Professional Liability Alert for Massachusetts Property Managers

by Edward D. Shoulkin

The Massachusetts Supreme Judicial Court (SJC) issued a slip opinion on May 15, 2018 that may cause a potential increase in claims and counterclaims asserted against property managers arising from their handling of, and participation in, summary process actions brought in Massachusetts.

The opinion addresses whether a property manager who does not own the property has standing to bring a summary process action against a tenant and, if not, whether the property manager faces liability for attempting to do so. The case is Rental Property Management Services v. Loretta Hatcher, and you can review the opinion in its entirety here.

Some highlights of the decision:

  • A property manager has no standing to bring a summary process action in his (or her) name, where he was not the owner or lessor of the property.  This principle is consistent with prior decisions by the Court, but the SJC expanded its scope in the Hatcher decision.
  • To the extent that a non-attorney property manager is acting on behalf of the true owner of the property in filing a summary process complaint, the Court deems such conduct tantamount to the unauthorized practice of law.
  • Where the plaintiff property manager in a summary process action is neither the owner nor the lessor of the property, the court must dismiss the complaint with prejudice for lack of subject matter jurisdiction, regardless of whether a motion to dismiss has been presented by the defendant.
  • On a related issue, where the plaintiff in a summary process action is the true owner or lessor, but the complaint has been signed and filed by another person, such as a non-attorney property manager, the court may either immediately dismiss the complaint without prejudice based on the unauthorized practice of law, or order that the complaint shall be dismissed on a designated date unless the plaintiff before that date retains counsel or proceeds pro se, and amends the complaint accordingly.
  • Last, the SJC addressed the potential liability of a property manager who engages in any of the prohibited conduct described above. The Court held that such conduct is not enough, on its own, to constitute an unfair or deceptive practice in violation of Mass. Gen Laws Ch. 93A, the MA Consumer Protection Act.  However, the Court’s choice of words in this part of the decision is not as ironclad as it could have been and leaves open the possibility that such conduct could, together with other problematic conduct, support a Chapter 93A claim. Regardless of Chapter 93A implications, the SJC held that where a property manager seeks to evict a tenant without the standing to do so or improperly signs and files a summary process complaint — and where that conduct is not inadvertent but by design, or part of a pattern or practice — a court has the inherent authority to impose appropriate sanctions, including attorney’s fees and other costs, against the property manager.

The SJC’s decision will likely result in an uptick in claims against some property managers in Massachusetts.  Many insurance policies for property managers contain exclusions for the unauthorized practice of law. Such exclusions may leave property managers with no coverage for such claims.

For more information or if you have questions about the impact of the Hatcher decision and its implications, please contact Barton Gilman attorney Edward Shoulkin at eshoulkin@bglaw.com or 617.654.8200.

Edward D. Shoulkin is a skilled trial and appellate attorney with 25 years of experience in a broad range of litigation matters, particularly in defending professionals in civil disputes and disciplinary proceedings, including property managers, accountants, real estate brokers, health care providers, insurance agents, attorneys, home inspectors, and other professionals. He also represents multinational corporations, small businesses and individuals in business disputes, construction litigation, product liability cases, premises liability actions, liquor liability claims, environmental litigation, and insurance coverage matters.