On Sept. 10, the Massachusetts Appeals Court affirmed a Massachusetts Superior Court decision in favor of Jewish Family and Children’s Services (JFCS) ending its Newton lease with Hasseltine House LLC.

JFCS had signed a 16-year lease with Hasseltine House to run a residential facility for people with intellectual and developmental disabilities. This lease contained a clause that allowed JFCS to terminate the lease agreement if at least five people planned to move out, which they did in 2018. Later that year, Hasseltine House sued for breach of contract.

A key part of the lawsuit hinged on whether or not JFCS had appropriately notified the mortgage lender, Brookline Bank. In a Subordination, Non-Disturbance and Attornment Agreement (SNDA) between the three parties, JFCS was prohibited from cancelling the lease without the prior written consent of Brookline Bank. The SNDA did not reference the special termination provision of the lease, and the lease did not mention the SNDA.

JFCS began operating the facility in 2013. Between May and August 2017, they received five notices to vacate from tenants. There were already four vacancies at this time, which meant that by Aug. 1, 2018, there would be only five residents in the 14-unit building.

JFCS said this was “not an acceptable situation.”

In January 2018, JFCS sent a letter to both Hasseltine House and Brookline Bank saying they planned to terminate the lease and service agreement one year later.

Hasseltine House filed its lawsuit in December 2018, arguing that JFCS did not receive prior written consent from Brookline Bank, and that JFCS did not do enough work to market the facility or try to fill vacancies. Hasseltine House also argued that notifying them in late August 2017 of vacancy notices sent from early May to early August did not constitute notifying them “promptly.” But Judge Shannon Frison of the Massachusetts Superior Court disagreed, ruling in favor of JFCS.

Hasseltine House appealed, but the Appeals Court explained why the law is on JFCS’ side. Most crucially, its rights under the lease signed between JFCS and Hasseltine House could not be superseded by the SNDA.

“There is nothing in the SNDA to suggest that weeks after signing the lease and the service agreement the tenant suddenly changed course and agreed to surrender its sole discretion to invoke its special termination rights,” wrote the Appeals Court in its decision. The court also wrote that “the lease conditioned the validity of a future SNDA on the lender’s recognition of the tenant’s rights under the lease, and Brookline Bank ultimately recognized those rights under the SNDA.”

The court also said that Hasseltine House was not harmed by JFCS waiting a month to notify them of the plan-to-vacate notices.

“While the parties could have established more stringent and specific notice requirements or otherwise limited the tenant’s exercise of its special termination rights, they did not do so,” said the Appeals Court at the end of their judgment.