New Rental Housing Rights for Victims of Abuse in Massachusetts

domestic-violenceAs I have recently written about landlord/tenant issues in Massachusetts, I thought it apropos to discuss a new domestic violence law that directly affects landlords. Just last month, Massachusetts enacted a new law that gives victims of domestic violence a fairly broad right to break their leases and have the landlord change their locks. The important provisions of the new law are as follows:

  • In order to break a lease, victims are required to provide notice to landlords that they were subject to a sexual assault or rape or under imminent threat of same within three (3) months of the incident.
  • Landlords may request supporting documentation such as a police report or restraining order (which they must keep confidential).
  • Provided the tenant or co-tenant victim provides the proper notice, she can terminate her lease and be relieved of financial liability to the landlord for the remainder of the rental period. The landlord must return any last month’s rent and security deposit.
  • Victims of sexual assault or stalking may require that the landlord change the unit’s locks within 48 hours and at the tenant’s expense. If the landlord fails to act, the tenant may change the locks herself.
  • If the perpetrator of the sex crime or threat is a household member (i.e., spouse/boyfriend), the landlord may authorize changing the locks and withholding the new key from the perpetrator.
  • Landlords who make a good faith attempt to comply with the new law, and do not give a new key to the alleged perpetrator, are generally absolved from liability to the perpetrator for not providing a key.
  • Noncompliance with the new law can result in damages against the landlord equal to 3x the rental amount, plus payment of the tenant’s legal fees, which may be set off against any unpaid rent.

The bill, as finally passed, was signed off by both tenant and landlord industry groups after several years of debate. It is clearly a step forward for victims of abuse. If you are a victim of domestic abuse and you have to leave your apartment, not violating your lease is one less thing you have to worry about.  It also gives landlords a way to deal with a request by a tenant to change the locks in order to keep another tenant out.  Before this law, landlords faced with a request by a tenant to change the locks in order to keep another tenant out faced a difficult situation.  Property owners now have a clearer path to navigate a difficult situation and help a victim of abuse. It is also, as a landlord, one more thing you need know.  A link to the new Massachusetts domestic violence law can be found here. 

This article is a slightly modified version of a January 13, 2013 post by Rich Vetstein on 1/13 on The Mass. Real Estate Blog and posted with his permission. Rich writes on a variety of subjects and I highly recommend you check him out!

A Deal is a Deal

real-estate-dealMy last post explored what constitutes a valid signature on a contract. In this post, I focus on when a signed contract to sell real estate is enforceable.

Most real estate transactions in Massachusetts start with an Offer to Purchase (“OTP”). The buyer signs the OTP and writes an escrow deposit check. After some negotiation, both parties sign the final version of the OTP. Most real estate agents in Massachusetts use a version of the Greater Boston Real Estate Board’s “standard” form. In the section entitled “Riders,” buyers usually reference an attached mortgage contingency and an inspection contingency. For condominiums, buyers also normally write in a contingency to review the “condominium documents.”

The buyer’s legal obligations
Paragraph 5 of the standard offer states that if the buyer does not “fulfill his obligations,” the worst that can happen is the loss of the initial deposit, usually $1,000. In my experience, buyers very rarely lose their initial deposit. I have never heard of an instance where a buyer had a good faith reason for changing her mind and did not get her deposit back. If the buyer makes a sincere attempt to purchase the property, sellers generally agree to return the deposit if the deal falls apart. It is bad business for a seller to try and hold a buyer’s deposit. The only real damage to the seller is loss of market time. A buyer has to behave extremely badly for a seller to consider retaining a deposit.

The seller’s legal obligations
On the other hand, the OTP is binding and enforceable against a seller. The seller’s only obligation specifically articulated in the standard OTP is in Paragraph 3, which says that both parties “shall sign” a purchase and sales agreement (“P&S”) at some point, generally within two weeks. Real estate and contract law requires that both parties act in “good faith” during the course of the contract, which includes bargaining over the terms of the P&S. Although “good faith” is subjective, a seller cannot change his mind about the deal because he just got a better offer or he just no longer likes the basic terms and conditions. If the seller backs out of the deal, and the buyer files a successful lawsuit, the seller will be required to sell the property to the buyer.

Whether you are a buyer or a seller, do not enter into a real estate transaction lightly. You should have the intention of doing what you can to make it work. Buyers have several avenues of escape if the deal no longer makes sense. Sellers, however, are basically locked in unless the buyer becomes unreasonable.

 

* In most cases, just because the buyer can’t get the deposit back doesn’t mean that the seller automatically gets it. The deposit is initially stuck in the agent’s escrow account. The seller cannot receive the deposit until the escrow agent obtains the consent of both parties. Initially, this can prove difficult. Most often, the parties eventually agree to some compromise based on the threat of litigation and the trouble and time related to fighting over $1,000. I have also seen the parties simply fail to come to an agreement and the money never released.

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What Condo Association Budget?

condo-budgetCondominium association budgets come in all shapes and sizes. If, like me, you live in a very small association with 2 or 3 units, it may be questionable whether an actual written budget even exists. Large associations, made up of hundreds of units, often have detailed budgets prepared by professionals. In either case, when you went to sell your condo in the past, only the prospective buyer cared about and reviewed the budget. In today’s lending climate, it is standard practice for the buyer’s lender to review the budget. Fannie Mae, the quasi-public company through which most mortgages pass, does not require a written budget for 2–4 unit associations, but does require it on associations of 5 or more units. Many lenders also have an “overlay,” which is essentially an additional requirement that 2–4 unit associations have a written budget. The bottom line is that it is a good idea to have an actual written budget, because it is likely that the lender will ask for it when someone goes to sell a unit in the association.

The lender reviewing the budget will want to see a line item for a 10% reserve. 90% of the annually collected fees must account for all of the regular recurring expenses, and 10% must be saved as reserves. According to the lenders I work with, it is unnecessary to have a separate reserve account. Be careful, however, as buyers looking to get mortgages guaranteed by the Federal Housing Administration (known as FHA mortgages) require condominiums associations to meet stricter requirements.

Most condominium budgets can be set up to show a 10% reserve. All obviously recurring expenses, like insurance, water and sewer, the common electric bill, and all clearly recurring maintenance (snow removal, for example) must be budgeted for in a line item. I also recommend some money be put in a line item labeled “maintenance,” because not having any money for general maintenance is not realistic or credible. Expenses that do not come up every year do not have to be budgeted for in advance and can come out of reserves. For example, if your association plans to spend $10,000 in the upcoming year on a new walkway, the budget can still show a 10% reserve for the year that you build the new walkway. The following year, when you produce a “budget vs. actual” report, you would show that you spent the money out of reserves.  As a matter of fiscal prudence, your association may still want to raise fees or collect money via a special assessment, but that is a different conversation.

I always enjoy a good conversation about condominium association budgets, so please don’t hesitate to contact me or write a comment and tell us about your condo association budget.

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More Real Estate Eye Candy

I fully intend to blog on some more serious subjects other than just real estate “eye candy,” but, I couldn’t help but comment on another ultra-high-end property that just hit the market today.  I am speaking, of course, about the Penthouse atop the Albert A. Pope building at 221 Columbus Ave.  This is the building developed by Paul Roiff in the late 1990s. The Penthouse built on the roof, which you have probably seen from the Mass. Pike, is his personal residence. similar sites It is now on the market for the first time (a mere $7.2M).  The restaurant Mistral is on the street level. Check it out:

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