Angel Kozeli Mozina

The booming real estate market of the last few years has renewed and increased interest in condominium conversions in Greater Boston. Developers and owners alike should be aware of the Massachusetts Condominium Conversion Law, also known as Chapter 527, when planning to convert occupied residential buildings. 

Chapter 527 applies to every municipality in Massachusetts unless a municipality has adopted its own ordinance, bylaw or regulation. The following municipalities have adopted bylaws or ordinances: Boston, Abington, Acton, Amherst, Brookline, Haverhill, Lexington, Malden, Marlborough, New Bedford, Newburyport, Newton (under special circumstances) and Somerville. Others, such as Cambridge, could join the list soon. Some of the ordinances or bylaws specifically state that Chapter 527 and the local ordinance or bylaw both apply to condominium conversions. 

There are two exemptions under Chapter 527. First, buildings of less than four residential units are exempt. In determining the unit count, units in two adjacent buildings with common ownership will be added together. Second, any building that has not been used for residential purposes for at least one year prior to an owner’s filing a master deed for a condominium.

Chapter 527 imposes the following conditions to condominium conversions: 

Notice of conversion:  A tenant is protected if there is merely an intent to convert. An intent to convert arises when, for example, a master deed along with purchase and sale agreements are prepared, or if there are inspections, permit applications, measurements, surveys, showings, advertising, etc.  

The converter must notify tenants by certified or registered mail of the filing of a master deed and of the owner’s intent to terminate their tenancy and their rights under Chapter 527. Most tenants have one year before they must leave. Three categories of protected classes have two years or longer, up to two more years, if they cannot find comparable rental housing in the same municipality: 

• Handicapped tenants 
• Elderly tenants (over 62 years old) 
• Low– or moderate–income tenants 

Chapter 527 prohibits evictions for the purpose of converting a building to condominiums. However, a tenant may still be evicted for any violation of the lease, including nonpayment of rent, provided that this is not merely a pretext for a condominium conversion eviction. 

Rent increase caps: Rent increases are capped at the increase in the Consumer Price Index or 10 percent, whichever is greater. 

Right of First Refusal: A tenant has a 90-day period to purchase on the same as or more favorable terms than those that will be extended to the general public. If not interested, tenants must execute a waiver of their right to purchase a rental unit.  

Such a waiver should state that a tenant received a purchase and sale agreement executed by the owner of the apartment building and that the tenant was notified that the terms and conditions of the agreement were substantially the same as or more favorable than the terms and conditions offered to the general public during the 90-day purchase period. 

Relocation Payments: The property owner must pay $750 per tenant, or $1,000 if the tenant is a “protected tenant.” This is a mandatory payment if the tenant owes no rent or moves out before the conversion date on the notice. 

Landlords face fines of not less than $1,000 or imprisonment of not less than 60 days for not complying with the statute. 

Local Rules Can Be More Strict 

Local ordinances can provide for more stringent conversion requirements instead of or in addition to Chapter 527. For example, the Boston ordinance gives elderly, handicapped and low–income tenants five years’ notice, but says that the notice period may be extended by future legislation. Therefore, a tenant in a protected class in Boston could be protected indefinitely.  

In Somerville, a tenant has a 30-day right to purchase following the granting of the master deed or permit. If the tenant fails to exercise that right, the converter may not sell the condominium at a price that is more favorable than the one offered to the tenant for the next 180 days. 

A municipality, such as the city of Newton, may not have a separate ordinance or bylaw covering condominium conversions. If a special permit has to be obtained from the board of aldermen to build more than three units in a dwelling, conversion to condominiums may not occur without obtaining an additional special permit from the board of aldermen. Therefore, conversions in Newton are governed by both Chapter 527 and the requirement of an additional special permit. 

It is important that developers are mindful of Chapter 527, local ordinances and bylaws and their restrictions. If and when possible, units should be vacant for more than one year or less than four units should be converted in order to avoid statutory and ordinance requirements.  

Angel Kozeli Mozina is a real estate attorney at Boston law firm Rackemann, Sawyer & Brewster, and co-chairs the Real Estate Bar Association’s Condominium Law and Practice Section