No Ownership Of or Compensation For Fixtures (aka Summer Homes) On Leased Land

In what must have been a truly bad day for two lessees of property on Conomo Point, the Appeals Court determined in Brian M. Touher v. Town of Essex that the two buildings at issue had become the property of the Town of Essex, and were not property of the purported homeowners (the Plaintiffs), and moreover that neither “homeowner” was entitled to compensation for their expenditures in purchasing and/or improving the buildings.

This is the most recent decision in a decades-long dispute over property rights in Conomo Point in the Town of Essex.  A brief history: the Town has been leasing land to seasonal residents for over a century, in some cases for as little as $75.00 a year.  The lessees, at their own expense, built and paid real estate taxes on seasonal cottages on the properties.  The Town has, over the years, attempted to alter the relationship with the seasonal tenants as well as increase the rents.  Special legislation passed in 2011 allowed the Town to lease its Conomo Point properties at fair market value, with preference to be given to the current lessees.  While assessments of the properties were undertaken, the Town offered to enter into bridge leases with the current lessees.  Any resident that declined to enter into a bridge lease was given the option of removing their building from the property at their own expense.  The two Plaintiffs, Brian Touher and the Wendell Trust, entered into bridge leases, but subsequently sought a declaration from the Superior Court that they, as lessees, owned the structures they had built on the Conomo Point properties, not the Town.  

Because the analysis of the case depends on whether the structures are permanently affixed to the property, a brief description of the two buildings at issue is necessary.  Touher originally built a small 2-bedroom, 1-bath cottage on the unimproved lot he leased beginning in 1962, but subsequently spent approximately $120,000 in improvements, nearly doubling the size of the original cottage, which is built on concrete walls, with a large fireplace and a concrete patio, all of which are attached to the bedrock.  The Wendell trust owns a “large, impressive three story house” overlooking the Atlantic Ocean, purchased in 1996 for $175,000, which is affixed to the land “by a series of brick pilings and with a small brick basement which goes into the land and apparently rests upon bedrock,” and is attached to two water cisterns.

The Superior Court determined that the two homes at issue had become permanent fixtures of the property, and therefore belonged to the Town.  Unsurprisingly, the Plaintiffs objected to this determination, and also argued that if the homes had become Town property, they were entitled to compensation, an argument the Superior Court rejected.  Faced with the suddenly very real possibility of losing ownership of their summer homes without any compensation, the Plaintiffs appealed.

The Appeals Court started its analysis with the well-known rule that “the erection of a building on the land of another makes it a part of the realty,” but recognized that an exception exists where there is an agreement that the building will remain the personal property of its builder.  However, notwithstanding the occasional reference to the lessees as “homeowners” in certain documents, the Court found that there was neither an express nor implied agreement between the Town and the lessees that the buildings would remain personal property.  Furthermore, the two buildings had become so affixed to the property that, although hypothetically it was technically feasible to move them, any such attempt would undoubtedly damage both the structure and the property, perhaps irreparably. 

As if that wasn’t enough of a blow to the Plaintiffs, the Court also found that they were not entitled to recover the value of the buildings.  Although the Court admitted that it had some sympathy with the Plaintiffs’ argument, the “well-established rule that the erection of a building on the land of another makes it a part of the realty” applies, particularly where both Plaintiffs built the homes knowing that they were merely leasing the underlying property.  Therefore, the Plaintiffs are not entitled to monetary relief from the Town.

The full decision can be read here.