Property Owner Prevails in Suite against Falmouth: Town to pay nearly $1 million for blocking building on “no disturbance” zone

The inlet waterway in Centerville Massachusetts on Cape Cod.What happens when a town institutes wetland “no disturbance” zones that prevent a landowner from building on her lot? In a recent case in Falmouth, MA, it resulted in the town owing the landowner nearly $1 million for denying her the economic value of the land. The use of zoning bylaws by towns to regulate and restrict growth is not a new phenomenon in Massachusetts but, as Falmouth recently learned, it can sometimes be a costly decision.

On Friday, December 9, 2016, a Barnstable Superior Court jury found that the wetlands protection regulations setting “no disturbance” zones within 100 feet of salt marshes and 50 feet of coastal banks deprived a land owner from building a single-family house on her lot. When the owner’s family purchased the 16,000 square foot lot in 1975, it was considered by the town to be a buildable lot. However, in 2008 Falmouth amended its zoning bylaws to include the “no disturbance zones,” prohibiting building within 100 feet of salt marshes and within 50 feet of coastal banks. The “no disturbance zones” restricted the buildable area to a small portion of the lot. These bylaws reduced the buildable area of the lot to just 115 square feet, and when the owner sought variances to build a single-family home in 2012, the town denied the request. The town unsuccessfully argued that it should not be liable for the taking because the owner had not built or attempted to build on the land in 30 years.

John Wall, the attorney for the land owner explained it well in an email to the Cape Code Times, “As an agency that has the power to regulate land, the Conservation Commission wields significant power. Mrs. Smyth’s [owner] case demonstrates that the Commission must exercise that power responsibly and with sensitivity to the rights of property owners. If the Commission deprives a person of all ability to develop their land, the Commission is constitutionally required to pay for the value of the land.”

This case serves as an important example to both landowners and towns of what can happen when a town chooses to use zoning to prevent development instead of compensating a landowner and placing the land in conservation. It will be interesting to watch how municipalities and potentially aggrieved land owners respond to this case.

Read more about the case here: http://www.capecodtimes.com/news/20161212/falmouth-ordered-to-pay-landowner-nearly-1m

California Dual Agency Case – Horiike v. Coldwell Banker

Midsection of judge reading document at desk in courtroom

On Tuesday, November 22nd, 2016, the California Supreme Court issued its opinion on Horiike v. Coldwell Banker, which focused on the interpretation of the California dual agency statute, Civ. Code sec 2079.13(b). The court affirmed the appellate court’s opinion by holding that, pursuant to that statute, each of the salespeople involved in a dual agency transaction owe fiduciary duties to both the buyer and the seller. It is important to note that this decision is entirely based on the literal interpretation of the California agency statute and will have no effect on agency issues here in Massachusetts.

For more information on the case, please visit:  http://realtormag.realtor.org/daily-news/2016/11/22/dual-agency-role-expanded-in-calif-high-court-ruling

The Impact of Recreational Marijuana on Real Estate

Large Indoor Marijuana Commercial Growing Operation With Fans, Greenhouse, Equipment For Growing High Quality Herb. Cannabis Field Growing For Legal Recreational Use in Washington State
Large Indoor Marijuana Commercial Growing Operation

On November 8th 2016 Ballot Question #4, which will allow for the recreational use of marijuana, was passed by Massachusetts voters in a fairly wide margin of 54% to 46%. Under the new law, the use of marijuana for recreational purposes will be legal starting on December 15, 2016. However, the sale of the drug from regulated retail stores will not be permitted until the beginning of 2018. So how will this new law impact real estate? Here are a few considerations to keep in mind, but watch for more information from MAR on this issue in the coming weeks and months.

The first thing to consider is that although legal under state law, marijuana remains a Schedule 1 illegal substance under federal law. Up until this point the federal government has taken the position that it will not enforce federal law in those states that permit recreational marijuana usage. However, there is no guarantee that they will keep this position in the future as more and more states change their laws to allow for the use of marijuana.

How will the legalization of recreational marijuana affect landlord-tenant relationships and the rights of each party? As written, the law will allow for landlords to prohibit the smoking of marijuana on their property, but owners should be sure to check the language of their lease agreements to make sure the issue is covered. Just as a landlord may prohibit smoking of cigarettes in an apartment, they may also prohibit smoking of marijuana.

How will the new law affect residential transactions? Similar to the laws in Colorado and other states, the law will permit residents to cultivate a certain amount of the drug in their homes for personal use. This could potentially impact the homeowners insurance policy if there is a loss due to issues related to water damage, electrical fires and mold issues.

When listing a home where cultivation is occurring, it is prudent to have a conversation with the seller prior to any showings or open house. A seller should consider removing or relocating equipment during the listing period.

Finally, the new law provides cities and towns with some ability to regulate or prohibit the sale of marijuana at retail locations within their community.

It is likely that additional regulations will be enacted and changes to the law itself may be made by the legislature before 2018. This will hopefully provide some additional time to clarify some of the issues that relate directly to the real estate industry.

2015-2016 Legislative Report | The Wednesday Word

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The 2015-2016 legislative session came to a frantic end just past midnight on July 31st, 2016. The end of the two year formal sessions marks the deadline for any significant legislation to pass the House and Senate and on to the governor’s desk. Due in large part to the advocacy of individual Realtor® members across the commonwealth, the Massachusetts Association of Realtors® can highlight several notable victories:

LEGISLATIVE SUCCESSES

Successfully Opposed Mandatory Energy Audits and Scoring

The Senate’s Energy Diversity Legislation contained language from a stand-alone bill that would have required sellers to perform a Mass Save energy audit prior to listing their home for sale and would also require the seller disclose to any prospective buyer the information in the energy audit. Additionally, the bill called for the Department of Energy Resources to design and implement an energy scoring and labeling system. Mandatory energy audits at or prior to the transfer of property would disrupt sales and would have a negative impact on the Massachusetts housing economy. Specifically, requiring energy efficiency scoring on homes in Massachusetts would have stigmatized our older homes, causing a substantial decline in home value.

 

Although the Senate included these proposals in their legislation, the House did not; therefore, they were subject to the conference committee appointed to negotiate the differences between the bills. More than 2,700 Realtors® took action and contacted their legislators to voice their strong opposition to the auditing and scoring proposals. That outreach, combined with our lobbying and marketing campaigns was successful in convincing the conference committee to leave those provisions out of the final bill, which was approved just hours before session ended.

 

Successfully Opposed Room Occupancy Taxes

The Senate’s economic development bill included provisions from stand-alone bills that would have extended the existing tax on hotels and motels to the rental of private homes. The House did not include the new tax in their economic development bill and it was therefore subject to a conference committee. Realtors® were successful in convincing the conference committee to exclude this new tax from the final bill.

 

Successfully Opposed Anti-Production Zoning Legislation

In May 2016, the Senate advanced a redrafted version of S.122 An Act promoting the planning and development of sustainable communities of by a vote of 23-15. After months of meetings, the Senate Committee on Ways & Means released a bill that was considerably improved from the original version but would still have negatively impacted housing production in Massachusetts at a time when the state is dealing with a severe housing crisis due in large part to a low rate of housing production that has not kept pace with population growth and needs. MAR successfully lobbied the House to not take the bill up before session ended and thereby defeated the proposal.

 

Successfully Opposed Real Estate Transfer Taxes

Legislators filed three different transfer tax proposals that would have created new transfer taxes on the sale of property in Provincetown, Nantucket, and one statewide effort. MAR successfully advocated against these proposals and none of them advanced before Sunday’s deadline.

 

Successfully Opposed Wetland Disclosure Legislation

This legislation would have required real estate licenses to research and disclose to prospective buyers the presence of any wetlands on a property. Such a requirement is far outside the scope of a real estate agent’s licensing and training. This proposal ultimately died in the House without a vote.

 

Successfully Advocated for Passage of Starter Home Legislation

MAR, along with other coalition members, advocated for the passage of legislation to encourage the production of “starter homes.” Communities will be able to voluntarily encourage the production of homes smaller than 1,850 square feet on lots smaller than a quarter acre. This will complement the current success that Chapter 40R has had with mixed-use and multifamily housing with the single family houses that young families are currently seeking. Importantly, this policy targets young families and other entry level buyers who are currently priced out of the market. Single family housing production continues to be far below the level that is required to meet demand, which results in increasing housing prices. The starter home program will help communities meet the demand by encouraging the production of affordable market rate single-family homes.

 

REMAINING ITEMS TO ADDRESS

Mortgage Forgiveness Debt Relief

Legislation that would have exempted debt forgiven during a short sale from a homeowner’s taxable income did not make it to the Governor’s desk before time ran out this session. H. 3770 An Act relative to discharge of indebtedness of principal residence from gross income received a favorable report from the Joint Committee on Revenue but was not taken up by either chamber before the July 31st deadline.

 

Scrap Metal

Both the House and Senate each advanced legislation that would have regulated the sale of scrap metal. Unfortunately, the chambers were unable to reach an agreement on which proposal should pass as the final bill and the proposal died.

 

The H.O.M.E. Bill

S.119 An Act improving housing opportunities and the Massachusetts economy focused on specific areas of Massachusetts zoning law that our members identified as provisions that could be changed to aid the production of much needed workforce and middle class housing. The Joint Committee on Housing recognized the importance of many of the provisions contained in the bill when it included S.119 in a favorable report of H.1111, another housing production bill. This action, unfortunately marked the end of the progress of that specific bill.

Thank you to Realtors® across the Commonwealth for advocating on these issues!

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; and Justin Davidson, Legislative & Regulatory Counsel)

REALTOR® Day on Beacon Hill Recap| The Wednesday Word

13529139_10154887328297506_2101616727979380665_nOn June 21, 2016, over 400 Massachusetts Realtors® traveled to the State House to participate in the 31st annual “Realtor® Day on Beacon Hill.” Realtors® discussed key issues that impact consumers, housing and the economy. The 2016 keynote address was provided by Lieutenant Governor Karyn Polito.

To read the full press release, please visit: https://www.marealtor.com/news/press-releases/2016/06/22/over-400-massachusetts-realtors-converged-on-beacon-hill-to-push-for-land-use-zoning-reforms-and-mortgage-debt-relief

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; and Justin Davidson, Legislative & Regulatory Counsel)

The Wednesday Word | CFPB to Issue TRID Guidance

Logo0_@2On April 28, 2016, the Consumer Financial Protection Bureau (CFPB) announced in a letter to industry partners that it is drafting a notice of proposed rulemaking on the Know Before You Owe rule, also known as “TRID.”  Since TRID went into effect on October 3, 2015, the industry has been working hard to understand and implement the rule, and many questions have arisen. Until now, the CFPB has provided only informal guidance to the industry through webinars and phone calls. Both the National and Massachusetts Association of REALTORS have urged the CFPB to draft written clarification on a number of issues, and we are hopeful that many of our questions will be addressed in this Rulemaking, The Bureau announced the Notice of Proposed Rulemaking (NPRM) would likely be issued in late July.

The National Association of REALTORS President Salomone made the following statement:

“The real estate industry has responded well to the implementation of “Know Before You Owe,” but there’s still work ahead. Today’s announcement from the CFPB is a recognition that there are lingering challenges to address, and I appreciate Director Cordray’s commitment to hearing those concerns.

“Realtors® continue to report issues in the post-TRID environment with gaining access to the Closing Disclosure, despite years of access to the substantively similar HUD-1. NAR remains committed to ensuring Realtors® have access to the CD so they can put their expert advice to work guiding clients throughout the homebuying process uninterrupted from beginning to end.

“We look forward to addressing remaining TRID-related concerns as part of the rulemaking process in the months ahead and thank the CFPB for an opportunity make the Realtor® voice heard on this issue.”

For further information and updates on the Know Before You Owe/TRID rules, please visit:

www.realtors.org/respa.

NAR Letter to House Financial Services Committee

NAR Newsline Blog for the Media

(Please note: This blog post was prepared by MAR Legal Staff: Michael McDonagh, General Counsel; Ashley Stolba, Associate Counsel; Justin Davidson, Legislative & Regulatory Counsel; and Christine Howe, Public Policy and Finance Coordinator)