Thursday, March 5, 2015

Cost Of Doing Business

321 Lincoln Avenue, For Sale signed partially buried

After running up $15,500 in legal expenses to the taxpayers of Amherst (presumably as much to his lawyer) in a losing effort to throw out the "owner occupied" requirement of one house in his Amherst empire, You-Pan Tzeng has put the property up for sale.

Litigation Report to Amherst Select Board

The house at 321 Lincoln Avenue was granted a Special Permit almost 20 years ago by the Zoning Board of Appeals to expand from a single family to a two-family (8 unrelated tenants) but with the provision that one of the two units be "owner occupied."

When Mr. Tzeng bought the house in June, 2012 and started renting it out to a gaggle of students, he told town officials that he was living there as opposed to his Longmeadow address that appears on all legal documents concerning GP Amherst, LLC.

Since that was not overly convincing, he filed suit against the town to remove the residency requirement and lost via "summary judgement," meaning blown out of the water. 

When the Building Commissioner recently contacted Mr. Tzeng to ask when he would come into compliance, he was informed that Tzeng's daughter, a UMass student, was now living there.  She was also gifted part ownership of GP Amherst, LLC. 

Of course a UMass education isn't a very long-term thing (at least for most students) so as soon as she graduates and moves out, the building will go back into non-compliance.

Since it is now for sale, perhaps a moot point. 


Anonymous said...

"Of course a UMass education isn't a very long-term thing (at least for most students) so as soon as she graduates and moves out, the building will go back into non-compliance."

But, Of course the law is a long term thing and there is nothing about his daughter that makes this unique. He could do this with any future tenant and use a basic contract far less complex than a lease to do it. Use an LLC, have the tenant be a member @ 1% without management or profit rights and a buyout dated at the end of the lease.

Thus, this like so many is a law against stupid people. If you are smart and know your rights, you can work right around such a silly restriction.

When you design a law like this, you are literally telling the landlord to do this in order to maintain the most rights with his property. You only trap ignorant business people with such legislation. Good for him for seeing a loophole in such a poorly designed law.

Anonymous said...

"Of course a UMass education isn't a very long-term thing" -- Larry you are the epitome of this statement... you are doing grand things with your degree as a half-ass smut blogger in the town of Amherst. Everyone at this school is doing something with their lives, take a seat old man

Anonymous said...


Anonymous said...

Actually I think having his daughter living there is a pretty good solution. I AM GLAD that the bylaw is making noncompliance inconvenient and expensive.

Anonymous said...

Hey, at least some people choose to be landlords.

Most landlords are smart enough that they could have gone out and got a selfish job for one. They have gone beyond this and decided to provide a resource that is in demand in the community.

Again, people with jobs at desks that punch clocks who think they are smart are being selfish and just looking out for themselves, while a landlord is making money and helping others, just about every time. This is a sacrifice, especially when the town has never ending regulations on this rather simple business model that needs little if any oversight.

Anonymous said...

This post is so 2013.

Larry Kelley said...

Yes, but things have improved somewhat dramatically since then.

Dr. Ed said...

Is the special condition binding on the next owner?

The property is really only valuable -- at it's asking price -- as a 2-unit rental, i.e. 8 unrelated persons. Hence it is only valuable to someone looking to live in one unit and rent the second, and presume such a person can not be found, either now or in the future.

If the current owner was smart, he formed a LLC which actually owns the house -- what if he, or a future owner, simply walks away from the mortgage and some big out-of-state bank acquires it in foreclosure?

First, would the condition, which exists under the authority of Massachusetts law, be binding on a Delaware-chartered bank? I'm not so sure -- other state laws aren't, which is why all the credit card companies are chartered either Delaware or North Dakota, the two states with the weakest consumer protection laws.

What is to prevent BankAmerica from renting the two units, having the tenants send their rent to Delaware (or charging it to their credit cards), and having someone like Eagle Crest as a subcontractor to arrange for what little maintenance is done on the place?

Second, presuming the town could preclude B/A from renting both units, they would then consider it a dead asset and "write it off" -- they would (probably) pay the taxes (i.e. not abandon ownership to the Town), but they wouldn't put any money into it, and might not even heat it. Maybe draining the pluming, maybe not -- likely not.

The lawn might get mowed, occasionally, but that's it. Shrubbery will grow, windows will be dark at night, everyone including the bad guys (and gals) will know that no one lives there. And it is right next to Southwest...

Think this might cause some problems for the APD, AFD, and perhaps UMPD?

Dr. Ed said...

No, I need to clarify this point: while you may have succeeded in preventing this becoming a student rental, the price you may pay, a vacant and essentially abandoned property in foreclosure, may make this a victory you wish not to have won.

Town-wide, Larry, what happens if the slumlords are driven out of business -- and their LLCs go bankrupt? If they walk away from the mortgages of their highly-leveraged empires and these properties go into foreclosure?

You have two messes -- long term and short term. Long-term you are going to wind up with bank-owned properties and be dealing with an out-of-state bank, and that is causing a lot of other communities a LOT of problems.

Short term -- and this can be 2-3 years or more -- a lot of things are in limbo during a bankruptcy and/or foreclosure. It is a lot more difficult for the town to get things done -- you can't throw a bankruptcy trustee in jail...

But back to this property -- imagine that it is owned by the Big Bad Bank -- who maybe mows the lawn (maybe not) and everyone knows it is vacant. Think you won't have homeless people breaking in on a continuing basis?

Would you want to be a police officer chasing a perp -- or a drunken college student -- into that property were it abandoned, not knowing who else might be there? Larry, would you want to do this at high noon, let alone on the far side of midnight?

They call them "vertical coffins" for a reason, and the officer (who may have a partner but likely won't) is going to have a very Faustian choice -- go in there after the perp or, with three adjacent streets (the latter two via backyards), accept the fact that the perp is likely gone before backup arrives.