Legal Updates

In a recent Massachusetts case decided in November, 2011, a real estate broker’s information in a newspaper ad and on the listing sheet, incorrectly stating the zoning classification of a property, caused the real estate broker to be held liable for misrepresentation.

After operating a hair salon in the Town of Norwell for several years, a businessman began seeking a possible site to relocate his business.  After seeing a real estate listing in a local newspaper, the businessman became interested in a property on Washington Street in Norwell.  The newspaper advertisement stated that the property was “zoned Business B.”  The businessman called the broker to inquire about the property.  He then viewed the property without the broker present.

On a second visit to the property, the businessman informed the broker that he would like to purchase a property that would accommodate a 6-station hair salon.  At this second viewing, the broker provided the businessman with a copy of the multiple listing service (MLS) listing, which she had prepared at the same time she had advertised the property in the newspaper.  The listing stated that the property was zoned as “Business B.”  The businessman also testified that the broker further informed him at the second viewing that he could purchase the property as a two-family residence and later legally convert it to a hair salon due to its commercial zoning.

A recent Massachusetts case clarifies that when an apartment is rented to four or more unrelated individuals, the law will treat that apartment building as a rooming house, thereby subjecting it to a different set of regulations.

In this case, the City of Worcester sued a landlord who was leasing his apartments to groups of students.  Although the apartments were in fact large enough to accommodate the students under the state sanitary code, the city claimed that they constituted rooming houses and were therefore prohibited.  A Housing Court judge sided with the city and ordered the landlord to discontinue renting to more than four unrelated individuals.  On appeal, the Appeals Court upheld the Housing Court’s decision and found that a landlord who leases to four or more unrelated adults is in violation of the state’s lodging house statute.

Landlords should consequently beware that by subjecting themselves to the lodging house statute, they may be violating zoning regulations.  This could, in turn, expose a landlord to additional liability in the event that a neighbor were to complain as a result of a loud party or other disturbance occurring on the premises.

Social Security Disability Insurance (SSDI) provides benefits to disabled or blind workers who are insured as a result of their work history of contributions into the Social Security trust fund. The Supplemental Security Program (SSI) is need based and pays monthly benefits to disabled individuals with very limited income and resources.  The disability definition for SSDI and SSI is the same.  In order to be entitled an individual must be unable to engage in substantial gainful activity (SGA) and the disabling conditions must have lasted or be expected to last for at least twelve months.

A dollar amount threshold is used to determine whether an individual is engaged in SGA.  For 2011, the SGA amount for individuals with disabilities, other than blindness, is $1,000.00 in earnings per month. In 2012, the SGA threshold will be $1,010.00 per month.

Social Security provides work incentives for recipients of both SSDI and SSI.  Special rules make it possible for disabled individuals to work and remain entitled to monthly payments and Medicare and Medicaid. Individuals receiving SSDI are allowed a 9 month Trial Work Period (TWP) during which they remain entitled to their full monthly benefit regardless of the amount of their earnings. Note that the monthly earnings amount used to determine whether a month counts for the TWP is not the same as the SGA threshold.  The amount used to establish whether a month counts for the trial work period is $720 per month and will remain unchanged for 2012.  Monthly payments will end if a claimant successfully completes the TWP and remains able to engage in substantial gainful activity.

Earlier this month, a Natick real estate broker was fined $41,235 by the Massachusetts Department of Environmental Protection for improper removal of asbestos.

According to the Metrowest Daily News:

The broker, David J. Oliveri, said he was not involved in the removal, though, and had been told by the contractor he hired to perform the work that they knew how to do it.

"I never saw it, touched it, nothing," he said, adding he had no financial incentive to skirt the state's regulations.

According to the DEP, Oliveri, who works for Prudential Lenmar Realty, arranged for a general contractor without an asbestos license to remove asbestos insulation from a Worcester home in February 2009.

To read the article in full, please visit: http://www.metrowestdailynews.com/archive/x432924500/Natick-realtor-fined-41-000-for-asbestos-violation#ixzz1b9AbIc7Z

We’re often asked by new business owners whether a corporation or an LLC is right for them.  Our answer is always the same – it depends entirely on your business model and what you are looking to accomplish.  There are advantages and disadvantages to both entities.  The following is a brief overview of the advantages and disadvantages of each:

Corporations

A corporation is a business entity owned by and separate from its shareholders.

Advantages

• The shareholders of a corporation are, for the most part, shielded from personal liability for the actions and obligations of the corporation.

• A corporation maintains a perpetual existence.  In other words, the death or withdrawal of a shareholder does not result in dissolution of the corporation.

• Generally, ownership of the shares of a corporation can be transferred with relative ease.

• A corporation, in many instances, can declare subchapter S status and avoid double taxation.

• The statutory and case law governing corporations is well developed and in many ways predictable.

When pursuing workers’ compensation benefits, a quick web search will provide useful information on the basic structure of the Massachusetts’ workers’ compensation statute and lost time benefits available.  Generally, an injured worker who is disabled as the result of an on the job injury is entitled to a weekly benefit equal to 60% of their gross earnings plus reasonable and necessary medical expense coverage. What about the “unadvertised benefits”?  Often times certain payment and reimbursement rights are not readily offered by the insurers responsible for such payments.

An injured worker is entitled to a mileage reimbursement at the rate of 45 cents per mile for travel to and from doctors’ visits, surgical procedures, testing, physical therapy and the like.  Over the life of a claim involving extensive treatment, these payments can total hundreds of dollars.

In many instances, such as when a claim is disputed, injured workers need to utilize their private health insurance to ensure timely access to appropriate medical treatment.  Claimants are entitled to reimbursement for co-pays and other out of pocket medical expenses.

A claimant’s weekly compensation rate is based on their gross average weekly wage.  Insurers often pay a claim based on an estimated rate.  Injured workers are entitled to have overtime, bonuses and other incidental earnings included when calculating their average weekly wage and resulting compensation rate.   Calculating a person’s true average weekly wage can have a huge impact as the overall value of a claim is based on the full weekly wage and resulting compensation rate.

Greg Rand, a 20-year real estate veteran and CEO of OwnAmerica, says now is the time to invest in real estate. Rand compares the current market to the years following the Great Depression when market conditions sparked a boom that sustained 65 years of appreciation in real estate.

“This economic crisis, while similar to the Great Depression, is also unique in the way that the housing market played a central role,” Rand said. “It is true that this is a once-in-a-generation crisis. It is also true that this is a once-in-a-generation opportunity. It’s time to focus on the other side of the coin.”

According to Rand, a little optimism can go a long way toward spurring real estate back to life.

By Heather Hill Cernoch DSNews 4/21/2011

To read the article in full, please visit: http://www.dsnews.com/articles/todays-real-estate-market-once-in-a-generation-opportunity-2011-04-21

In an effort to protect against the costs of future damages to an apartment or unpaid rent, a landlord commonly collects a security deposit at the commencement of a new tenancy.  However, this same practice, designed to protect the landlord, often causes greater harm.  This harm results from a lack of understanding of the Massachusetts security deposit law known as M.G.L. c. 186 § 15B.

The Massachusetts security deposit law is complicated and if not followed carefully, can subject a landlord to severe penalties.  It is therefore essential that every landlord intending to collect a security deposit have a general understanding of the law.

When collecting a security deposit from a tenant, a landlord must be sure to comply with the following terms and conditions:

1. The security deposit may not exceed the amount of the tenant’s first month of rent.
2. The security deposit must be deposited in a separate, interest-bearing account in a bank located in Massachusetts within 30 days of receipt.
3. The security deposit must be deposited in a bank account that is protected from the landlord’s creditors, including a foreclosing mortgagee or a trustee in a bankruptcy matter.
4. Upon receipt of the security deposit or within 10 days of the commencement of the tenancy, whichever is later, the landlord must provide the tenant with a written “statement of condition,” which describes the condition of the apartment and any damage that exists at that time.  The tenant has 15 days to add to or revise the “statement of condition.”
5. Within 30 days of receiving the security deposit, the landlord must provide the tenant with the name and location of the bank holding the deposit, the actual account number and the total amount deposited.

As of September 30th, all drivers in Massachusetts are prohibited from using a cell phone or other handheld device to compose, send or read electronic messages while behind the wheel.   This includes e-mailing, internet browsing and related activities.  The ban applies to drivers while they are moving and while stopped at stop signs and traffic lights.

Drivers under the age of 18 are prohibited from using cell phones (even use with a hands-free device) while behind the wheel.

Drivers over the age of 75 must take a vision test every 5 years and must renew their license in person at the Registry of Motor Vehicles.

Fines for those caught texting while driving include:

• $100 for the first offense
• $250 for the second offense
• $500 for the third and subsequent offenses
• Drivers under the age of 18 will also face license suspensions for violations

In real estate transactions you must be keenly aware of the deadlines that are agreed to in on original Offer to Purchase.  Although those deadlines are self-imposed, they may be enforceable and not subject to change without the agreement of both parties in writing.

In a case decided by the Massachusetts Appeals Court in the spring of 2010, the Court found that one party cannot unilaterally change dates in the offer to purchase, including the mortgage commitment date.  The Court further noted that: “parties will be held to the deadlines they have imposed upon themselves when they agree in writing that time is of the essence.”  In that case, a buyer made an offer to purchase to the seller with specified time frames and a statement that “time was of the essence.”  The buyer then realized that she could not meet the time frames in the offer and attempted to extend the mortgage contingency date.  The seller refused to accept the new date.  The case then became very muddy when both sides gave different versions of a telephone call.  The Appeals Court said that there remained an open question about whether the seller really rejected a request for a change in the date or stated that since the date was attempted to be changed, the deal was off.  The Appeals Court has sent the case back to the Land Court for further testimony and a trial.  The case is entitled “Coviello v. Richardson.”

The lesson to be learned from this case is to make sure the dates that are self-imposed in an Offer to Purchase are honored.  You should check with all the necessary professionals involved in the transaction, including the lender, attorneys, appraiser and home inspector so that everyone is aware of the dates and agrees to abide by them.  If there is going to be a change in the date, get it in writing.