Doug Cornelius .com

Floor Area Ratio has longed been used as a way regulate building density under zoning laws.  The owner of the property can choose to build a short building on most of the property or a taller building on less of the property.

Although Floor Area Ratio has been used to regulate commercial properties, there was some uncertainty as to whether you could use it for single family residential property in Massachusetts. Floor Area Ratio restrictions is one way to limit McMansions.

In the case of 81 Spooner Road LLC v. Town of Brookline (SJC-10104), the Massachusetts Supreme Judicial Court ruled that towns and cities can use Floor Area Ratio to regulate the density of single-family residential properties.

The uncertainty comes from M.G.L. c.40A, §3 that provides in part:

 ”No zoning ordinance or by-law shall regulate or restrict the interior area of a single family residential building . . . provided, however, that such . . . structures may be subject to reasonable regulations concerning the bulk and height of structures and determining yard sizes, lot area, setbacks, open space, parking and building coverage requirements. . . .”

A property owner challenged the Town of Brookline’s imposition of a 0.3 Floor Area Ratio on a single family house the owner proposed to build on a vacant lot.

The Massachusetts Supreme Judicial Court ruled in part:

“that regulation of single-family residences pursuant to the authority in the proviso of G. L. c. 40A, § 3, second par., including bulk regulation by floor-to-area ratio, is a proper exercise of the zoning power, provided the effect of such regulation on the interior area of such structures is incidental.  Although the town’s bylaw requires consideration of gross floor area of single-family residences for purposes of calculating floor-to-area ratio, this is not a prohibited direct regulation of interior area.  Its effect is only incidental.”

It looks like Massachusetts cities and towns can use Floor Area Ratio to limit McMansions from sprouting up, with over-sized houses growing in existing neighborhoods.

Disclaimers

I had previously posted about the Massachusetts Rule on Tree Liability. Last month, the Massachusetts Appeals Court generated some new law on trees in the case of Glavin v. Eckman 71 Mass. App. Ct. 313 (2008).

To improve their own view of the ocean, Eckman cut down ten mature oak trees on the property of their neighbor, Glavin, without the permission of Glavin. Glavin brought a claim under M.G. L. c. 242, § 7.

“A person who without license wilfully cuts down, carries away, girdles or otherwise destroys trees, timber, wood or underwood on the land of another shall be liable to the owner in tort for three times the amount of the damages assessed therefor; but if it is found that the defendant had good reason to believe that the land on which the trespass was committed was his own or that he was otherwise lawfully authorized to do the acts complained of, he shall be liable for single damages only.”

The jury found in favor of the neighbor and awarded $30,000 in damages , which the judge trebled since it was readily apparent the the trees were not on Eckman’s property.

The interesting part of this case and the decision was the damage award. The $30,000 award was for the restoration costs. Eckman argued that the award should have been for the timber value of the trees or the diminution in value of Glavin’s property without the trees.

“A plaintiff may opt for either the value of the timber cut or the diminution in value of his property as the measure of damages under the statute, . . . and when the latter measure does not fairly measure his damages, he may permissibly opt for restoration cost damages.”

From the Massachusetts Trial Court Libraries is a site with Massachusetts Law About Neighbors and Trees.

After this latest snowstorm in Boston, I had to drag some fallen limbs into my compost pit. I thought this would be a good time to post on Massachusetts law on trimming your neighbor’s trees.

A neighbor may remove branches extending over a shared property line onto his or her own property. See, e.g., Levine v. Black, 312 Mass. 242 (1942); Michalson v. Nutting, 275 Mass. 232 at 233-234 (1931). Also, the neighbor has no liability for roots growing into your yard and causing damage. The ability to cut back limbs and roots is limited by Mass. Gen. Laws ch. 87, § 11 that provides: “Whoever wilfully, maliciously or wantonly cuts, destroys or injures a tree, shrub or growth which is not his own, standing for any useful purpose, shall be punished by imprisonment for not more than six months or by a fine of not more than five hundred dollars.” You can trim the branches and roots back, but you cannot kill the tree. This is the “Massachusetts Rule.”

Massachusetts law does not allow a person to cross or enter a neighbor’s property for these purposes without the neighbor’s consent, nor to remove any branches or other vegetation within the confines of the neighbor’s property. Mass. Gen. Laws ch 242 §7 A party is liable for triple damages for entering the property of another and cutting down trees or branches.

There is also a Massachusetts statute that prohibits cutting, trimming or removing of public shade trees. Mass. Gen. Laws Ch. 87. Under this statute public shade trees are defined as “All trees within a public way or on the boundaries thereof…” Mass. Gen. Laws ch. 87 § 1.

The Massachusetts Rule is followed in most states. However, the Washingtonpost.com
is reporting that Virginia just adopted a new rule: Virginia High Court Breaks New Ground on Tree Liability. Apparently in Virginia a tree owner can now be held liable for damage caused by their tree and can forced to cut back roots and limbs if the tree poses a risk of actual harm or an imminent danger. Fancher v. Fagella (9/14/2007):

“Accordingly, we hold that encroaching trees and plants are not nuisances merely because they cast shade, drop leaves, flowers, or fruit, or just because they happen to encroach upon adjoining property either above or below the ground. However, encroaching trees and plants may be regarded as a nuisance when they cause actual harm or pose an imminent danger of actual harm to adjoining property. If so, the owner of the tree or plant may be held responsible for harm caused to [adjoining property], and may also be required to cut back the encroaching branches or roots, assuming the encroaching vegetation constitutes a nuisance. We do not, however, alter existing . . . law that the adjoining landowner may, at his own expense, cut away the encroaching vegetation to the property line whether or not the encroaching vegetation constitutes a nuisance or is otherwise causing harm or possible harm to the adjoining property. Thus, the law of self-help remains intact . . . .”

Last week I noted the story and decision of City of Springfield Code Enforcement v. Concerned Citizens for Springfield, Inc., et al. in which Housing Court Judge William H. Abrashkin ordered the individual manager (Shalom Segelman) of the property owning limited liability company to pay $1.3 million in relocation costs for the tenants in the sub-standard apartment complex.

After reviewing the case, it is not clear whether the judge was piercing the liability shield of the LLC or carving an exception to the liability shield.

M.G.L. C. 156C s. 22 provides that no “. . . member or manager of a limited liability company shall be personally liable, directly or indirectly, including, without limitation, by way of indemnification, contribution, assessment or otherwise, for any such debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company.” This is the liability shield for a limited liability company.

Judge Abrashkin looks to the definition of owner under the State Sanitary Code (105 CMR 400) that imposes obligations on the owner. The code has a very broad definition of owner:

“Owner means every person who alone or severally with others:

(1) has legal title to any dwelling, dwelling unit, mobile dwelling unit, or parcel of land,vacant or otherwise, including a mobile home park; or
(2) has care, charge or control of any dwelling, dwelling unit, mobile dwelling unit or parcel of land, vacant or otherwise, including a mobile home park, in any capacity including but not limited to agent, executor, executrix, administrator, administratrix, trustee or guardian of the estate of the holder of legal title; or
(3) is a mortgagee in possession of any such property; or
(4) is an agent, trustee or other person appointed by the courts and vested with possession or control of any such property; or
(5) is an officer or trustee of the association of unit owners of a condominium.

Each such person is bound to comply with the provisions of these minimum standards as if he were the owner. Owner also means every person who operates a rooming house.”

My reading of Judge Abrashkin’s decision is that this definition of owner is an exception to the liability shield of M.G.L. C. 156C s. 22.

I disagree with a statement in the Judge’s analysis: “Had this complex gone in the other direction Mr. Segelman would, rightly, have insisted upon reaping the rewards. With the benefits go the burden, and this one falls unavoidably, upon Mr. Segelman.”

One the basic paradigm’s of investing in real estate (and any business) is being able to limit your losses. If I went out and bought a share of Boston Properties, Inc. (BXP) I would pay the $104.37 that it costs (as of this morning). I have unlimited upside. The stock could triple in value and pay out enormous dividends. My downside is limited to the $104.37 that I paid for the share. As a shareholder, I would never expect to get a bill to contribute more capital to Boston Properties because one of their buildings is in disrepair.

I expect the same treatment if I were an individual investor in a limited liability company that directly owned an apartment building. I know my initial capital is at risk, but I should not have to put additional capital in (unless I agreed to under the limited liability company agreement). I could lose all of my investment. But I should not have to lose more than my investment.

That being said, there are some exceptions to this liability shield. In real estate, there is CERCLA’s ability to look through entity for liability due to environmental contamination. (You can read this article by Daniel M. Darragh of Buchanan Ingersoll & Rooney PC on Indirect Owner/Operator Liability Under CERCLA). There is also the equitable remedy of piercing the corporate veil.

In his order, Judge Abrashkin did not discuss any of the factors for piercing the corporate veil. So I am left to assume that the Massachusetts state sanitary code is an exception to the limited liability of an entity.

The Massachusetts Appeals Court ruled that a security deposit for a Massachusetts residential lease must be deposited in a Massachusetts branch of a Massachusetts bank: Taylor v. Burke. (subscription required)

The landlord in the case opened the security deposit account in the New Hampshire branch of Citizens Bank.

Under MGL c.186, S. 15(B) , (3)(a) provides: “Any security deposit received by such lessor shall be held in a separate, interest-bearing account in a bank, located within the commonwealth under such terms as will place such deposit beyond the claim of creditors of the lessor, including a foreclosing mortgagee or trustee in bankruptcy, and as will provide for its transfer to a subsequent owner of said property. . . .”

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