New SLG Attorney Wins Important Condominium Decision

In a case handled from inception to conclusion (including argument before the SJC) by Attorney Mark Rosen, who recently joined the Schofield Law Group, the Supreme Judicial Court has ruled that an arbitration provision contained in a condominium’s governing documents does not entitle the prevailing party to an award of attorneys’ fees and costs.

The decision, which was issued on January 7, 2016, is significant because many condominium documents include provisions which require unit owners to arbitrate any challenges to the actions or decisions of the Board of Trustees. In its fourteen-page decision, the SJC held that under such circumstances an arbitrator cannot award attorneys’ fees to a prevailing owner unless the arbitration provision specifically authorizes the awarding of such fees. The decision is significant for condominiums because it reduces the exposure of arbitration if the relevant provision is silent as to the issue of attorneys’ fees.

To learn more about this decision or to obtain a copy, please contact Mark Rosen at mark@schofieldlg.com

Also, please visit our website at www.schofieldlg.com

Mark Rosen Joins SLG

As we celebrate our 12th Anniversary, we are pleased to announce that we are continuing to grow and expand our capacity to serve our clients. With the addition of Mark Rosen, an experienced litigator and condominium lawyer, we now have five lawyers with a broad range of experience providing sophisticated and responsive legal services.

Mark has over 40 years of experience as a litigator and condominium attorney. He has represented clients in various types of civil and commercial litigation. Mark also has vast experience representing condominium associations and property managers in all aspects of operating residential and commercial condominiums.

Mark is a past Chair of the Boston Bar Association’s Insurance Law Committee and the Solo and Small Firm Practice Section. He is also a past Chair of the Attorneys’ Committee of the Community Association Institute – New England Chapter, a trade association of condominium leaders and professionals.

Mark is a 1976 graduate of the University of Minnesota Law School. He is licensed to practice in Massachusetts and is admitted to practice before the Federal District Court of Massachusetts, the First Circuit, and the United States Supreme Court. Prior to moving to Boston in 1989, Mark practiced law in Minneapolis and Chicago.

In addition to his professional activities, Mark has served on the building committees for the renovation of the elementary and middle schools in Needham, Massachusetts, where he resides with his wife and two children. Mark currently serves on the Traffic Management Advisory Committee for the Town of Needham. Mark has also provided representation on a pro bono basis to individuals on a wide range of legal matters. Mark is active in many social action projects both through his synagogue (of which he is a past president) as well as a volunteer for community projects to help the disadvantaged.

Airbnb Raises Concerns for Condominiums

The growing popularity of home-sharing services, such as Airbnb, is raising concerns for property managers and condominium associations. We often get calls from clients who want to end the flow of tourists and transients coming into their buildings. Fortunately, there are tools available to condominium associations to confront this growing problem.

For example, the condominium documents may mandate that a rental term be at least 180 days or may contain other restrictions on rentals which the condominium association could use to stop the practice. Similarly, the condominium documents may prohibit the commercial use of a unit which could be the basis for prohibiting such short-term rentals. The condominium documents may also empower the association to assess fines to owners who violate these types of provisions.

If the condominium documents do not contain any restrictions which could be applied to short-term rentals then an association may want to adopt appropriate amendments to their condominium documents. It is important to note that under Massachusetts law a restriction on the use of a unit (including rentals) must be formally adopted into the condominium’s Master Deed or Declaration of Trust/By-Laws. Many associations mistakenly believe that they can adopt rental restrictions by a simple vote of the board of trustees, but this is not sufficient under the law.

We can help an association to understand its rights and powers with respect to short-term rentals and, if necessary, to prepare, adopt, and record appropriate amendments to the condominium documents.

Better and Bigger

In the past eleven years, our firm has changed and evolved in many ways and 2015 has been another exciting year. We have expanded our practice and helped more clients resolve their disputes, manage their properties, and grow their businesses.  We have also focused on the growth and development of our own people, which enables us to better serve our clients. 

Promoting Our Ideals

Since 2009, Paul Tellier has helped define our firm by his intelligence, hard work, and total commitment to our clients. He has earned a reputation as a thoughtful advisor and a fierce advocate. His knowledge, experience, and character represent all that we value as a law firm, which is why I am proud to announce that Paul Tellier has been promoted to a Partner of Schofield Law Group, LLC.  

Please join me in congratulating Paul and please check out his Biography at www.schofieldlg.com

Growing for the Future

I am also pleased to announce that we have recently added a new associate so that we can better serve our clients. Chris Donnelly focuses his practice on condominium law and civil litigation and has already built strong relationships with many of our clients.   Please join me in welcoming Chris and please check out his Biography at www.schofieldlg.com

We are getting better and bigger and the future is bright for our firm and our clients.

Thank you,  

Tim Schofield

The Importance of Record Keeping

Condo associations and property managers are faced with the challenge of maintaining accurate and detailed records of fees and assessments due from unit owners.  Regular maintenance of records may seem like an obvious task, but when it comes to obtaining delinquent common expenses, keeping the books straight is more than just good business practice, it is necessary to comply with the law.

The Massachusetts Condominium Act sets forth a rigid two-step notice process for associations seeking to collect overdue payments for common expenses.   First, the association must notify the unit owner and the mortgage holder that the unit owner’s common expenses are at least 60 days past due.   Second, the associations must provide 30-days notice to the mortgage holder prior to filing an action to enforce a lien against the property.  In other words, before any other legal action is taken on the matter, condo associations have to provide date-sensitive warnings to unit owners and mortgage holders.

Though a lawyer can and should serve the notices on behalf of the association, his or her legal assistance relies upon on the records provided by the condo association.  So, organized records are vital to complying with the law and protecting the rights of the association.

Who we are and what we do…

As we embark upon a new year and as our law firm celebrates its 11th Anniversary, we have been reflecting on our work and our place in the legal market.  As a boutique law firm, we can and do provide a broad range of legal services, but we also have areas of particular expertise including civil litigation and condominium law.  So, how do we succinctly convey our ability to handle many types of matters while highlighting our areas of specialty?

In other words, what is our elevator pitch?

Law in an elevator…

At this point, you should be humming an Aerosmith song of a similar name.  Seriously though, after much consideration we have narrowed our elevator pitch to one of the following:

“A full service law firm specializing in civil litigation and condominium law.”

or

“A general practice law firm concentrating on civil litigation and condominium law.”

or

“A boutique law firm focusing on civil litigation and condominium law.”

Since we live in the age of crowdsourcing, we are asking you, our friends, clients, and colleagues to help us determine the best one-line summary of our law firm.  We are also open to other ideas and suggestions so feel free to get creative!

Please e-mail your thoughts and ideas to tim@schofieldlg.com.

IMPORTANT LEGAL DECISION

On November 7, 2014, the Massachusetts Appeals Court issued its decision in the case of Drummer Boy Homes Association, Inc. vs. Carolyn P. Britton et.al., which has major implications for condominium associations and property managers.

The relevant issue in the Drummer Boy case was whether condominium associations can file multiple concurrent lawsuits to establish so-called “rolling liens” to take advantage of the limited priority lien provision of the Massachusetts Condominium Act.

The Law and Past Practice

The Massachusetts Condominium Act gives condominium associations a priority lien (also known as a “super-lien”) for up to six months of unpaid condominium fees and the costs of collecting such fees. In other words, if certain statutory notice requirements are followed then up to six months of unpaid condominium fees and the corresponding collection costs take priority over any first mortgage and are paid first in any foreclosure action.

The super-lien has proven to be a very effective method for condominiums associations to collect unpaid fees and collection costs because mortgage holders will often pay the super-lien amount to avoid any impact on their mortgage priority.

However, because the notice and collection process can take longer than the six months covered by the super-lien, it has been the practice of condominium associations to file multiple concurrent lawsuits to cover successive six-month periods (a so-called “rolling lien”). Unfortunately, it is this practice that has been prohibited by the Massachusetts Appeals Court.

The Drummer Boy Decision

In the Drummer Boy case, a unit owner withheld payment of condominium fees in a dispute with the  association over parking rights and fines. The association filed three separate and concurrent lawsuits asserting a super-lien for eighteen months of unpaid fees and collection costs. The lawsuits were consolidated into one case and the association ultimately prevailed, but the trial court ruled that the association only had a super-lien over the first six months before the first lawsuit was filed and not the eighteen months claimed by the association.  In other words, only six months’ worth of fees, and the corresponding collection costs, took priority over any first mortgage and would be paid first in any foreclosure action.  The Appeals Court agreed with the trial court in rejecting the use of concurrent lawsuits to establish a rolling super-lien.

Moving Forward

There is no question that this is a bad decision for condominium associations, but the six month priority lien is still a very powerful tool for obtaining payoffs from mortgage holders. It is essential, however, that associations and property managers not delay in pursuing their rights to avoid any unnecessary loss during the six month priority window.  Condominium associations may also have to seek foreclosure more often and more quickly than has been necessary in the past.  Finally, the Drummer Boy decision appears to be limited to concurrent lawsuits and we do not think that it prohibits associations from filing a new lawsuit after an earlier lawsuit for unpaid fees has been dismissed.

Mass. Legislative Activity, 2014

The Massachusetts Legislature has recently taken action on issues related to condominium law. During the past session, which ended this summer, two bills were introduced that sought to clarify or amend M.G.L. c. 183A, the current statute governing condominium law. Neither bill was enacted by both chambers (as is required in order to be signed and executed into law by the governor). Yet, both bills passed the Senate and traveled through multiple committees in the House of Representatives. These two bills therefore signal potential updates to the condo statute, provided they are both reintroduced and passed in the next session (such a possibility would likely not occur until January, after the fall elections). Below is a brief description of each bill and its respective affect on current law.

(1)   S.2316 aims to clarify language in section of M.G.L c. 183A pertaining to condominium priority liens. As the law currently stands, condo associations are entitled to a six-month priority lien on delinquent common expenses, therefore providing associations with an important advantage over mortgage lenders in legal actions to recoup overdue fees and related expenses. In recent years, however, lenders have challenged the notion that the law gives associations the right to multiple six-month priority liens. S.2316, introduced by Senator Brian Joyce, would amend the statute to clarify that the phrase “priority liens” does indeed refer to all six-month priority liens established in accordance with the law. The bill would effectively silence lenders on the subject, ending the argument that associations are limited to one six-month priority lien over delinquent common expenses.

(2)   S.602 , also introduced by Senator Joyce, features two major sections:

The first section attempts to remove contradictory language in the condo statute. M.G.L. c. 183A currently contains a provision that allows condo associations to permit unit owners to modify certain common areas, specifically limited common areas and exclusive use easements. However, the law also has another provision that requires the condo’s master deed to be amended in order to achieve the very same action.  S.602 aims to end the conflicting provisions by eliminating the amendment requirement. If passed, associations will have greater legal clarity to create or authorize certain common area rights.

The second section attempts to streamline consent requirements for amending condominium documents, such as the master deed or the declaration of trust. Currently, some condo documents require mortgagees — typically institutions like Bank of America, N.A. or CitiMortgage, Inc. — to sign off on amending these documents. In this situation, S.602 would place a burden on mortgagees to specifically object within 60 days of receiving notice from an association via first class and certified mail; otherwise, consent by mortgagees will be implied. In other words, if S.602 were to pass, condo associations would have broader ability to advance on amending their own documents, weakening the influence of mortgagees in this regard.

Mass. Legislature Aims to Strengthen Condo Rules for Financial Records

Efforts by Massachusetts lawmakers are underway to change the rules regarding condo financial records, potentially exposing condo associations to legal actions by unit owners.

The Legislature is close to passing a bill that would force condo associations to make a variety of documents easily accessible to unit owners or risk paying the price in court.  The bill, S.621, would amend the current law regulating condominiums to ensure that condo associations are responsible for “all reasonable attorney fees” in actions brought by either unit owners or their mortgagees to attain documents.  The bill has passed in the Senate, but awaits approval in the House of Representatives.

As The Boston Globe has reported, some see the bill as a common-sense measure to facilitate unit owner access to basic condo records. Yet, such a change to the law could enable owners to exploit the provision at the expense of associations.

As the law stands, unit owners are already entitled to access accurate financial records. Condo associations (or property management companies serving as the agent for condo associations in matters related to financial management) must retain financial records for a period no shorter than seven years.  Such records include: receipts and expenditures, audits, reviews, account statements, service agreements and contracts, and insurance policies.  Now, however, the proposed bill introduces a financial penalty for condo associations that don’t meet immediate demands for these documents.

But even if the House can’t muster the votes to pass the bill, condo associations should still get their records in order and provide them to unit owners in a timely manner upon request. Nothing prevents legislators from re-filing the bill in another session with a more favorable set of members.  And, given the recent growth of condo unit sales in Massachusetts, pressure to toughen up laws that benefit owners may continue to mount.

Boston Condo Market Off to a Great Start in 2012

The Boston Business Journal reports that the Boston condo market had a strong start in the early months of 2012.  http://www.bizjournals.com/boston/print-edition/2012/07/06/hub-condo-market-off-to-strong-start.html