App. Ct. 469 (1998), cert. denied, 428 Mass. 1106 (1998), the plaintiffwas an employee of a tenant in a building managed by the defendant. Theplaintiff sued both the defendant property manager and the owner of thebuilding because the plaintiff was injured in a doorway area, in a space foundto be part of the leased premises, not a part of the common area. The plaintiffsued under the novel theory that the landlord had negligently given its priorwritten consent to alterations and construction proposed by a tenant whichaffected this area. The court found that the defendant had no duty to theplaintiff through the approval of the construction plans and alternatively hadno duty because the tenant had neglected to make certain repairs. Because theinjury did not occur in the common areas, and the lease provided that thelandlord had no control over the tenant's space, the defendant owner andproperty manager could not be liable to the plaintiff. Furthermore, the courtrecognized that the plaintiff sued the defendant owner and property managerbecause, if she sued her employer, she would be limited to obtainingworkers' compensation damages.
Zoning, subdivision and land use St. Botolph Citizens Committee, Inc. v. BostonRedevelopment Authority In St. Botolph Citizens Committee, Inc. v. BostonRedevelopment Authority, 429 Mass. 1 (1999), the SJC upheld various approvalsby the Boston Redevelopment Authority regarding a proposal for new residentialunits on a parcel of land in an urban renewal area of Boston. For practitionersin Boston and for those who work with urban renewal agencies, there is a gooddiscussion in this case of urban renewal agencies organized pursuant to G.L. c.121B and urban renewal corporations organized pursuant to G.L. c. 121A. Thecourt also reviewed the role of the Boston Redevelopment Authority in approvinglarge projects (in this case, Article 31 of the Boston Zoning Code, which hasbeen superseded by Article 80).
Greater Boston Real Estate Board v. City of Boston In another case involving the city of Boston, the SJC inGreater Boston Real Estate Board v. City of Boston, 428 Mass. 797 (1999),invalidated a Boston ordinance regulating condominium conversions adopted afterthe repeal of rent control.
A.F.M. Limited v. City of Medford In A.F.M. Limited v. City of Medford, 428 Mass. 1020(1998) (rescript), the SJC upheld a preliminary injunction granted by theSuperior Court which prevented Medford from enforcing its zoning bylaw whichseverely limited locations for adult bookstores, motion picture theaters andadult video stores.
Petrucci v. Board of Appeals of Westwood The Appeals Court also was busy with zoning and land usecases. In Petrucci v. Board of Appeals of Westwood, 45 Mass. App. Ct. 818(1998), cert. denied, 1999 Mass. LEXIS 87, the Appeals Court interpreted theprovisions of G.L. c. 40A, § 3 relating to the exemption from zoningregulations for child care facilities. The court, affirming a Land Courtjudgment, found that the use of a structure (formerly a barn) for childcarefacilities was exempt and, further, that certain dimensional regulations whichmight have the effect of preventing such use were unreasonable.
Adams v. Brolly In Adams v. Brolly, 46 Mass. App. Ct. 1 (1998), cert.denied, 1999 Mass. LEXIS 76, the Appeals Court held that lack of frontage on apublic way as a result of an Metropolitant District Commission land taking wassufficient basis for a variance granted by the Dedham Zoning Board of Appeals.The Appeals Court also upheld the North Attleborough Zoning Board of Appeals inMaselbas v. Zoning Board of Appeals of North Attleborough, 45 Mass. App. Ct.54, cert. denied, 428 Mass. 1103 (1998), which allowed an owner of anon-conforming structure to build a separate three car garage, swimming pooland storage space as an accessory structure.
Boulter Brothers Construction Company, Inc. v. ZoningBoard of Appeals of Norfolk In Boulter Brothers Construction Company, Inc. v. ZoningBoard of Appeals of Norfolk, 45 Mass. App. Ct. 283 (1998), the Appeals Courtreviewed a Norfolk zoning bylaw provision which regulated a lot that waslocated partially in Norfolk and partially in Millis. In 1993, Norfolk amendedits zoning bylaw to provide that a split lot (i.e., a lot located in two towns)must conform to all provisions in the Norfolk bylaws including the total lotsize requirement for that portion of the lot located in Norfolk. In this case,the bylaw required 55,000 square feet, but the portion of the lot located inNorfolk contained only 33,401 square feet. Prior versions of the bylawscontained no such split lot requirements, although the Board of Appeals arguedthat it had always interpreted the bylaws in this manner. The court agreed withthe owner that the lot was grandfathered from the change in the bylaws, becauseit had existed as a separate lot prior to the amendment.
Marlborough Savings Bank v. City of Marlborough The Appeals Court was also active with subdivision cases.In Marlborough Savings Bank v. City of Marlborough, 45 Mass. App. Ct. 250(1998), the bank acquired through foreclosure eight lots in a subdivision inwhich the road was not completed. It sued the city seeking a declaration thatit was entitled to building permits and, further, that the city was responsiblefor building the road. The court held that the bank had failed to exhaust itsadministrative remedies under G.L. c. 40A for the issuance of building permits,that the city had no duty under G.L. c. 41, § 81U to build a road, andthat the city was not a guarantor for roadway completion. In this case, thecity had used the funds held as security for the completion of the roadway tocorrect other deficiencies in the subdivision (faulty water lines) and did nothave enough money to complete the road.
Rattner v. Planning Board of West Tisbury In Rattner v. Planning Board of West Tisbury, 45 Mass.App. Ct. 8 (1998), the Appeals Court, after reviewing decisions concerningstanding in zoning cases, determined that an abutter to a proposed subdivisionwas an aggrieved party and that the defendant Planning Board had a duty toevaluate the condition of roads outside of the proposed subdivision whenreviewing the adequacy of access in a proposed subdivision plan.
Massachusetts Broken Stone Company v. Planning Board ofWeston The town of Weston kept the Appeals Court busy in 1998. InMassachusetts Broken Stone Company v. Planning Board of Weston, 45 Mass. App.Ct. 738 (1998), the Appeals Court affirmed a decision of the Land Court andfound that the Weston Planning Board had no authority to withhold approval of asubdivision plan.
However, in another case involving the same plaintiff andthe town of Weston, Massachusetts Broken Stone Company v. Town of Weston, 45Mass. App. Ct. 748 (1998), the Appeals Court reversed a Land Court decisionregarding the application of a zoning freeze to an entirely different projectfrom that which was initially proposed. This case discusses the various zoningfreezes created by G.L. c. 40A, § 6. The court concluded that thesubdivision freeze contained in § 6 freezes zoning as it applies to thesubdivision plan but does not serve to freeze zoning to the parcel as a whole.Thus, in this case, the zoning freeze was inapplicable because the later planfor which the freeze was sought bore no relation to the earlier plan. This isan extremely fact-intensive case, and I urge practitioners dealing with zoningfreeze issues to review it thoroughly.
Mortgages, financing and foreclosure SKW Real Estate Limited Partnership v. Gold In SKW Real Estate Limited Partnership v. Gold, 428 Mass.520 (1998), the defendants, general partners in a limited partnership, executedpromissory notes on behalf of the partnership, as well as separate guaranties.The notes were secured by mortgages on partnership property which wereforeclosed and resulted in a deficiency. The plaintiff brought actions againstthe guarantors separately, however, the notice required by G.L. c. 244, §17B was not given to the guarantors. The defendants argued that because theirobligations as general partners duplicated their liability as guarantors, thatthey were entitled to such notice. The Appeals Court agreed, but the SJCreversed. The SJC found the guaranties to be independent obligations separatefrom the underlying note and mortgage.
East Boston Savings Bank v. Ogan The doctrine of equitable subrogation was reviewed by theSJC in East Boston Savings Bank v. Ogan, 428 Mass. 327 (1998). In this case, asecond mortgage given to the defendant was overlooked in a sale by a priorowner (and mortgagor), and the property was sold without the defendant beingpaid. At the time of the sale, the new owner gave the plaintiff a mortgage. Thedefendant argued that it had a first mortgage, but the SJC, using the doctrineof equitable subrogation, disagreed and held that the mortgage was subject tothe new first mortgage and to the new buyer's equity. This case containsa good discussion of the principles of equitable subrogation.
Federal Deposit Insurance Corporation v. Porter In Federal Deposit Insurance Corporation v. Porter, 46Mass. App. Ct. 241 (1999), the Federal Deposit Insurance Corporation sought tohold the husband and wife beneficiaries of a nominee trust liable for thedeficiency remaining after the foreclosure of a mortgage on trust property. Thetrustee husband argued that because he signed the loan documents as trustee andinserted in the loan documents the language "and not individually,"the intent was that he not be personally liable for the loan. The Appeals Courtheld that summary judgment granted to the FDIC was not appropriate because therewere facts in question as to the intent of the parties, including whether, atthe time of the loan, the parties had intended that it be a non-recourseobligation. The court noted that in dealing with nominee trusts, liabilitygenerally may be imposed on beneficiaries but may be waived by contrarylanguage in a contract or note.
Fitzgerald v. The First National Bank of Boston In Fitzgerald v. The First National Bank of Boston, 46Mass. App. Ct. 98 (1999), the Appeals Court upheld the postponement of the foreclosuresale through public pronouncement and declined to adopt the more rigid noticeprovisions contained in In re Ruebeck, 55 B.R. 163 (D. Mass. 1985). The courtalso upheld the price obtained at sale. In another case involving foreclosure(and the lengths to which a borrower will go to stop foreclosure), MetropolitanCredit Union v. Matthes, 46 Mass. App. Ct. 326 (1999), the Appeals Courtaffirmed an order evicting a borrower who had remained in possession afterforeclosure. This case contains a review of the issues involved in foreclosure,bankruptcy and summary process.
First Federal Savings & Loan Association of Galion,Ohio v. Napoleon In First Federal Savings & Loan Association of Galion,Ohio v. Napoleon, 428 Mass. 371 (1998), the SJC determined that a debtor whohad transferred property without fair consideration violated the UniformFraudulent Conveyance Act, G.L. c. 109A (now repealed and replaced with theUniform Fraudulent Transfer Act, G.L. c. 109A 109A).
Purchase and sale agreements Kelly v. Marx The SJC recently dealt with issues which practitionershave long grappled with in dealing with agreements regarding the sale ofproperty. In Kelly v. Marx, 428 Mass. 877 (1999), the SJC reviewed theliquidated damages provision contained in a purchase and sale agreement. Thecourt declined to adopt the "second look" doctrine espoused by theAppeals Court (look to damages suffered at time of actual breach) and insteadupheld the liquidated damages provision contained in the agreement. "Thisapproach most accurately matches the expectation of the parties, who negotiateda liquidated damage amount that was fair to each side based on their uniqueconcerns and circumstances surrounding the agreement, their individual estimateof damages in event of a breach." Id. at 880. The court found that aliquidated damage provision allowing the seller to retain the deposit (5percent of the purchase price) was reasonable, even though the seller was ableto sell the property for a higher price.
McCarthy v. Tobin In McCarthy v. Tobin, 429 Mass. 84 (1999), the SJC found apreprinted offer to purchase agreement binding even though the form contained aprovision which required the execution by a certain date of the "StandardForm Purchase and Sale Agreement recommended by the Greater Boston Real EstateBoard." In this case, the defendant seller signed an offer to purchase,but before the purchase and sale agreement was signed (during its negotiation),the seller received a higher offer, accepted that offer and refused to sign thenegotiated purchase and sale agreement.
The court found that the parties had waived the date forsigning the purchase and sale agreement contained in the offer because theseller's lawyer had not provided an initial draft of the agreement untilafter the deadline, and during subsequent negotiations, "did not objectto the passage of the deadline." Id. at 89. "Once there was awaiver, time was no longer of the essence." Id. The court remanded thecase to the Superior Court for an entry of specific performance. This caseraises interesting questions and issues for lawyers dealing with offers topurchase.
Miscellaneous real estate cases Shamban v. Masidlover In Shamban v. Masidlover, 429 Mass. 50 (1999), the SJCresponded to questions certified by the U.S. District Court for the District ofMassachusetts concerning a declaration of homestead. In this case, a debtorattempted to file a homestead as a disabled person under G.L. c. 188, § 1Abut she failed to attach the Social Security Disability Award letter requiredby the statute. The court concluded that because there was no award letterfiled the declaration was not effective under § 1A (thus no $200,000exemption) but was effective under § 1 (for exemption of $100,000).
Schwachman v. Meagher Schwachman v. Meagher, 45 Mass. App. Ct. 428 (1998), dealswith a pre-1980 tenancy by the entirety. The court found that a wife could notalienate her right of survivorship in such a tenancy and that a deed signed bythe wife alone in 1993 was void.
Capodilupo v. Vozzella In Capodilupo v. Vozzella, 46 Mass. App. Ct. 224 (1999),the Appeals court found an encroachment on registered land to be de minimis andwould not order the removal of the encroaching structure. In this case, thedefendant's one-story building in Boston's North End encroachedfrom 3.6 inches to 4.8 inches onto the plaintiff's property which wasregistered land. The court found that in this case it was appropriate to expandto registered land the equitable exception to the mandatory removal of anencroaching structure.
Conclusion As you can see from a discussion of these cases, it was aninteresting year for real estate practitioners at the Appeals Court and SJC.The Appeals Court continued its tradition of dealing with many land use andzoning matters, and the SJC seemed to focus on more general aspects of realestate practice. Once again, this was a fairly arbitrary listing of noteworthycases and did not cover every case decided by each court that may affect realestate practice.