Category Archives: Real Estate

Massachusetts Proceeds with Proposal to Impose Tax on Short-Term Rentals like Airbnb

By on June 19, 2017

As discussed in one of our previous posts , Massachusetts legislators have continued to discuss imposing a tax on short-term rental companies like Airbnb. Recently, the Massachusetts Senate decided to proceed with Governor Charlie Baker’s proposal to expand the room occupancy tax to include short-term rentals, but not without a few modifications. Back in January, Governor Baker proposed to expand hotel taxes to include users of services like Airbnb who rent out private rooms for more than five months (150 days) per year. The proposal stated that the 5.7% state tax – and up to 6% local tax – should apply to all providers of “transient accommodations.”

The Senate’s proposal, which was published in late May, adopts and expands upon Governor Baker’s initial proposal. Instead of only applying the room occupancy tax to private rooms that are rented out for more than five months per year, the Senate proposes imposing the tax on all “transient accommodations.” In contrast to Governor Baker’s proposal, which suggested encompassing long-term Airbnb providers under the definition of “hotels,” the Senate’s proposal introduces an entirely new category of housing that would be subjected to the room occupancy tax. “Transient accommodation” would encompass all “owner-occupied, tenant-occupied or non-owner occupied property . . . that is not a hotel, motel, lodging house or bed and breakfast establishment” where at least one room is rented to an occupant and all accommodations are reserved in advance. This new category of accommodation would expand the application of the room occupancy tax to all Airbnb-type services, regardless of their frequency. As a result of this proposed expansion, the state Senate’s proposal is projected to raise $18 million in 2018.

In a television ad Airbnb declared its support for the proposed rental tax in Massachusetts. Although similar ads ran last summer, the new ad reaffirms the company’s “commit[ment] to working with Massachusetts on new, common-sense home sharing rules. We want to collect and pay taxes for our hosts and protect affordable housing. Together, we can make sure all of Massachusetts benefits.” At this point it appears that at least some tax will be levied on companies like Airbnb in the very near future. The effect on hosts and customers remains unknown.  Strang Scott will continue to follow the progress of the proposed tax.

New Hampshire Supreme Court Denies Consumer Protection Act Claim in Real Estate Transaction Gone Bad

By on June 15, 2017

     In the recent case of Fat Bullies Farm, LLC, v. Lori Devenport et al., the New Hampshire Supreme Court had occasion to consider whether a series of less than truthful representations made by a prospective purchaser in the course of negotiating a real estate transaction gave rise to liability under NH RSA 358-A, New Hampshire Consumer Protection Act (the “Act”).

     After a trial in the matter, the Superior Court determined that the plaintiff and counterclaim defendants, Fat Bullies Farm and its principals, were liable for an award of enhanced damages – double attorney’s fees and double costs – pursuant to the Act.  On appeal, Fat Bullies Farm and its principals argued that the trial court erred in determining that the conduct underlying the award was sufficient to support liability under the applicable legal standard – that is, that the conduct was sufficiently unfair and deceptive to meet the “rascality test” for determining liability under the Act.

     The Act proscribes unfair and deceptive practices in commerce generally, and provides an inexhaustive list of specific types of conduct that give rise to liability under the Act.  For conduct not specifically listed, courts in New Hampshire consider the conduct complained of under the Act’s general proscription against unfair and deceptive conduct.  When considering whether any particular conduct not proscribed in the Act nevertheless supports liability, New Hampshire courts consider the conduct against the so-called “rascality test.”  Under the “rascality test” the conduct complained of must “attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.”  As a practical matter the court seeks guidance from the Federal Trade Commission Act (the “FTCA”) to determine whether such conduct runs contrary to the “rascality test” and offends the Act.

     The FTCA test considers whether the complained of activity offends public policy as embodied in other statutes, the common law or otherwise offends established norms of fairness, whether the conduct is immoral, unscrupulous, oppressive or unethical or whether it causes substantial harm to consumers.

      In the instant matter, the trial court found that Fat Bullies Farm’s conduct, which consisted of a course of unscrupulous behavior including misrepresenting their intentions for the future of the real property included in the proposed transaction, along with certain other selfish bargaining and business dealing tactics, was sufficient to establish liability under the Act. 

     The Supreme Court disagreed with the trial court’s decision, however, and held as a matter of law that misrepresentations concerning future uses of real property to be purchased could not give rise to liability under the Act if not contained in writing, because oral promises concerning real property are unenforceable under the Statute of Frauds.  The Supreme Court noted that even though Fat Bullies Farm’s misrepresentations encouraged property owner to sell the property to them, a course of misrepresentations of intent were not enough to support liability under the general proscription of the Act and the “rascality test” absent more.

     Each decision concerning liability under the general proscription of the Act and the related “rascality test” is inherently fact based, and therefore may not serve as strong precedent for future decisions of the Court.  Nonetheless, the Fat Bullies Farm decision further underscores the larger body of New Hampshire Supreme Court jurisprudence that demonstrates a pattern of restraint in its application of the Act to business dealings.  While other states with similar statutes apply the remedies offered by the Act liberally, the New Hampshire Supreme Court applies the remedy sparingly, and potential litigants should not be confident that, absent extraordinary circumstances, the Act provides redress for unscrupulous conduct in business dealings.  To consider whether the circumstances of your dispute merit consideration of a claim under the Act, litigants are well-advised to contact a New Hampshire litigator.       

Property Owners and Landlords Beware: New Ruling Clarifies Restriction on Claims to Remove Holdover Owners and Tenants After Foreclosure

By on June 5, 2017

Every eviction action centers on one or both of the following issues: which party is entitled to possession and what amount of damages are appropriate. Recently, the Massachusetts Appeals Court faced a unique set of facts with regard to the right of possession in Fed. Nat. Mortgage Ass’n v. Heather Gordon, et al., 2015-P-0441, and reaffirmed the requirement for post-foreclosure owners to resort to summary process to remove holdover owners and tenants.

In Nat. Mortgage Ass’n, the occupants of a property in Roxbury appealed from a judgment in favor of Fannie Mae, the party obtaining title to the property after foreclosure, from the Boston Housing Court. The occupants argued Fannie Mae’s common-law trespass claim against them was barred by statute and that Fannie Mae failed to obtain actual possession of the property before filing its claim. The occupants previously entered into a 3-year residential lease with one of the former owners of the property who lost title at foreclosure. Interestingly, the lease was executed after the date of foreclosure and after Fannie Mae filed a summary process action against the former owner. The former owner moved out of the property several months after signing the lease and the occupants moved in. Once Fannie Mae learned the occupants had taken possession, it brought a separate action for common-law trespass against them. The Boston Housing Court entered judgment awarding possession to Fannie Mae.

The occupants argued on appeal that Section 18 of Massachusetts General Laws Chapter 186 prohibits property owners from bringing common-law trespass actions against holdover former owners or tenants and requires resort to summary process to lawfully regain possession. The Appeals Court agreed with the occupants, reaffirming the Supreme Judicial Court’s holding in A.G. v. Dime Sav. Bank of N.Y., 413 Mass. 284 (1992). The Appeals Court held that the former owner occupied the property at the time of foreclosure and that the occupants became holdover tenants. The Court went on to hold that the occupants’ status in relation to the property could not be treated as different or lesser than that of a holdover tenant without attributing actual or constructive knowledge that the occupants knew the former owner did not have title when signing the lease or when they moved into the property. The Court declined to create an expectation that residential tenants would need to take steps to make sure their landlord has title to a property before entering into a tenancy. Under the ruling set forth in Fed. Nat. Mortgage Ass’n, post-foreclosure owners may not bring a trespass action against holdover tenants who remain in possession, even where that holdover tenant’s leasehold rights arose after the date of foreclosure, but before final judgment for possession in favor of the foreclosure purchaser.

The Appeals Court also held in favor of the occupants’ argument that Fannie Mae never took actual possession of the property. Actual possession is one of the elements claimants must prove in order to succeed on a common-law trespass claim. In holding for the occupants, the Court reaffirmed the ruling in Dime Savings that actual or constructive possession by an owner asserting a trespass action cannot be maintained when the property is actually possessed by another. The Appeals Court clarified that “actual” possession does not terminate the minute the former owner vacates the property and that the facts presented in Nat. Mortgage Ass’n showed that the execution of the lease and surrender of possession to the occupants did not “indicate [the former owner]’s surrender of possession in relation to others [namely, Fannie Mae] who might claim title.” To the contrary, the facts suggest the opposite and that a gap in time between when the former owner vacated and the occupants took possession cannot signify surrender of actual possession by the former owner. The Court determined that surrender of possession is a factual dispute “to be determined by the intent as expressed by words and acts of all the parties in the light of the circumstances” and the facts presented suggested that the former owner intended to remain in possession after she moved out, regardless of the pending summary process action against her by Fannie Mae. 

The outcome of Fed. Nat. Mortgage Ass’n further emphasizes the strict conformity Massachusetts require in connection within regaining possession and the necessity for landlords and residential property owners to undertake summary process to protect and enforce those rights. Evicting holdover tenants and former owners can be a complicated and fact-specific process.  As such, you should contact an experienced attorney to ensure the proper timelines and steps are taken to evict a tenant.

Want Out? Prove It: Enforcing Termination Options in Massachusetts Commercial Leases

By on May 22, 2017

A recent Massachusetts Appeals Court decision made clear that the burden of proof relative to the operation of lease option clauses falls on the party seeking to exercise the option regardless of which party moves to enforce their rights pursuant to the lease. In Patriot Power, LLC v. New Rounder, LLC, et al. (2016), a commercial landlord initiated an action for declaratory judgment and breach of contract against a tenant alleging that the tenant did not properly exercise its contract option to terminate its tenancy.

At trial, the jury was instructed that the landlord bore the burden of proof relative to the claim that the tenant had not properly exercised the lease termination option. The landlord objected to the instruction and subsequently lost the case. On appeal, the court sided with the landlord and reversed the ruling on the grounds that the jury instruction regarding the burden of proof was erroneous and prejudicial.

The court held that the fact that the landlord initiated the action for declaratory relief did not shift the burden to the landlord on the underlying action. The court cited a line of cases supporting the proposition that, “one relying on a condition to avoid contractual obligation has the burden to prove the occurrence of the condition.” A proposition made stronger when the facts are such that, “the contractual obligation actually requires an affirmative act by the party seeking to end the obligation.”

As applied to the facts in Patriot Power it is clear that the tenant bore the burden of proof. The lease termination option required the tenant to mail timely notice of such termination in order to relieve the tenant of further contractual obligation. Thus, the tenant needed to prove it had, in fact, complied with the terms of the lease rather than the landlord needing to prove non-compliance. Lease termination option clauses are common in many Massachusetts commercial leases. Both commercial landlords and tenants should read their leases carefully in order to fully understand the obligations and provisions contained within.

Massachusetts Commercial Lease: Maintaining and Repairing Equipment

By on April 28, 2017

It often comes as a surprise to commercial tenants that they are responsible for repairing and maintaining most of the equipment in their commercial space.  This can prove both frustrating and expensive when an outdated air conditioner breaks in the middle of summer.  To avoid these frustrations, tenants should (1) review the specific requirements in the lease, with an eye on some of the below specific applications; and (2) have a professional evaluate the life and value of each piece of equipment the tenant is required to maintain.

Servicing Exclusively the Premises

When a lease requires a tenant to repair and maintain equipment, the commercial leasing lawyers typically haggle over what specific equipment is required to be maintained.  The usual approach is to require the tenant to repair and maintain equipment that “exclusively serves” the rented space.  Meaning, the landlord is required to maintain equipment that serves the entire building (e.g. the building plumbing) but the tenant is required to maintain equipment that only serves the space (e.g. plumbing located in the tenant’s bathroom).  All buildings and all rental spaces are different, so it is imperative to negotiate, with as much detail as possible, what equipment truly “exclusively serves” the premises.  Often, as is usually the case with air conditioning and HVAC, the line between a building system and a premises-specific system is blurred. 

Air Conditioning and HVAC

Air conditioning and HVAC units are some of the more contested elements in maintenance/repairs provisions of leases.  These systems are critical because they can completely destroy a tenant’s ability to operate its business if they fail and they are often expensive.  Moreover, these systems are often tied to other systems within the building and therefore it is difficult to pinpoint who should absorb the cost.  As stated above, tenants should enlist a maintenance or engineering expert to determine (1) the life of the air conditioning and HVAC system; and (2) fully describe the interplay between the tenant’s systems and the building’s systems. 

Grease Traps

A grease trap, which is a plumbing apparatus used to collect cooking grease before it enters the wastewater system, is particularly important for restaurant commercial leases.  In every restaurant lease I have negotiated, the tenant is responsible for cleaning and maintaining the grease traps.  Leases typically state that tenants must “regularly” clean and maintain their traps, but sometimes a lease will provide for specific periodic cleanings (e.g. once a month) and even specify the contractor the restaurant owner must use.  The above language is fairly standard, but one important piece that is often overlooked is the location of the actual grease trap.  While ordinarily located within the restaurant, grease traps are sometimes located in separate areas, in other adjacent units, and even outside of the premises.  As such, tenants and landlords alike should discuss and agree to how and when grease traps should be cleaned.  Otherwise, tenants will have headaches in trying to access the very thing they agreed to clean, and landlords may have other tenants angry because the grease trap equipment is interfering with their business.    I once had a client whose grease trap was located in the basement of an adjoining unit, which happened to be a merchandise showroom.  Although my client cleaned the grease trap as required, they also inadvertently dragged grease throughout the showroom, much to the frustration of the other tenant.     

Operating Expenses

The confusing crossover between all repair and maintenance issues is when repair and maintenance are covered as part of operating expenses.  In larger buildings, tenants will have to pay, in addition to rent, a portion of the landlord’s operating expenses for the building.  This portion often covers some of the building’s overall maintenance and repair costs.  As such, even if something is not a direct tenant expense, the tenant may end up covering the cost (or a portion) through the payment of operating expenses.  It is therefore imperative that tenants ensure their maintenance and repair obligations are consistent with what is covered under operating expenses.   

The above is a simplified summary of different approaches to equipment maintenance for a commercial space. Each situation is different, and often different locations will have differing “standards” for how leases are structure. For example, in the Boston area, the standard provisions for commercial leases in Cambridge often differ from those in the City of Boston. In fact, the standards in different neighborhoods in Cambridge (e.g., Kendall Square) often deviate from other neighborhoods (e.g., Harvard Square). As such, it is critical that both landlords and tenants speak with a commercial real estate attorney before executing a commercial lease.

Purchasing At Foreclosure? Foreclosed owners may remain in possession longer under new Housing Court ruling

By on April 10, 2017

By Jennifer Lynn, Esq.,

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     The required timeline for notice of eviction to holdover former homeowners was recently altered by the Southeastern Division of the Massachusetts Housing Court in Lenders Comm. Finance LLC v. Pestilli, et al., docket no. 16H83SP03779BR.  After obtaining title, Lenders Commercial Finance brought a summary process action against the former-mortgagor who refused to vacate after receiving a 30-day notice to quit.  The bank moved for summary judgment, requesting the court to enter judgment in its favor because no facts were disputed between the parties and it brought a valid action to evict. In a departure from long-standing practice, the court ruled that Section 12 of Massachusetts General Laws Chapter 186 requires service of a 90-day notice to quit in order to regain possession from the holdover former-mortgagor properly.  The court based the ruling on the fact that no agreement existed between the purchasing mortgagee and the former mortgagor to pay rent for any definite rental period. This ruling is a marked departure from the longstanding principle that a former-mortgagor, as tenant-at-sufferance, is only entitled to “reasonable” notice prior to eviction, and customary practice provided 30 days’ notice to the holdover occupant.

     The court’s ruling in Pestilli is an unpublished district court decision and stands only as persuasive authority for future summary process decisions. The ruling, however, may signal a shift in Massachusetts housing courts toward statutory interpretations that provide foreclosure occupants a longer period of notice before the mortgagee regains possession of foreclosed property. Should the standards set forth in this ruling be adopted widely, the timeline for eviction will be extended, creating additional burdens for the foreclosure purchaser and increased overall costs. In addition, the change will likely create an increase in “cash for keys” deals, under which the purchaser offers a deal to the former-mortgagor to vacate voluntarily and to forego challenging the right to possession. Evicting holdover tenants and former homeowners can be a complicated and fact-specific process. As such, you should contact an experienced attorney to ensure the proper timelines and grounds for eviction are present.

Massachusetts Commercial Lease: Acceleration Clause

By on February 20, 2017

Unlike Massachusetts residential leases, under which a landlord is required by law to mitigate its damages, commercial lease provisions are more flexible and often contain a so-called “acceleration clause.”  An acceleration clause, in its most basic form, addresses whether a landlord may accelerate rent (i.e. demand all of the rent that is remaining due under the lease) if a tenant breaches the lease before the end of the term.  Generally speaking, commercial leases deal with acceleration in one of three ways:  (1) the lease is silent about acceleration; (2) the landlord can demand the full rent immediately upon the tenant’s default; or (3) the landlord can demand the full rent immediately upon the tenant’s default and demand that the tenant continues to pay the ongoing obligations under the lease.  Practically speaking, it is very rare that a lease is completely silent.  Thus, for purposes of this article, we will assume that the lease contains some form of an acceleration clause. 

Savvy tenants typically try to limit the landlord’s ability to accelerate rent.  Often, tenants will try to (1) negotiate longer cure periods (i.e. have a longer time period during which the tenant can remedy the default); (2) limit the landlord’s options to either (i) demanding full rent upon default or (ii) requiring the tenant to meet ongoing obligations; and/or (3) ask that the acceleration of rent is offset once the landlord secures a new tenant (i.e. the landlord must try to mitigate its damages).  Assuming the landlord is willing to make some of these concessions, landlords will want their own limitations: (1) landlords are generally not going to allow a cure period beyond thirty days; (2) if the landlord elects to take a one-time payment in lieu of ongoing rent payments, the landlord may require more money for the security deposit and/or require a personal guarantee; and (3) the landlord may allow an offset (i.e. the landlord gives the tenant a “credit” once the landlord secures a new tenant), but that offset usually factors in the landlord’s costs in doing so, like broker commissions, attorney fees, etc.  

Tenants have argued that acceleration clauses effectively allow landlords to “double-dip” their purported damages.  Said another way, a tenant may argue that it is unfair for a landlord to receive accelerated rent from the tenant and receive rent from a new tenant (assuming the landlord is able to obtain a new tenant).  Massachusetts courts, however, have continued to uphold acceleration clauses on the basis that accelerated rent is a valid form of “liquidated damages.”

In a seminal case on this topic, the Massachusetts Supreme Judicial Court (“SJC”) in Cummings Properties, LLC v. National Communications Corporation1 held that the acceleration clause at issue was a valid against the tenant.  In that case, the landlord asserted that it was entitled to accelerated rent on the remainder of the lease (more than two years) for and thus the landlord was entitled to more than $500,000.  Citing relevant cases from Massachusetts and other jurisdictions, the SJC agreed.  Subsequently, other tenants have fought unsuccessfully to void such provisions, making the argument that acceleration clauses effectively allow landlords to “double-dip” if they then find a suitable replacement tenant.  This argument was summarily dismissed in a recent federal court decision, Bridge Over Troubled Waters, Inc. v. Argo Tea, Inc.2, applying Massachusetts law.  Like the SJC in Cummings Properties, the Court in Argo ruled that the acceleration clause was enforceable as liquidated damages.

The above is a general summary of acceleration clause approaches in commercial leases. Each situation is different, and often different locations will have differing “standards” for how leases are structure. For example, in the Boston area, the standard provisions for commercial leases in Cambridge often differ from those in the South Boston. In fact, the standards in different neighborhoods in Cambridge (e.g., Kendall Square) often deviate from other neighborhoods (e.g., Central Square).  Moreover, acceleration clauses tend to vary depending upon whether the space is for a restaurant, laboratory, retail, office or warehouse).  As such, it is critical that both landlords and tenants speak with a commercial real estate attorney before executing a commercial lease.

 

FN1.  Cummings Properties, LLC v. National Communications Corporation, 449 Mass. 490 (2007)

FN2.  Bridge Over Troubled Waters, Inc. v. Argo Tea, Inc, 2016 WL 7238793

Massachusetts Court Holds That Strict Condominium Bylaws Preclude Lawsuit Against Trustees

By on February 13, 2017

Massachusetts Court of Appeals recently affirmed the legal validity of a condo’s bylaws requiring the consent of eighty percent (80%) of unit owners as a prerequisite for owner standing in lawsuits against the trustees of the condominium’s board. The bylaw in question made it functionally impossible for unit owners to sue the trustees as, by virtue of the number of units and number of trustees, it necessitated at least partial trustee-owner consent to reach the eighty percent (80%) threshold. Bettencourt v. Trustees of Sassaquin Village Condo Trust, 59 N.E.3d 455 (Mass. App. 2016).

The Court held that the bylaw was neither unconscionable nor against public policy and thus concluded, “that the consent requirement is valid and the plaintiffs’ failure to comply with it mandates dismissal of their derivative claims.”  The Court reasoned that as the plaintiffs, “knowingly and voluntarily agreed to the consent requirement when they purchased their units,” and were not precluded from, “persuading other unit owners and one or more of the trustees to consent to a lawsuit,” that the bylaw was not unconscionable as the, “plaintiffs [had] not identified any aspect of the consent requirement that is substantively or procedurally unfair.”  Additionally, the Court noted the bylaw was not “one-sided” as the provision applied to all owners, included potentially aggrieved trustee-owners. The Court also held that  condominium trustees do not owe a fiduciary duty to individual condominiums owners, but rather that duty is limited to the board of trustees itself.

Functionally this ruling implies that even the most stringent of condominium bylaws may be read as valid so long as owners were aware of the bylaws at the time of purchase and the bylaws treat all owners the same (including trustee-owners). This ruling should serve as a reminder to current and potential Massachusetts condominium owners that heightened vigilance with regard to the contents of condominium bylaws and other condominium related documents is necessary and advantageous.

Proposed Legislation to Restrict Reasons for Evicting Tenants in Boston

By on January 31, 2017

Mayor Walsh’s administration recently proposed a new bill aimed at limiting the available reasons to evict a residential tenant. The proposal, known as the “Jim Brooks Community Stabilization Act,” would eliminate no-fault evictions in many instances, a common practice used to remove tenants without listing a violation. Proponents of the act claim that it is designed to protect renters from “arbitrary” or unreasonable evictions, without unfairly restricting the landlord. Opponents cite concerns that it would deter further development and hinder private property rights.  

Under current law, landlords may evict tenants for a specific reason, or for no reason at all, depending on the type of rental agreement. For tenancies with an ongoing, written agreement, landlords may give notice to evict for nonpayment of rent or for a specific reason, including violation of a provision of the lease. For tenants who are at-will, meaning those who do not have a written lease for a specific term, landlords may give notice to evict for failure to pay rent or for no reason.

Should the proposed Act pass, the new law would severely restrict the “no-fault eviction,” and limit evictions to instances where the tenant has not paid rent, created a nuisance, used the unit for an illegal purpose, violated the lease agreement, refused to extend or renew the lease, refused to permit the landlord to make necessary repairs, or offered subtenants not approved by the landlord. Exceptions to these restrictions have been offered, but are narrow in scope, applying to sober homes, college housing, or buildings owed by a Massachusetts resident who has six or less residential units. For larger scale, commercial landlords, they would be stuck with a tenant until a material issue arises.

Moreover, if passed, the Act would prevent landlords from clearing an entire building for the purpose of selling, renovating, or converting the use of the building. Under the new law, landlords would have to renovate a building or unit while the tenants continue to reside in their unit or force the landlord to provide alternative housing to the tenant while construction is ongoing.

If you are a landlord renting residential units in Boston, make sure you continue to monitor the Jim Brooks Community Stabilization Act. If it becomes law, your ability to remove tenants from a unit may become dramatically restricted. Should you have questions about evicting a residential tenant, you should contact a Boston property management attorney.

Massachusetts Commercial Lease: Unenforceable Indemnification Provisions

By on October 21, 2016

I will concede that discussing indemnification provisions in commercial leases is not the most riveting topic. However, this is a critical issue for landlords and tenants alike. Nearly every commercial lease I have reviewed, from small transactions (e.g. a boutique Boston restaurant) to larger, complex transactions (e.g. a state-of-the-art laboratory facility in Cambridge), has a provision discussing how and when a tenant or landlord must indemnify the other party. In layman’s terms, “indemnification” simply means that one party promises to pay the cost for possible future damages or claims. We discussed indemnification in the context of construction subcontracts and construction management contracts in our previous articles.  

In the commercial leasing context, leases often state that the tenant will indemnify the landlord for any claims, injuries or damages that occur on the leased property. They will often go further and require that the tenant indemnify the landlord even for the landlord’s own actions, inactions or negligence. While these provisions seemingly offer landlords protection, landlords should proceed with caution: some of these provisions are completely unenforceable in Massachusetts.

Massachusetts General Laws Chapter 186, Section 15 states:

Any provision of a lease or other rental agreement relating to real property whereby a lessee or tenant enters into a covenant, agreement or contract, by the use of any words whatsoever, the effect of which is to indemnify the lessor or landlord or hold the lessor or landlord harmless, or preclude or exonerate the lessor or landlord from any or all liability to the lessee or tenant, or to any other person, for any injury, loss, damage or liability arising from any omission, fault, negligence or other misconduct of the lessor or landlord on or about the leased or rented premises or on or about any elevators, stairways, hallways or other appurtenance used in connection therewith, shall be deemed to be against public policy and void.

Both Massachusetts and Federal Courts have held that the above statute applies equally to residential leases and commercial leases. The statute does not, however, preclude a landlord from requiring a tenant to obtain insurance protecting against the landlord’s own negligence. So what does this mean? In short, it means that commercial landlords cannot force tenants to indemnify or hold landlords harmless from the landlords’ wrongful actions. It does not prevent, however, landlords from requiring tenants to carry insurance to protect from such liability. As an example, imagine that a customer walking into a restaurant trips and falls in an entranceway. If the lease has language stating that the tenant has to indemnify the landlord from any injuries on the property, including those caused by the landlord, then the tenant would have to cover the customer’s injuries. Under Massachusetts law, however, such provisions are unenforceable and so the landlord may not escape liability (say, for example, the customer tripped because the landlord failed to fix the doorway). To protect against this liability, the landlord can obtain its own insurance and/or require the tenant to obtain insurance protecting the landlord.

The above is meant only as a brief summary. If you are a commercial tenant or landlord and have questions about your lease, you should contact a commercial real estate lawyer.