Published By
Andrea Rutherford
Associate, Estate Planning
It’s a tempting thought – why wait until I am gone? Why not just deed the family home to my kids now? In almost every case, this is a mistake.
A little bit of Taxation 101. Let’s imagine a couple bought a house for $200,000 in 1990. Now, it’s 2023 and the children are grown, maybe with their own children. The parents deed the house to a child or children. Ten years later, in 2033, the parents pass away and the children decide to sell the house – for $350,000.
Under this scenario, the children’s capital gain will be calculated all the way back to when the parents bought the house in 1990.
The gain is $150,000. If the house isn’t the children’s primary residence, this entire amount is taxable capital gain. The parents intended to give their children a house – instead, they gave them a house and a large tax bill.
So does this mean that you can’t give your children your house?
Not at all.
A properly drafted trust ensures that your children will get your house. But by keeping some rights (such as a right to receive income if the property is rented) in the hands of the parents, the trust turns the gift into a gift upon death – a totally different ballgame under the tax laws.
Let’s look at our example under this scenario. The parents buy the house for $200,000 in 1990. In 2023, instead of deeding the house to their children, they sit down with an attorney and create a Trust naming their children as beneficiaries. Ten years later, the parents pass away – at that time, the house is worth $350,000. The children sell the house a year later for $360,000. The taxable gain is only $10,000. So the parents have used the Trust to give the house to the kids, but they haven’t passed on the tax obligation.
Don’t be put off by the term “Trust.” Creating a Trust is probably easier than you think. Speak with one of our estate planning attorneys today to start creating your estate plan. The first meeting is always free.
Published By Christina Petrucci Partner, Dalton & Finegold
Mechanic’s liens can be a complicated issue for homeowners in Massachusetts. A mechanic’s lien is a legal claim against a property that is filed by a contractor, subcontractor, or supplier who has provided labor or materials for a construction project and has not been paid. In this blog post, we’ll discuss what mechanic’s liens are, how they work in Massachusetts, and how to deal with them.
What is a Mechanic’s Lien?
To uncover any liens, such as mechanic’s liens, title examiners search the registry of deeds.
A mechanic’s lien is a legal claim against a property that is filed by a contractor, subcontractor, or supplier who has provided labor or materials for a construction project and has not been paid. The lien gives the contractor or supplier a legal right to seek payment from the property owner, even if the property owner has already paid the general contractor.
How do Mechanic’s Liens Work in Massachusetts?
In Massachusetts, mechanic’s liens are governed by Chapter 254 of the Massachusetts General Laws. Under this law, any person who furnishes labor or materials for the improvement of real property has a right to file a mechanic’s lien if they are not paid. The lien must be filed within 90 days of the last day of work or the last delivery of materials.
Once the lien is filed, it must be served on the property owner, and the lienholder must file a lawsuit within 90 days to enforce the lien. If the lien is not enforced, it becomes invalid after one year from the date it was filed.
How to Deal with Mechanic’s Liens in Massachusetts?
If you are a homeowner who is facing a mechanic’s lien, there are a few things you can do to protect yourself. First, it’s important to determine if the lien is valid. Check to see if the contractor or supplier followed all the necessary legal requirements when filing the lien, and make sure that you were properly served with the lien.
If the lien is valid, you have several options for resolving the issue. You can negotiate a settlement with the lienholder, pay the lien in full, or challenge the lien in court. If you choose to challenge the lien, you should seek the advice of an experienced real estate attorney.
Mechanic’s liens can be a complicated issue for homeowners in Massachusetts. If you are facing a mechanic’s lien, it’s important to seek the advice of an experienced real estate attorney who can guide you through the process and help you protect your rights. For more information on Mechanic’s Liens or other liens affection real estate, contact one of our attorneys from our residential department. If you receive a notice or have been served with a mechanics lien contact our litigation department.
Former Power Plant Property Eyed for Staging
By Christopher R. Vaccaro
Special to Banker & Tradesman
In his introduction to “The Scarlet Letter,” Nathaniel Hawthorne wrote, “And yet, though invariably happiest elsewhere, there is within me a feeling for Old Salem, which, in lack of a better phrase, I must be content to call affection.”
Tourists and historians share Hawthorne’s affection for Salem. Salem’s 400- year history has some blemishes, such as the 1692 witch trials. But it also has noteworthy successes, such as its involvement in global maritime trade during the 18th and 19th centuries and in manufacturing during the 20th century. Today, renewable energy firms eye Salem as a staging area for offshore wind turbine projects.
Whether this Gateway City ultimately serves this role depends on Avangrid Inc. and its Commonwealth Wind project. Avangrid is a foreign-owned utility company that delivers electricity and natural gas to millions of ratepayers in New England and New York. Through its subsidiary Avangrid Renewables, it promises to generate clean energy using offshore wind turbines. With its Vineyard Wind project already under construction, Avangrid also plans to develop other offshore wind turbine projects known as Commonwealth Wind and Park City Wind on the continental shelf south of Martha’s Vineyard.
Developers Signed Purchase Agreements with Utilities
Commonwealth Wind is the largest offshore wind project on the drawing board for New England. It is expected to generate 1,200 megawatts of clean energy, enough for 700,000 Massachusetts homes. The project will reduce greenhouse gas emissions by 2.35 million tons per year, the equivalent of removing 460,000 gasoline-powered cars from the road. Park City Wind is expected to generate another 800 megawatts for ratepayers in Connecticut.
A major industrial investment in a Gateway City north of Boston could come undone thanks to economic disruptions and a dispute between a major multinational company and state power regulators.
Avangrid entered into long-term power purchase agreements (PPAs) with several utility companies at set prices for Commonwealth Wind.
Crowley Maritime, a specialist in port management and logistics, purchased the site last October for $30 million through a public-private partnership with the city of Salem. Avangrid will be its anchor tenant. The terminal will be used for turbine pre-assembly and component storage, transportation, and staging activities. Commonwealth Wind is expected to create thousands of jobs and attract millions of dollars of state investment to Salem. Terminal construction is scheduled to begin this year, with completion in 2025.
Utilities Dispute Terms of Agreements
Plans for Commonwealth Wind and the Salem Harbor Wind Terminal look promising, but there is a catch. Avangrid recently sought to renegotiate the PPAs with the utility companies, to improve the return on its anticipated investment. When the utility companies balked, Avangrid filed a motion with DPU in December to stop DPU’s review of the PPAs and dismiss the utility companies’ petitions. Avangrid claimed that Commonwealth Wind cannot be financed or built under the current PPAs for several reasons, including the Ukraine war, inflation, higher interest rates, supply chain problems and other economic disruptions.
The utility companies urged DPU to reject Avangrid’s attempt to stop DPU’s approval process, arguing that if DPU were to dismiss their petitions at this late stage, offshore wind projects in Massachusetts would be undermined. The attorney general and Department of Energy Resources reaffirmed their support for the PPAs.
DPU approved the PPAs over Avangrid’s objections on Dec. 30. DPU found that Commonwealth Wind satisfied eligibility criteria for offshore wind energy generation, the PPAs will facilitate project financing, and the project will enhance the electrical grid’s reliability while stabilizing winter electricity pricing. It also found that the PPAs ensure that cost overruns will not be borne by ratepayers, the project can be completed in a reasonable timeframe, and the project will be properly paired with energy storage systems. DPU noted that Commonwealth Wind will mitigate environmental impacts and produce economic benefits in a cost-effective manner that will further the public good. Given these benefits, it is unsurprising that DPU approved the PPAs.
Regardless of this approval from DPU, the future of Commonwealth Wind and the Salem Harbor Wind Terminal depends on whether Avangrid can secure financing and materials in a changing economic environment. If Avangrid cannot do so, the goal of weaning Massachusetts ratepayers off fossil fuels over the next few decades will be at risk. That setback would be a challenge for Gov. Maura Healy’s nascent administration.
Published By Althea Volper Associate, Dalton & Finegold
No parent wants to imagine their child getting into an accident. But, without the right documentation in place, parents can face a time-consuming and expensive legal process before they can make medical decisions for an adult child. While as parents we cannot eliminate the possibility of unfortunate events, we can create a safety net of legal documentation that would allow us to step in and make the best decisions for our children should the unthinkable happen.
If your children are 18 or older
Whether they’re off to college or working – you should make sure they execute a few important documents. Once they are legally adults, you won’t have automatic access to their medical records or be able to make health care and financial decisions for them.
The first set of documents that your child should execute relate to health care: a Health Care Proxy, a HIPPA Authorization, and a Living Will / Medical Directive.
A Health Care Proxy — also referred to as a Health Care Power of Attorney — allows your adult child to name you as his or her health care agent or agents, authorizing you to make medical decisions if he or she were incapacitated.
A HIPAA Authorization waives the confidentiality of your child’s health and medical information, allowing you to speak with your child’s doctors and other medical professionals about their medical needs.
A Living Will — also referred to as a Medical Directive or Advanced Directive — allows your child to specify their medical care choices under various scenarios, including life-extending measures and end-of-life care. For parents, this requires us to think about the unthinkable. However, having our adult children express their wishes regarding such medical treatments means that we, as their health care agents, would be able to honor their wishes.
How a Durable Power of Attorney Helps
The last important document is a Durable Power of Attorney. A Durable Power of Attorney allows your adult child to name an agent or agents who are authorized to manage his or her property and finances. You may be thinking, “my child doesn’t have anything to manage.” But consider bank accounts, school loans, automobiles, car loans, club memberships and subscription services—all of these could be left in legal limbo if your child is incapacitated. If your child is enrolled in college or university, a Durable Power of Attorney allows you to communicate directly with the school on your child’s behalf.
Without a Power of Attorney in place, parents of an incapacitated child would need to spend valuable resources and time in court to be appointed conservator so that they could access their child’s bank account; deal with other assets, including real estate; modify contracts; pay bills and manage school loans.
For the helicopter parents among us, it’s worth noting that, these documents would be crucial if your child were unconscious, incapacitated or otherwise unable to make their own decisions. For parents of healthy kids, it’s hard for us to contemplate a scenario when these documents would be needed. Nevertheless, given life’s uncertainties, parents are best advised to speak with their adult children about these issues.
As your children come into adulthood and build their own lives and families, they may wish to update their documents to name their partners or spouses. In the meantime, with the proper documents in place, parents can rest assured that they will be able to make important decisions for their adult children should the need arise.
As Parcel 12 Rises, 1000 Boylston Descends into Legal Battle
By Christopher R. Vaccaro
Special to Banker & Tradesman
Boston is an attractive city with many desirable attributes, but it remains scarred by the 20th century public transportation project known as the Massachusetts Turnpike, an urban canyon that separates the Back Bay and South End.
Decades ago, turnpike air rights developments for the Hynes Convention Center, Prudential Center, John Hancock garage and Copley Place bridged some of this gap, but no similar projects have been completed since the 1980s. This is not surprising, given the engineering, permitting and financial challenges involved when constructing buildings over an eight-lane interstate highway and adjacent railroad tracks.
The city of Boston and the then-Massachusetts Turnpike Authority tried to facilitate air rights developments in 1997 with a memorandum of understanding that gave the city a role in approving those projects. The city published “A Civic Vision for Turnpike Air Rights in Boston,” which offered project guidelines on 23 air rights parcels delineated by the Turnpike Authority, but the 2008 financial crisis and subsequent Great Recession stalled development.
In 2018, Weiner Ventures placed a major project on the drawing board involving parcel 15, an 11,000-square-foot air rights parcel near the Hynes Convention Center. The Weiner project would have combined parcel 15 with adjacent properties for a mixed-use project holding 108 condominium units, a 175-space parking garage and a 45,500 square-foot retail component. To satisfy Boston’s inclusionary development policy, the Weiner project would have created at least 51,000 square feet of affordable housing at locations to be negotiated with the Boston Planning & Development Agency.
Teaming Up with Suffolk Construction
Weiner formed a joint venture with an entity controlled by John Fish, the president of Suffolk Construction Co., to develop parcel 15. Suffolk was engaged as general contractor. State and local government did their part to support the Weiner project. The BPDA successfully petitioned the Boston Zoning Commission to establish parcel 15 as a planned development area, and the state legislature passed a law specifically authorizing the Massachusetts Department of Transportation to double the maximum air rights lease term for parcel 15 from 99 years to 198 years.
By summer 2018, most of the permitting for the Weiner project was in place or forthcoming, leaving Weiner to negotiate financing. Suffolk mobilized a construction team to start site work. But the deal abruptly fell apart in 2019, after Weiner and Fish had already invested over $80 million in project costs. Weiner’s principal, Stephen Weiner, became uncomfortable with project risks. He refused to sign a personal guaranty for the project, and was reluctant to pledge liquid collateral to secure a limited recourse guaranty.
In August 2019, Weiner announced that the parcel 15 project would not proceed. Fish scrambled to find substitute investors for Weiner and structure a financial arrangement that would enable Weiner and him to recover their investments, but without success. MassDOT terminated the development agreement for parcel 15 in October 2019.
At a topping-off ceremony in September, Samuels & Assoc. marked the completion of vertical framing for an office and life science tower anchored by CarGurus’ headquarters on Massachusetts Turnpike air rights parcel 12. Photo courtesy of Samuels & Assoc.
Fish filed suit in Superior Court against Weiner for breach of contract, intentional misrepresentation, tortious interference and unfair and deceptive business practices. Weiner answered with the expected denials, affirmative defenses and counterclaims. Discovery by the parties is ongoing and is expected to be completed next year. A once-promising collaboration between Weiner and Fish has degenerated into nasty litigation.
CarGurus HQ and Hotel Rise on Boylston Street
Meanwhile, a few hundred feet down Boylston Street to the west of parcel 15, there is good news to report. Samuels & Assoc. is making steady progress developing the 1.8-acre Mass Pike air rights plot known as parcel 12 with MassDOT. Suffolk, which lost work when Weiner’s parcel 15 project was abandoned, is handling construction at parcel 12.
Samuels and Suffolk reached a significant milestone this year when they completed the decking over the Mass Pike. The decking will support a 657,000 square foot mixed-use project containing office, life science and retail space, together with a half acre public plaza. The office building will serve as corporate headquarters for CarGurus, and another building will accommodate a citizenM Hotel. Public benefits include improved access for pedestrians, cyclists and commuters. Samuels is also expected to make housing and jobs exaction payments to the city totaling over $5 million under a development impact project agreement with the BRA.
The parcel 12 project is an overdue step toward healing the urban wound caused by the Mass Pike. Contrast this with the abandoned parcel 15 project, which failed to heal the urban wound, and instead inflicted a wound on the relationship between two of Boston real estate’s biggest players.
Court Favors ADA “Tester” in Maine Inn Lawsuit
By Christopher R. Vaccaro
Special to Banker & Tradesman
Deborah Laufer is a severely disabled Florida resident. She needs a wheelchair to get around, and has limited use of her hands and impaired vision. Her disabilities require numerous accommodations, such as accessible parking, wheelchair ramps and widened passageways.
She is also a self-described Americans with Disability Act “tester” – an individual who seeks out businesses that are noncompliant with the ADA and its regulations, but does not intend to actually use the businesses’ services.
Under the ADA, “no individual shall be discriminated against on the basis of disability in the full and equal enjoyment … of
any place of public accommodation by any person who owns … or operates a place of public accommodation.”
Hotels are public accommodations subject to this law. ADA regulations require that hotel reservations systems describe accessible features in hotel facilities “in
enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs.” These regulations are designed to help disabled individuals efficiently determine from hotel online reservation systems whether a hotel can accommodate them.
Surfing for Online Violations
Whether testers like Laufer have “standing” to file lawsuits is a threshold issue in discrimination cases. Courts developed the standing doctrine to ensure that plaintiffs
have concrete injuries, and that they are not merely concerned bystanders seeking to vindicate their value interests. In order to have such standing, plaintiffs must suffer actual injury, traceable to the defendants’ misconduct, which can be redressed by the courts.
Plaintiffs without standing cannot maintain lawsuits, and courts must dismiss their cases. In 1982, the United States Supreme Court ruled in Havens Realty Corp. v. Coleman that a Black tester had standing to sue a real estate company that refused to show her available housing. However, many federal courts have dismissed ADA lawsuits filed by serial testers, ruling that the testers lack standing.
Laufer surfs the internet looking for hotels nationwide whose online reservation systems lack information on accessibility. When she finds them, she engages lawyers
to sue hotel operators in federal court for ADA violations, seeking declaratory judgments, injunctive relief and attorney’s fees. The ADA does not allow private parties to collect monetary damages, but it does require violators to pay their attorney’s fees, thus creating a lucrative industry for lawyers that work with testers like Laufer. With such lawyers’ assistance, Laufer has filed over 650 lawsuits involving non-compliant ORS.
Some federal courts have ruled that Laufer lacks standing to maintain her lawsuits. But she persists, despite occasional setbacks.
Hotels that fail to comply with ADA requirements for online reservation systems face increased risk of liability in the wake of a recent court filing
Who Has Standing?
In 2020, she discovered that the online reservation system for the Coast Village Inn and Cottages of Wells, Maine lacked information on accessibility. She filed suit in the federal court in Maine, claiming that the inn’s online reservation system caused her “humiliation and frustration at being
treated like a second-class citizen.” The district court dismissed her suit, ruling that she lacked standing to sue the inn because, as an ADA tester, she did not suffer an actual injury, and no injury to her was imminent.
Last month, the U.S. Court of Appeals for the First Circuit, which hears federal appeals from Maine, Massachusetts, New Hampshire and Rhode Island, overruled the Maine federal district court. While acknowledging the division among federal appeals courts on Laufer’s standing to file suits as an ADA tester, the First Circuit appeals court ruled that Laufer had standing to sue the Maine inn.
The appeals court acknowledged Laufer’s claim that the inn’s online reservation system lacked accessibility information required by ADA regulations. This denial of information to Laufer, a disabled individual, was actionable under the ADA. Laufer’s status as a tester, with no intent to actually use the accessibility information, did not change this. The deficient reservation system
caused Laufer a concrete injury, because the lack of information put her “on an unequal footing to experience the world in the same way as those who do not have disabilities.” For these reasons, the First Circuit appeals court reversed the district court’s judgment, allowing Laufer’s lawsuit to proceed.
Because of the split among federal appeals courts on ADA testers’ standing, the U.S. Supreme Court may eventually decide this issue. For now, hotels and inns, especially those located in Maine, Massachusetts, New Hampshire and Rhode Island, should make sure their websites and reservations systems, including those operated by outside services, disclose the availability of accommodations for disabled individuals. They should also spread the word that testers like Laufer are out there looking to start lawsuits when they discover violations of ADA regulations.
Former Power Plant Property Eyed for Staging
For the helicopter parents among us, it’s worth noting that, these documents would be crucial if your child were unconscious, incapacitated or otherwise unable to make their own decisions. For parents of healthy kids, it’s hard for us to contemplate a scenario when these documents would be needed. Nevertheless, given life’s uncertainties, parents are best advised to speak with their adult children about these issues.
