Property owners, contractors, lenders, architects, engineers, LSPs and surveyors should be aware of important new legislation allowing "design professionals" to place a lien against a property to secure payments due under a contract for professional services. The list of design professionals includes architects, professional engineers, licensed site professionals (LSPs), land surveyors and landscape architects who are licensed or registered in Massachusetts. (The list does not include professional wetland scientists, registered sanitarians or other environmental professionals.) This new law took effect on July 1, 2011.
The Mechanic's Lien Law, General Laws Chapter 254, has long provided a mechanism for building contractors, subcontractors and material suppliers to recover money due under a construction contract. Chapter 254 describes how the lien is created (file a notice of contract), perfected (file a lawsuit to enforce the lien), and enforced (sell the property and collect amounts due relative to other recorded security interests), along with many other critical details. However, prior to the July 1st amendments, architects, engineers, LSPs, and other design professionals typically did not have rights under the Mechanic's Lien Law.
Here are some considerations for design professionals (and building owners, developers, landlords and lenders) under the new law. Of course, the statute must be read in full to appreciate all of its considerations.
1. There must be a written contract. If the written contract is not directly with the owner (e.g., a subcontract with the prime, or first tier, design professional), the owner must approve of the contract in writing.
2. It must be a private project due to the continued exception for public property.
3. The design professional must be licensed or registered in Massachusetts. The lien can be claimed by an individual professional or a corporate entity that is authorized to practice one of the professions.
4. The design professional's lien can be created and enforced whether or not the building or improvement is commenced or completed and whether or not the professional services have been completed.
5. The design professional may record its Notice of Contract at the Registry of Deeds (or Land Court district) at any time as long as it is before the end of the statutory deadlines (i.e., the earlier of 60 days after Notice of Substantial Completion or 90 days after last performing services), and provide notice of the recording to the owner.
6. The design professional must record its Statement of Account within 30 days after the deadlines to record the Notice of Contract (see above).
7. The design professional must file its lawsuit (a Verified Complaint) in court to enforce its lien within 90 days after filing its Statement of Account, and record the Complaint at the Registry within 30 days after it is filed.
8. The design professional must prevail in its lawsuit and then move to enforce the judgment (e.g., force a sale and recover proceeds) if the matter has not been resolved.
9. Owners, developers and lenders should consider requiring lien waivers from design professionals as well as design professional subcontractors, just as they require them from contractors, subcontractors and material suppliers.
10. Owners and developers should consider modifying their construction contracts to require contractors to address liens created by design professionals and to provide indemnification and defense of such liens, just as those provisions may be required for liens created by contractors, subcontractors, and material suppliers.
Please contact me if you or a colleague has a questions on this e-mail or construction projects involving mechanic's liens for contractors or design professionals.
Thursday, August 11, 2011
Friday, May 6, 2011
Liability of Commercial Landlords and owners for Unsafe Conditions
In a recent decision, the Massachusetts Supreme Judicial Court held that a commercial landlord has a statutory duty to correct an unsafe condition as long as the tenant provided written notice of the condition and the tenant did not cause the condition. A commercial landlord has that duty even if the lease provides that the tenant is responsible for repairs and replacement.
The statutory duty arises from General Laws Chapter 186, Section 19. The duty may not be waived in any lease or rental agreement; any such waiver “shall be void and unenforceable.”
Based on this new case, it is important that owners, landlords and property managers respond to written notices provided under the statute even if the tenant is responsible for repairs under the lease. It is also important that the lease provides that the landlord can recoup costs if it is called upon to make repairs.
The new case is Bishop v. TES Realty Trust, wherein the tenant provided the landlord with written notice (by certified mail, return receipt requested, per the statute) complaining about a leaking roof and skylights. The landlord repaired the roof but not the skylights. The tenant claimed that plaster fell from the roof by the skylight into her eye, causing her to fall and suffer injuries. In its defense, the landlord claimed that the statute did not apply to commercial landlords and that the lease obligated the tenant to make repairs. Unfortunately for commercial owners and landlords, the SJC disagreed.
In addition to the “statutory duty” at issue in Bishop, the SJC identified two instances under “common law” where a commercial landlord is liable for injuries arising from unsafe conditions on the landlord’s property: (1) the landlord contracted to make repairs and made them negligently, and (2) the defect that caused the injury was in a common area or other area appurtenant to the leased area over which the landlord had some control.
The Court had an interesting comment on lease provisions that impose a duty to repair on the tenant: “The statutory duty imposed by §19 applies only where the required notice of an unsafe condition has been provided to the landlord. Where the lease imposes on the tenant a duty to repair, the tenant is unlikely to provide such notice, and is more likely to repair the condition herself. Where a tenant with such a duty under the lease gives the required notice and the landlord remedies the unsafe condition, the landlord may bill the tenant for the cost of repair or, as expressly provided under the lease in the instant case, charge the cost of repair as additional rent. And if the application of §19 to commercial landlords does, in practice, devour the common-law rule or allow commercial tenants to shirk their responsibilities under a lease, commercial landlords may petition the Legislature to limit §19 to residential landlords, as the Legislature has done in many other statutes.”
Accordingly, owners, landlords and property managers should consider reviewing their leases to confirm that the provisions concerning tenant’s duty to repair, waiver of landlord obligations, and landlord’s ability to bill a tenant for the cost of repair or charge a repair cost as additional rent, comply with the holding in the Bishop case. Landlords and managers should also be prepared to evaluate written notices sent by tenants pursuant to G.L. c. 186, §19, to determine if an unsafe condition should be corrected by the landlord, and make those corrections if they are required by statute, even if the lease requires the tenant to make repairs.
Please contact me if you or a colleague has a question on the Bishop case or this e-mail.
The statutory duty arises from General Laws Chapter 186, Section 19. The duty may not be waived in any lease or rental agreement; any such waiver “shall be void and unenforceable.”
Based on this new case, it is important that owners, landlords and property managers respond to written notices provided under the statute even if the tenant is responsible for repairs under the lease. It is also important that the lease provides that the landlord can recoup costs if it is called upon to make repairs.
The new case is Bishop v. TES Realty Trust, wherein the tenant provided the landlord with written notice (by certified mail, return receipt requested, per the statute) complaining about a leaking roof and skylights. The landlord repaired the roof but not the skylights. The tenant claimed that plaster fell from the roof by the skylight into her eye, causing her to fall and suffer injuries. In its defense, the landlord claimed that the statute did not apply to commercial landlords and that the lease obligated the tenant to make repairs. Unfortunately for commercial owners and landlords, the SJC disagreed.
In addition to the “statutory duty” at issue in Bishop, the SJC identified two instances under “common law” where a commercial landlord is liable for injuries arising from unsafe conditions on the landlord’s property: (1) the landlord contracted to make repairs and made them negligently, and (2) the defect that caused the injury was in a common area or other area appurtenant to the leased area over which the landlord had some control.
The Court had an interesting comment on lease provisions that impose a duty to repair on the tenant: “The statutory duty imposed by §19 applies only where the required notice of an unsafe condition has been provided to the landlord. Where the lease imposes on the tenant a duty to repair, the tenant is unlikely to provide such notice, and is more likely to repair the condition herself. Where a tenant with such a duty under the lease gives the required notice and the landlord remedies the unsafe condition, the landlord may bill the tenant for the cost of repair or, as expressly provided under the lease in the instant case, charge the cost of repair as additional rent. And if the application of §19 to commercial landlords does, in practice, devour the common-law rule or allow commercial tenants to shirk their responsibilities under a lease, commercial landlords may petition the Legislature to limit §19 to residential landlords, as the Legislature has done in many other statutes.”
Accordingly, owners, landlords and property managers should consider reviewing their leases to confirm that the provisions concerning tenant’s duty to repair, waiver of landlord obligations, and landlord’s ability to bill a tenant for the cost of repair or charge a repair cost as additional rent, comply with the holding in the Bishop case. Landlords and managers should also be prepared to evaluate written notices sent by tenants pursuant to G.L. c. 186, §19, to determine if an unsafe condition should be corrected by the landlord, and make those corrections if they are required by statute, even if the lease requires the tenant to make repairs.
Please contact me if you or a colleague has a question on the Bishop case or this e-mail.
Monday, November 29, 2010
Guidance on the new "Permit Extension Act"
Back in August, I alerted clients and colleagues to the new “Permit Extension Act”, which provides a very valuable two-year extension to qualifying real estate development permits that were in effect or existence between August 15, 2008 and August 15, 2010. Three weeks ago, the Executive Office of Housing and Economic Development (EOHED) issued helpful guidance in the form of “Frequently Asked Questions” to assist local Conservation Commissions, the Department of Environmental Protection (DEP), property owners, wetlands scientists and engineering consultants in implementing the Act.
The FAQ clarifies and confirms many aspects of the Act, such as:
The Act automatically extends the permit by operation of law, so that a permit holder and issuing agency are not required to take action to activate the extension. However, an issuing agency may issue an extension form to a permit holder who requests such a document.
The Act is not limited to state-issued permits; the two-year extension applies to all qualifying permits issued by any town, city, regional or state entity.
Permits related to pre-development activities, such as the clean-up of oil or hazardous materials, are not affected by the Act. Such pre-development activities are considered to be independent undertakings outside the context of a larger development project and, therefore, are not covered by the Act.
The Act extends building permits that were issued or in effect between August 15, 2008 and August 15, 2010.
MEPA certificates, decisions, and waivers are covered, so that qualifying certificates will have two additional years before a “lapse of time” will have occurred that would otherwise have triggered a Notice of Project Change or a new Environmental Notification Form.
Importantly, the Act revives and extends any permit or approval that may have expired during the qualifying period of August 15, 2008 through August 15, 2010. Thus, for instance, “a permit that expired on July 1, 2009, is now revived and set to expire on July 1, 2011.” Also, a permit is revived even if an extension had been previously denied by the agency.
The Act provides an additional two years to the original term of the permit even if it was not due to expire until after the qualifying period of August 15, 2008 through August 15, 2010. Thus, “if a permit or approval was due to expire on September 1, 2011, it will now automatically expire on September 1, 2013.”
However, a permit that had been revoked during the qualifying period is not extended, because the Act specifically preserves the issuing agency’s authority to suspend or revoke a permit. However, the agency must have an independent reason authorized by the terms of the permit in order to revoke or suspend the permit. The agency cannot attempt to avoid the two year extension by revoking or suspending the permit.
The Act does not protect a permit holder from enforcement actions to address noncompliance. The issuing agency’s enforcement authority is retained.
The Act does not extend mitigation that was required as a condition of the original permit. All conditions that applied to the permit continue to apply, so that the permit is subject to the same substantive terms as when it was originally issued. However, any interim deadlines established by the permit are extended for two years, according to the FAQ.
The FAQ indicates that a permit that was pending “adjudicatory appeal” during the qualifying period is not extended. In contrast, a permit pending “judicial appeal” would qualify for an extension if the court were to ultimately uphold the permit.
Of course, the complete text of the FAQ and the Act should be reviewed to evaluate the specific workings of the statute.
Please contact me if you or a colleague has a question on the Permit Extension Act or any real estate development permits affected by the Act.
The FAQ clarifies and confirms many aspects of the Act, such as:
The Act automatically extends the permit by operation of law, so that a permit holder and issuing agency are not required to take action to activate the extension. However, an issuing agency may issue an extension form to a permit holder who requests such a document.
The Act is not limited to state-issued permits; the two-year extension applies to all qualifying permits issued by any town, city, regional or state entity.
Permits related to pre-development activities, such as the clean-up of oil or hazardous materials, are not affected by the Act. Such pre-development activities are considered to be independent undertakings outside the context of a larger development project and, therefore, are not covered by the Act.
The Act extends building permits that were issued or in effect between August 15, 2008 and August 15, 2010.
MEPA certificates, decisions, and waivers are covered, so that qualifying certificates will have two additional years before a “lapse of time” will have occurred that would otherwise have triggered a Notice of Project Change or a new Environmental Notification Form.
Importantly, the Act revives and extends any permit or approval that may have expired during the qualifying period of August 15, 2008 through August 15, 2010. Thus, for instance, “a permit that expired on July 1, 2009, is now revived and set to expire on July 1, 2011.” Also, a permit is revived even if an extension had been previously denied by the agency.
The Act provides an additional two years to the original term of the permit even if it was not due to expire until after the qualifying period of August 15, 2008 through August 15, 2010. Thus, “if a permit or approval was due to expire on September 1, 2011, it will now automatically expire on September 1, 2013.”
However, a permit that had been revoked during the qualifying period is not extended, because the Act specifically preserves the issuing agency’s authority to suspend or revoke a permit. However, the agency must have an independent reason authorized by the terms of the permit in order to revoke or suspend the permit. The agency cannot attempt to avoid the two year extension by revoking or suspending the permit.
The Act does not protect a permit holder from enforcement actions to address noncompliance. The issuing agency’s enforcement authority is retained.
The Act does not extend mitigation that was required as a condition of the original permit. All conditions that applied to the permit continue to apply, so that the permit is subject to the same substantive terms as when it was originally issued. However, any interim deadlines established by the permit are extended for two years, according to the FAQ.
The FAQ indicates that a permit that was pending “adjudicatory appeal” during the qualifying period is not extended. In contrast, a permit pending “judicial appeal” would qualify for an extension if the court were to ultimately uphold the permit.
Of course, the complete text of the FAQ and the Act should be reviewed to evaluate the specific workings of the statute.
Please contact me if you or a colleague has a question on the Permit Extension Act or any real estate development permits affected by the Act.
Subscribe to:
Posts (Atom)
Posts
