Property owners are often struck by how difficult it is to build or rebuild a home in Massachusetts, especially if the lot or building is “nonconforming” (e.g., the lot is too small or does not have enough frontage, the house is too close to the property line, there is too much lot coverage, etc.). Even if a home has existed for decades without any “problems”, it can be very difficult (and expensive) to obtain approvals for additions or rebuilding to create present day amenities like energy efficiency, larger space and improved views.
If a city or town has tightened its zoning code over the years, the home falls into the category of “preexisting nonconforming structure” with challenging permit requirements regulating alterations. All of a sudden, a “team” of professionals may be needed to help obtain the necessary approvals. (However, to paraphrase Seinfeld, not that hiring professionals is a bad thing!) Although “mansionization” grabs the media attention, even modest reconstructions can face this challenge.
The Legal Standards
The challenge originates primarily in the State Zoning Act, General Laws Chapter 40A, Section 6, which provides that a preexisting nonconforming single family structure may be altered or reconstructed provided that it “does not increase the nonconforming nature” of the structure. To determine if a home’s nonconforming nature would be increased, one needs to identify the existing nonconformity (e.g., area, setback, frontage, coverage, etc.) and then determine if the new home would intensify the nonconformity or create new ones.
If the municipality determines that the home’s nonconforming nature would be increased, the rebuilding is allowed only if it is not “substantially more detrimental” than the existing home to the neighborhood. This is often called the “Section 6 Finding”, after its location in Section 6 of the Zoning Act.
As you likely sense, these are vague, subjective standards. Ultimately, the determination is typically made by the volunteer members of the local zoning board of appeals, who are often subject (and receptive) to neighbors’ claims that they are “aggrieved” by the proposal. (One maxim applies here: very few neighbors like change.)
Adding to this challenge is the authority granted to each municipality to adopt its own local zoning code to customize provisions of the Zoning Act. For instance, each municipality is allowed to implement different procedures, standards, prohibitions, and voting requirements for the Section 6 Finding and determining whether an alteration is substantially more detrimental to the neighborhood.
What Is “Substantially More Detrimental” to the Neighborhood?
Prior court decisions may not be too helpful in clarifying these issues because the other decisions are often tailored to a municipality’s specific code and project. The Supreme Judicial Court (SJC) attempted to facilitate approval of certain “small scale” alterations in its 2008 decision titled “Bjorklund vs. Zoning Board of Appeals of Norwell”. However, the SJC’s list of small scale projects was so limited as to have little practical effect for owners proposing even modest additions or reconstructions. For example, the SJC’s list of small projects included adding one dormer, enclosing a porch or sunroom, constructing a 2-car garage, and installing a storage shed for gardening or pool equipment.
Some municipalities handle the Section 6 Finding as an “administrative finding”, usually by the zoning board of appeals (ZBA) based upon a simple majority vote. However, some municipalities have made the Finding subject to a discretionary “Special Permit”, with all the strict requirements imposed by Section 9 of the Zoning Act, such as written notice to all “interested parties”, legal advertisements in the newspaper, long time frames for opening the public hearing and issuing a decision, and, very importantly, a “supermajority” vote (e.g., four affirmative votes of a five member board).
In addition, a municipality may seek to impose a detailed list of “Special Permit criteria” to the statutory test of whether the proposal is substantially more detrimental to the neighborhood. Of course, because “substantial detriment” is not susceptible of a fixed measure, the public hearing often delves into amorphous issues like, is it too big, is it in harmony with the neighborhood, does it impact views, etc.
This complex process begs a simple question: If other homes in the neighborhood are roughly similar to the proposed house, is it possible for the new home to be “substantially more detrimental” to the neighborhood?
As if the discretionary Section 6 Finding was not challenging enough, some municipalities have also adopted a discretionary “site plan review” requirement (or, even more onerous, a “site plan special permit” requirement), or wetland regulations with strict “no build” zones, or sewage disposal restrictions more stringent than the State standards. These all have their own complexities, often necessitating a team to navigate them. However, apropos of Seinfeld, not that hiring a team of experts is a bad thing!
Please contact me if you or a colleague has a question on permit requirements for building a home or other real estate issues.
Wednesday, June 13, 2012
Monday, February 27, 2012
"Who you gonna sue" (or be sued by)?
In the Ghostbusters movie, the popular refrain was, “Who you gonna call?” In the business world, when a company’s expectations are not met, the inquiry is often, “Who you gonna sue?”
Fortunately, for providers of professional services, the Massachusetts Appeals Court recently confirmed that there are limits on who can sue a professional. Even with these limits, professionals need to watch out for third-parties (i.e., parties with whom they are not in contract) that may seek to rely on, and attempt to sue based on, the professional’s services. This is important for consultants, engineers, architects, contractors, brokers, accountants, planners, and other professional service providers.
Facts of the Case
The Appeals Court case is called, “Meridian at Windchime, Inc. v. Earth Tech, Inc.” A real estate developer attempted to sue a professional engineering firm that had been hired by a town as a consultant to inspect the developer’s road and utility work. Importantly, the engineer’s contract was with the town, not the developer.
The developer alleged that the engineer’s inspections were negligent because they failed to identify deficiencies with the infrastructure work performed by the developer’s construction contractor. When the deficiencies were discovered later on, the developer was required to replace the road at far greater cost than if the deficiencies were discovered earlier.
When the road contractor went out of business, the developer was faced with the question, “Who you gonna sue?” It chose the engineer, even though it did not have a contract with the engineer.
What the Appeals Court Said
The Appeals Court held that the developer was not allowed to sue the engineer because there was no direct contract between the developer and the engineer (i.e., no “breach of contract” claim), and there are limits to the liability of a professional to a third-party for negligent performance of a contract.
Under the principle of “reasonable reliance”, a professional employed to provide a service does not owe a duty of care to a third-party with whom the professional has no contractual relationship unless (i) it was “foreseeable and reasonable” for the third-party to rely on the services provided by the professional to its client, and (ii) the professional had “actual knowledge” that the third-party was relying on the professional’s services.
The Court held that there was no “reasonable reliance” because the developer had hired its own project engineer to provide services on the project, the underlying contract between the town and the engineer provided that the engineer would have no responsibility for the construction methods selected by the developer, and the engineer had informed the developer of the engineer’s limited role in the project.
Things For the Professional to Consider
• When entering into a contract for professional services, the professional should consider whether the work product might be obtained and relied upon by a third-party who is not the intended client. For instance, this scenario can arise if the professional is engaged to make submittals to local or state agencies (which could then make the document accessible to the public, members of which might claim “reliance” on the submittal). Another scenario is when a professional submits work product to a client or lender, who then shares it with a buyer, borrower, customer or other “user”.
• Consider adding provisions in the contract as well as statements in the work product to clearly announce that the services and work product are only for the client’s use, the document may not be used or relied upon by any third-party, and there are no intended third-party beneficiaries of the contract. Such a statement should be considered for each submission prepared by the professional even if the submissions are numerous or frequent (e.g., periodic inspection or status reports).
• If there is reason to believe that a third-party might seek to rely on the services or work product that the professional is providing to its client, the professional should consider informing the third-party that it can not and should not rely on the professional’s services without prior express approval.
• In contrast, if you are in the role of the “third-party” and want the legal right to rely on the work product of a professional with whom you are not in contract, you can attempt to obtain a statement from the professional, sometimes in the form of a “reliance letter”, confirming that you are authorized to rely on the work product just as the original client was able to rely on it.
Although these measures do not assure immunity from claims by third-parties, they might provide some level of protection against them.
Please contact me if you or a colleague has a question on contracts, performance, or real estate issues.
Fortunately, for providers of professional services, the Massachusetts Appeals Court recently confirmed that there are limits on who can sue a professional. Even with these limits, professionals need to watch out for third-parties (i.e., parties with whom they are not in contract) that may seek to rely on, and attempt to sue based on, the professional’s services. This is important for consultants, engineers, architects, contractors, brokers, accountants, planners, and other professional service providers.
Facts of the Case
The Appeals Court case is called, “Meridian at Windchime, Inc. v. Earth Tech, Inc.” A real estate developer attempted to sue a professional engineering firm that had been hired by a town as a consultant to inspect the developer’s road and utility work. Importantly, the engineer’s contract was with the town, not the developer.
The developer alleged that the engineer’s inspections were negligent because they failed to identify deficiencies with the infrastructure work performed by the developer’s construction contractor. When the deficiencies were discovered later on, the developer was required to replace the road at far greater cost than if the deficiencies were discovered earlier.
When the road contractor went out of business, the developer was faced with the question, “Who you gonna sue?” It chose the engineer, even though it did not have a contract with the engineer.
What the Appeals Court Said
The Appeals Court held that the developer was not allowed to sue the engineer because there was no direct contract between the developer and the engineer (i.e., no “breach of contract” claim), and there are limits to the liability of a professional to a third-party for negligent performance of a contract.
Under the principle of “reasonable reliance”, a professional employed to provide a service does not owe a duty of care to a third-party with whom the professional has no contractual relationship unless (i) it was “foreseeable and reasonable” for the third-party to rely on the services provided by the professional to its client, and (ii) the professional had “actual knowledge” that the third-party was relying on the professional’s services.
The Court held that there was no “reasonable reliance” because the developer had hired its own project engineer to provide services on the project, the underlying contract between the town and the engineer provided that the engineer would have no responsibility for the construction methods selected by the developer, and the engineer had informed the developer of the engineer’s limited role in the project.
Things For the Professional to Consider
• When entering into a contract for professional services, the professional should consider whether the work product might be obtained and relied upon by a third-party who is not the intended client. For instance, this scenario can arise if the professional is engaged to make submittals to local or state agencies (which could then make the document accessible to the public, members of which might claim “reliance” on the submittal). Another scenario is when a professional submits work product to a client or lender, who then shares it with a buyer, borrower, customer or other “user”.
• Consider adding provisions in the contract as well as statements in the work product to clearly announce that the services and work product are only for the client’s use, the document may not be used or relied upon by any third-party, and there are no intended third-party beneficiaries of the contract. Such a statement should be considered for each submission prepared by the professional even if the submissions are numerous or frequent (e.g., periodic inspection or status reports).
• If there is reason to believe that a third-party might seek to rely on the services or work product that the professional is providing to its client, the professional should consider informing the third-party that it can not and should not rely on the professional’s services without prior express approval.
• In contrast, if you are in the role of the “third-party” and want the legal right to rely on the work product of a professional with whom you are not in contract, you can attempt to obtain a statement from the professional, sometimes in the form of a “reliance letter”, confirming that you are authorized to rely on the work product just as the original client was able to rely on it.
Although these measures do not assure immunity from claims by third-parties, they might provide some level of protection against them.
Please contact me if you or a colleague has a question on contracts, performance, or real estate issues.
Thursday, January 12, 2012
Is your property contaminated? How about your indoor air? (MassDEP's Guidance on Vapor Intrusion and Indoor Air)
Just in time for the recent Holiday season, the Massachusetts Department of Environmental Protection provided the real estate and environmental communities with a dubious present, the 102-page (plus five appendices) “Interim Final Vapor Intrusion Guidance” document on the scintillating (to some) topic of indoor air contamination caused by groundwater and soil contamination. The Guidance document will be important for building and landowners, developers, lenders, tenants and environmental consultants, particularly Licensed Site Professionals (LSP’s), with the misfortune of encountering (potential) indoor air contamination.
The DEP estimates that approximately 50 new sites are identified each year with the potential for vapor intrusion (i.e., the way contamination in soil and groundwater can enter a building and contaminate the indoor air). In addition, vapor intrusion concerns have been raised at former contaminated sites that were previously cleaned up and believed to be “closed” under the hazardous waste cleanup regulations. Additional expensive and time-consuming hazardous waste response actions have been required at some former sites based upon assertions that the prior cleanup did not properly evaluate the potential for vapor intrusion or for new building construction. As imagined, this uncertainty has been a serious concern for lenders, owners, developers and LSPs.
A title combining the words “Interim”, “Final”, and “Guidance” raises some questions as to the document’s legal and practical effect. According to DEP, the document is “final” insofar as it can be quoted and cited after a prior draft had previously been circulated. It is “interim” insofar as DEP says that it will issue formal revisions to its regulations by July 2012, which may supersede parts of the document and lead to additional revisions. Finally, according to DEP, the “Guidance” is not a regulation, rule or requirement, and should not be construed as mandatory. However, because the Guidance presents the technical recommendations and preferences of DEP, an owner, developer or LSP could be forgiven if they treated the document as a requirement subject to enforcement by DEP.
The Guidance outlines DEP’s recommendations for best practices that will meet the current regulatory requirements. The stated purposes are to clarify when to evaluate the pathway for vapor intrusion; provide guidance on conducting assessments to determine if the vapor intrusion pathway (i.e., migration route from the containment source to the sensitive receptor) is complete and conducting risk assessments if the pathway is complete; and, recommend mitigation strategies to address vapor intrusion.
In terms of evaluating the potential for vapor intrusion at sites where there is soil or groundwater contamination, the Guidance contains a multi-step flow chart including documentation of indoor air contamination or odors, the concentrations of contaminants within certain distances of an occupied building, specific building criteria (e.g., an earthen floor, significant cracks in the foundation, a groundwater sump, etc.), and the potential for contaminants moving along preferential migration pathways such as utility trenches.
The DEP recommends a multiple “Lines of Evidence” approach to determine if the vapor intrusion pathway from source to receptor is complete and likely to be of concern. The Lines of Evidence may include the concentration of contaminants in the soil, groundwater, soil gas below the building (sub-slab soil gas), and indoor air; the presence of preferential migration pathways for vapors; and, the presence of other outdoor and indoor sources for the contaminants (e.g., outdoor sources of pollution, household products, etc.).
In an effort to “simplify” the evaluation of the vapor intrusion pathway, DEP has developed Residential and Commercial/Industrial Threshold Values (TVs). These Threshold Values are used to determine whether measured indoor air concentrations are within the range of typical residential indoor air concentrations and typical exposure scenarios for commercial and industrial settings.
The Guidance addresses the common question of whether, and when, to conduct direct sampling of indoor air. The Guidance indicates that it is not common to sample indoor air for volatile organic compounds (VOCs) without first collecting other data on groundwater, soil, or soil gas that indicates that there might be an indoor air problem due to environmental contamination, at least for the purpose of satisfying hazardous waste cleanup regulations (i.e., there may be other reasons to sample the indoor air unrelated to the Massachusetts Contingency Plan, or MCP, at 310 CMR 40.0000). The Guidance recognizes that direct sampling of indoor air without gathering other site data can result in erroneous conclusions and unnecessary response actions to address conditions that are not related to the MCP. In addition, when sampling indoor air (if it is appropriate), efforts should be made to eliminate sources of contamination within or near the building that can affect the results, such as cigarette smoke, the use of sprays, solvents, paints, and other household products, and operations of nearby businesses, such as a dry cleaner.
The Guidance discusses the contentious issue of potential future building construction when there is a potential risk of vapor intrusion (if a building were to be constructed). Achieving closure of a vacant contaminated site that does not have a building can be difficult because actual building conditions cannot be directly measured and existing methodology may not explicitly address potential indoor air problems at a future building. The Guidance indicates that, if some amount of residual contamination will remain in the soil or groundwater, the potential for vapor intrusion should be considered in planning the future placement of a new building and preparing the building site.
The Guidance states DEP’s preference of using an Activity and Use Limitation (AUL), which is a deed rider recorded at the Registry of Deeds, to provide notice to interested parties of the contamination that remains and how to address it in the future. For instance, an AUL might specify the measures to be taken at the time of future building construction (e.g., installation of sub-slab depressurization (SSD) system and a vapor barrier) or might restrict construction activity to locations outside of areas with contamination, or specify that an LSP must evaluate the potential for vapor intrusion before a building is constructed.
The Guidance provides that engineering measures may be incorporated into the future construction plans to protect against vapor intrusion if a building will be constructed in an area where contamination remains that could lead to vapor intrusion. Depending on the concentration of the contaminants, a vapor barrier and an active SSD system either is not required (Category A site), or “should” be installed (Category B site), or presumably “would” be installed (Category C site). The Guidance provides criteria on whether post-construction confirmatory indoor air sampling is necessary and the procedure to determine if the SSD system can be terminated.
Among the various takeaways for owners, developers, and lenders is that LSPs and environmental professionals will have good reason to be cautious in addressing contaminated sites with the potential for vapor intrusion and indoor air contamination. This includes sites with existing buildings as well as vacant properties on which building and construction activities may occur in the future. The Guidance will likely lead to additional site investigations and sampling, which would likely be reflected in the cost and schedule of the work.
Please contact me if you or a colleague has a question on DEP’s Guidance or on other real estate or environmental issues.
The DEP estimates that approximately 50 new sites are identified each year with the potential for vapor intrusion (i.e., the way contamination in soil and groundwater can enter a building and contaminate the indoor air). In addition, vapor intrusion concerns have been raised at former contaminated sites that were previously cleaned up and believed to be “closed” under the hazardous waste cleanup regulations. Additional expensive and time-consuming hazardous waste response actions have been required at some former sites based upon assertions that the prior cleanup did not properly evaluate the potential for vapor intrusion or for new building construction. As imagined, this uncertainty has been a serious concern for lenders, owners, developers and LSPs.
A title combining the words “Interim”, “Final”, and “Guidance” raises some questions as to the document’s legal and practical effect. According to DEP, the document is “final” insofar as it can be quoted and cited after a prior draft had previously been circulated. It is “interim” insofar as DEP says that it will issue formal revisions to its regulations by July 2012, which may supersede parts of the document and lead to additional revisions. Finally, according to DEP, the “Guidance” is not a regulation, rule or requirement, and should not be construed as mandatory. However, because the Guidance presents the technical recommendations and preferences of DEP, an owner, developer or LSP could be forgiven if they treated the document as a requirement subject to enforcement by DEP.
The Guidance outlines DEP’s recommendations for best practices that will meet the current regulatory requirements. The stated purposes are to clarify when to evaluate the pathway for vapor intrusion; provide guidance on conducting assessments to determine if the vapor intrusion pathway (i.e., migration route from the containment source to the sensitive receptor) is complete and conducting risk assessments if the pathway is complete; and, recommend mitigation strategies to address vapor intrusion.
In terms of evaluating the potential for vapor intrusion at sites where there is soil or groundwater contamination, the Guidance contains a multi-step flow chart including documentation of indoor air contamination or odors, the concentrations of contaminants within certain distances of an occupied building, specific building criteria (e.g., an earthen floor, significant cracks in the foundation, a groundwater sump, etc.), and the potential for contaminants moving along preferential migration pathways such as utility trenches.
The DEP recommends a multiple “Lines of Evidence” approach to determine if the vapor intrusion pathway from source to receptor is complete and likely to be of concern. The Lines of Evidence may include the concentration of contaminants in the soil, groundwater, soil gas below the building (sub-slab soil gas), and indoor air; the presence of preferential migration pathways for vapors; and, the presence of other outdoor and indoor sources for the contaminants (e.g., outdoor sources of pollution, household products, etc.).
In an effort to “simplify” the evaluation of the vapor intrusion pathway, DEP has developed Residential and Commercial/Industrial Threshold Values (TVs). These Threshold Values are used to determine whether measured indoor air concentrations are within the range of typical residential indoor air concentrations and typical exposure scenarios for commercial and industrial settings.
The Guidance addresses the common question of whether, and when, to conduct direct sampling of indoor air. The Guidance indicates that it is not common to sample indoor air for volatile organic compounds (VOCs) without first collecting other data on groundwater, soil, or soil gas that indicates that there might be an indoor air problem due to environmental contamination, at least for the purpose of satisfying hazardous waste cleanup regulations (i.e., there may be other reasons to sample the indoor air unrelated to the Massachusetts Contingency Plan, or MCP, at 310 CMR 40.0000). The Guidance recognizes that direct sampling of indoor air without gathering other site data can result in erroneous conclusions and unnecessary response actions to address conditions that are not related to the MCP. In addition, when sampling indoor air (if it is appropriate), efforts should be made to eliminate sources of contamination within or near the building that can affect the results, such as cigarette smoke, the use of sprays, solvents, paints, and other household products, and operations of nearby businesses, such as a dry cleaner.
The Guidance discusses the contentious issue of potential future building construction when there is a potential risk of vapor intrusion (if a building were to be constructed). Achieving closure of a vacant contaminated site that does not have a building can be difficult because actual building conditions cannot be directly measured and existing methodology may not explicitly address potential indoor air problems at a future building. The Guidance indicates that, if some amount of residual contamination will remain in the soil or groundwater, the potential for vapor intrusion should be considered in planning the future placement of a new building and preparing the building site.
The Guidance states DEP’s preference of using an Activity and Use Limitation (AUL), which is a deed rider recorded at the Registry of Deeds, to provide notice to interested parties of the contamination that remains and how to address it in the future. For instance, an AUL might specify the measures to be taken at the time of future building construction (e.g., installation of sub-slab depressurization (SSD) system and a vapor barrier) or might restrict construction activity to locations outside of areas with contamination, or specify that an LSP must evaluate the potential for vapor intrusion before a building is constructed.
The Guidance provides that engineering measures may be incorporated into the future construction plans to protect against vapor intrusion if a building will be constructed in an area where contamination remains that could lead to vapor intrusion. Depending on the concentration of the contaminants, a vapor barrier and an active SSD system either is not required (Category A site), or “should” be installed (Category B site), or presumably “would” be installed (Category C site). The Guidance provides criteria on whether post-construction confirmatory indoor air sampling is necessary and the procedure to determine if the SSD system can be terminated.
Among the various takeaways for owners, developers, and lenders is that LSPs and environmental professionals will have good reason to be cautious in addressing contaminated sites with the potential for vapor intrusion and indoor air contamination. This includes sites with existing buildings as well as vacant properties on which building and construction activities may occur in the future. The Guidance will likely lead to additional site investigations and sampling, which would likely be reflected in the cost and schedule of the work.
Please contact me if you or a colleague has a question on DEP’s Guidance or on other real estate or environmental issues.
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