Mass. high court weighs limits of residents' right of first refusal in Crown Communities v. Pocasset Park

The Massachusetts Supreme Judicial Court heard oral arguments in Crown Communities LLC v. Pocasset Park Association, Inc., a case testing when residents may exercise a statutory right of first refusal to buy a manufactured-housing community.

Kenneth Leonetti, counsel for Crown Communities, told the court the association "failed to establish that it complied with all the requirements of the Manufactured Housing Act," including that it "failed to obtain a mortgage commitment within the statutory required 90 days" and did not provide reasonable evidence that a majority of resident-owners chose to exercise the right. Leonetti urged the court to enforce the statute's time limits and the requirement that residents submit a substantially equivalent offer.

The issue has proved thorny because litigation recorded a lis pendens after the association sued, and the parties disagree about whether that instrument excuses or tolls statutory deadlines. A justice asked whether a lis pendens could reasonably be inferred to have delayed or prevented financing; Leonetti responded that "there was no evidence, no witness testimony that the lis pendens thwarted getting the mortgage," and noted the record shows the association ultimately obtained a mortgage commitment outside the 90-day period.

Tom Ellsworth, representing the Pocasset Park Association, countered that requiring strict adherence to the deadlines despite a lis pendens would render the right of first refusal illusory when the recording of a lis pendens makes closing legally or practically impossible. He said organized nonprofits assisted residents in pursuing financing and argued the statute should be read in a remedial manner to avoid depriving residents of the opportunity the law intends to provide.

Assistant Attorney General Michael Turry, appearing for the Commonwealth, told the court the statute is "to favor resident ownership of manufactured housing communities" and urged that lis pendens operate as a legal impediment to financing. The AG suggested remedies the court might adopt (for example, prompt dissolution of lis pendens in these contexts or treating the lis pendens as a basis to excuse deadlines) to preserve the statute's protective purpose.

Justices pressed all sides on several recurring points: what "substantially equivalent" means where one offer contains a mortgage contingency and the other is all cash; whether the 90-day financing period requires strict, mechanical compliance or allows some accommodation when a lis pendens is recorded; whether initial evidence showing that more than 51% of resident-owners support a purchase must be revalidated later; and what form of evidence (applications, denial letters, witness testimony) would be required to establish that a lis pendens in fact prevented financing.

Counsel agreed on the factual outline: the residents submitted an offer in January 2020; the association filed suit in early April; and the financing Crown relied on arrived in July, about six months after the offer was filed. Counsel and the AG disputed whether the record contains direct evidence that a lis pendens caused lenders to delay or refuse financing or whether the law should treat lis pendens as a categorical impairment that excuses strict compliance.

The court did not rule from the bench. The arguments focused on statutory interpretation (the Manufactured Housing Act's timing and evidence requirements), causation standards for lis pendens, and possible equitable remedies when a recorded lis pendens interacts with the rights of residents under the statute. A decision will follow after the justices deliberate.

The case name is Crown Communities LLC v. Pocasset Park Association, Inc.; the arguments discussed the operation of the Manufactured Housing Act, the effect of a lis pendens on lender behavior, and the evidentiary threshold for demonstrating that at least 51% of resident-owners support purchase.