This case presents the questions left open in Cornell v. Bd. of Appeals of Dracut, 453 Mass. 888 , 891 n.7 (2009). Will "substantial reliance" render valid a variance that has not been recorded within one year? And, if so, was there such "substantial reliance" in this case?
The case was tried before me jury-waived. Based upon the evidence admitted in connection with the trial and my assessment of the credibility, weight and inferences to be drawn in light of that evidence, I find and rule that "substantial reliance" by a late-recording variance holder is sufficient to uphold a variance, at least (as here) one recorded within days after the year expired. I further find that the acts of reliance which occurred in this case, including the issuance of and reliance upon a building permit, the granting and recording of a mortgage, the indebtedness and expenditure incurred, and the commencement of building activities, are sufficiently "substantial" to meet the test.
Defendants Arthur and Irene Stefanidis [Note 1] were once the owners of a large lot at 64 Central Street in Peabody. They divided the lot in two, front (Lot A - 64 Central Street) and back (Lot B - 64R Central Street), and converted the house on the front part into a three-unit condominium, reserving "an easement in favor of Lot B [the rear lot]...to use the existing driveway and parking area of the condominium for foot, vehicular, and utility access to Central Street." [Note 2] Ex. A to Master Deed (Amended), Central Gardens Condominium, 64 Central Street, Peabody, Massachusetts (Apr. 28, 2005). [Note 3] When neither the condominium association nor any of its individual unit owners accepted the Stefanidis' offer to sell them the back lot, the Stefanidis' made plans to construct a two-family house on it. Since the back lot had no frontage, this required a variance. They thus applied for and received such a variance, which was filed in the City Clerk's office on June 23, 2008. No one appealed from the grant of that variance, and the Clerk's certification of "no appeal" was filed in the Clerk's office on July 22, 2008.
G.L. c. 40A § 10 provides that "if the rights authorized by a variance are not exercised within one year of the date of grant of such variance such rights shall lapse." As the Supreme Judicial Court has ruled, "a variance does not 'take effect' until it is recorded and...the recording of a variance within one year of its grant is necessary to 'exercise' it." Cornell, 453 Mass. at 891 (construing G.L. 40A §§ 10 and 11). [Note 4] The variance itself stated, "[p]etitioner is responsible for obtaining a Certified Copy of Said Decision from the City Clerk's Office after the 20 day appeal period has expired commencing from the time-stamped date of filing in the City Clerk's Office....The applicant must record the decision at the Registry of Deeds in Salem. Proof of recording must be submitted to the Building Inspector in order to obtain a Building Permit. This variance as granted is applicable for one (1) year only." Variance at 2 (Jun. 23, 2008). Despite the statute and this warning, the Stefanidis' did not record the variance at the Registry of Deeds within the one-year period, i.e. on or before June 22, 2009.
What they did do before that year expired was the following. They had previously (pre-grant) hired a surveyor (Jan. 27, 2008) and architect (Sept. 2, 2008). Now they (1) hired a general contractor (Feb. 18, 2009), (2) applied for a building permit (Feb. 22, 2009), (3) were issued that building permit by the City's building inspector (Feb. 24, 2009), (4) hired (at the City's insistence) a supervising architect to review the progress of the work and prepare periodic reports for the City (Jun. 15, 2009), (5) applied for and received a $350,000 construction loan from Community Credit Union of Lynn (Jun. 17, 2009), (6) granted a mortgage on Lot B to Community Credit Union (Jun. 17, recorded Jun. 18, 2009), (7) drew an initial $59,120 from the loan to begin funding construction activities (Jun. 19, 2009), and (8) began clearing the site (Jun. 2009). Each involved a corresponding expenditure.
Plaintiff Mary O'Grady is one of the condominium unit owners on the front lot (Lot A). The easement to Lot B passes by her windows and through the area where she parks. See Decision Sketch. She did not appeal the grant of the variance. However, on June 29, 2009, she wrote to the building inspector requesting revocation of the Stefandis' building permit for failure to comply with the one-year variance recording requirements of G.L. c. 40A §§ 10 and 11. [Note 5] The building commissioner reviewed her request and denied it "for the following reasons:"
1.The rights authorized by the variance have been exercised within one year of the date of granting of such variance.
2.A building permit has been obtained and work has commenced.
3.The owner has also complied with the conditions #1 through #10 of the variance dated June 23, 2008. [Note 6]
Letter from Kevin Goggin, City of Peabody Building Commissioner, to Edward and Mary Grady (Jul. 6, 2009). Ms. Grady appealed the building commissioner's denial to the Peabody Zoning Board of Appeals, which upheld that denial by written decision dated December 10, 2009 stating, "[t]he reasons for this decision are that the board determined that all the proper steps were taken and the building permit was exercised according to the law. A copy of the easement was produced showing allowance of petitioners to pass onto abutter's property." ZBA Decision at 1 (Dec. 10, 2009). Ms. Grady then timely appealed that decision to this court pursuant to G.L. c. 40A § 17. In the meantime, the Stefanidis' have finished construction of the house. [Note 7]
The defendants begin by challenging Ms. Grady's standing to bring her case. I previously ruled that she has such standing, and no extended discussion is necessary to reaffirm that ruling. All foot, vehicular and utility access to the two-family residence on Lot B is over the easement on Lot A. See Decision Sketch. That easement runs past Ms. Grady's windows and through her parking area. Id. It will be traveled, regularly, by each resident and visitor to Lot B, by foot and by car, potentially at any hour and on any day. The light and noise those pedestrians and vehicles will generate, and the impact of those pedestrians and vehicles on Ms. Grady's own access and parking over the shared space (the area occupied by the easement), are sufficient to grant her standing as a "person aggrieved" by the board's decision. See Hoffman v. Bd. of Zoning Appeal of Cambridge, 74 Mass. App. Ct. 804 , 807-810 (2009).
Defendants next argue that the one-year recording requirement was automatically extended for an additional two years pursuant to St. 2010, c. 240 § 173 (the so-called Permit Extension Act) making their July 3, 2009 recording (eleven days after the expiration of the one-year period) timely and avoiding the need to reach the question of "substantial reliance." I disagree, and again no extended discussion is necessary. The Permit Extension Act, in relevant part, provides, "[n]otwithstanding any general or special law to the contrary, an approval [Note 8] in effect or existence during the tolling period [Note 9] shall be extended for a period of two years, in addition to the lawful term of the approval." St. 2010, c. 240 § 173(b)(1) (emphasis added). As Cornell makes plain, however, under G.L. c. 40A §§ 10 & 11, "a variance does not 'take effect' until it is recorded...and the recording of a variance within one year of its grant is necessary to 'exercise' it." Cornell, 453 Mass. at 891. Simply put, unless "substantial reliance" is sufficient to bring variance rights into effect, there is no actual "variance" unless and until timely recording occurs. Thus, absent a "substantial reliance" exception, there was no "approval" capable of being extended by the Permit Extension Act. In short, on the facts of this case, the "substantial reliance" issue cannot be avoided.
As noted above, the "substantial reliance" issue has two parts. The first is whether "the failure [timely] to record a variance may void a variance on which a variance holder substantially has relied" - the issue left "for another day" in Cornell, 453 Mass. at 891 n.7. I find and rule that it does not. Unlike, for example, the deadline for appealing a board decision set forth in G.L. c. 40A § 17, there is no compelling policy reason for a hard and fast "one year" rule. [Note 10] By definition, the applicant's right to the variance has already been heard and granted by the local board, and any opposing party's rights to appeal from that grant and, if the appeal is successful, to have it overturned, are completely unaffected by the recording or non-recording of the variance itself. [Note 11] The closest analogy is special permits, in which the failure to record has been held "not fatal" where substantial use of such permits has occurred. McDermott v. Bd. of Appeals of Melrose, 59 Mass. App. Ct. 457 (2003) (cited in Cornell). I believe the same reasoning applies here, the "general disfavor" of variances notwithstanding. If nothing else, it is unlikely the Supreme Judicial Court would have raised the issue at all, much less cited to McDermott and given potential examples of "substantial reliance," if felt that a failure timely to record was fatal to variances in all circumstances The question remains, however, what those circumstances would be. [Note 12]
Given the examples in Cornell's footnote 7 and the discussion that follows in the court's opinion, surely those circumstances include two that exist in this case: (1) the actual issuance of a building permit and the Stefanidis' good faith reliance on it, [Note 13] and (2) the granting of a mortgage on the property. See Cornell, 453 Mass. at 891 n.7 (sale of lot or engaging in construction as "substantial reliance"); 891-892 (obtaining building permit or conveying one of the lots make variance "effective in action"). The issuance of the building permit was relied upon to obtain the $350,000 construction loan, to incur the personal financial obligation to repay that loan, and to commence construction activities. [Note 14] The granting of the mortgage to Community Credit of Lynn was a conveyance of the lot in express reliance on the variance. See Faneuil Investors Group Ltd. Partnership v. Bd. of Selectmen of Dennis, 458 Mass. 1 , 6 (2010) ("a mortgage is a conveyance of title"); US Bank N.A. v. Ibanez, 458 Mass. 637 , 649 (2011) (same). Thus, "substantial reliance" has occurred and the variance is not void for failure to record it within in the year.
For the foregoing reasons, the decision of the zoning board of appeals upholding the building commissioner's denial of the plaintiff's request to revoke defendants Arthur and Irene Stefanidis' building permit is AFFIRMED and the plaintiff's complaint is DISMISSED, WITH PREJUDICE. Judgment shall enter accordingly.
[Note 1] For ease of reference, since it makes no difference to the resolution of the issues in this case, I refer to Arthur and Irene Stefandis as "the Stefanidis"' throughout this Decision, whether they were acting individually or in their capacity as trustees.
[Note 2] See the attached Decision Sketch.
[Note 3] The individual unit deeds also reflected the reserved easement. See, e.g., Quitclaim Deed of Unit 2 to Edward Grady and Mary Grady (Dec. 28, 2005).
[Note 4] G.L. c. 40A § 11 provides, in relevant part, "[n]o variance or special permit, or any extension, modification or renewal thereof, shall take effect until a copy of the decision bearing the certification of the city or town clerk that twenty days have elapsed after the decision has been filed in the office of the city or town clerk and no appeal has been filed or that if such appeal has been filed, that it has been dismissed or denied..."
[Note 5] The Stefanidis' recorded their variance at the Registry on July 3, 2009, promptly after being notified of Ms. Grady's request to the building commissioner. This was eleven days after the one-year period expired.
[Note 6] Most of the conditions were restrictions on present or future actions regarding Lot B. The conditions requiring affirmative steps were (1) preparation of "a drainage plan to mitigate surface water runoff from the room and driveway and submit the plan to the Department of Public Services for approval" (condition #7), (2) submission of a revised plot plan "showing the 77 foot setback" (condition #8), and (3) "obtaining, if necessary, an amended Easement over Lot A as identified for the purpose of further defining the easement area allowing for ingress, egress and installation of utilities..." (condition #9).
[Note 7] Ms. Grady unsuccessfully sought a preliminary injunction from the Essex Superior Court prohibiting further construction activities. Grady v. Stefanidis, Essex Superior Court Civil Action No. 2009-01568, Memorandum and Order on Plaintiff's Motion for Preliminary Injunction (Aug. 26, 2009). That motion was denied because Ms. Grady had not yet exhausted her administrative remedies (an appeal of the building commissioner's ruling to the Peabody Zoning Board of Appeals). Id. The denial noted, however, that "the development of 64 Central Rear could be subject to a cease and desist order, that the building permit could be revoked, and the issued variance declared void." Id. at 3 (Feeley, J.).
[Note 8] The term "approval" includes variances. St. 2010, c. 240 § 173(a).
[Note 9] "Tolling period" is defined as "the period beginning August 15, 2008, and continuing through August 15, 2010." St. 2010, c. 240 § 173(a).
[Note 10] See, e.g., Kramer v. Zoning Bd. of Appeals of Somerville, 65 Mass. App. Ct. 186 , 192-93 (2005) ("The statutes of limitation for judicial review of special permit decisions - whether twenty days, or ninety days, where there has been a defect in notice - exist to promote finality and to preclude attacks indefinitely on decisions which have already been tested in the hearing process." (internal citations omitted)).
[Note 11] Instead, they run from the date the decision is filed at the Clerk's office. G.L. c. 40A § 17.
[Note 12] There is also the question of when the acts of reliance must occur - within the year, or including acts beyond it previously set in train? I need not and do not address this question since the two acts of "reliance" I find decisive (the City's issuance of the building permit and the mortgaging of the property) both occurred within the year.
[Note 13] The Stefanidis' failed timely to record their variance at the Registry of Deeds because they simply forgot they had to record it. Once they realized their failure (brought to their attention as a result of Ms. Grady's letter to the building commissioner), they promptly went to the Registry and recorded.
[Note 14] I agree with Ms. Grady that the actual construction that occurred before the Stefanidis' were on notice that their variance was in jeopardy (the date of Ms. Grady's letter to the building commissioner) was not extensive. As the evidence showed, it was mostly site preparation. But that is not decisive. The contractual and financial commitments to that work had been incurred prior to that notice and $59,120 already drawn on the loan.