Wednesday, March 8, 2017

Short Term Rental Regulations: A Hot Topic for Maine Municipalities, But Choices and Questions Remain

Made increasingly popular by websites like AirBnB and Home Away, the availability of short term rentals have arguably been a boon to the Maine economy (to the tune of over $26 million in 2016). Not only does this model within the sharing economy allow individuals to rent out unused rooms to supplement their monthly budgets, but they increase the availability of cheaper rooms and apartments for would-be vacationers. Maine does, after all, support a nearly $6 billion tourism industry.

However, short term rentals present a bevy of problems that municipalities across Maine have only recently begun to tackle. The three most prevalent are:
1.    Zoning Violations: Seekers of short term rentals are often attracted by the opportunity to stay in a quiet, established neighborhood, rather than at a generic hotel. Therein lies the problem; short term rentals often violate  the neighborhood’s underlying zoning . Most units listed on short term rental websites are based in single-family residences, either as the rental of a single room, or more often, the rental of an entire residence — effectively converting  single family residences into a lodging houses, a use that is often prohibited in residential districts. This dynamic can also turn quiet residential streets into boisterous ones, with previously-occupied homes morphing into small hotels each and every week, prompting consistent complaints from neighbors.
2.    Code Violations and Under-regulation: When they were constructed, most short term rental units were inspected and approved as single-family or multi-family residences. Because of this, local Code Enforcement Officers almost certainly did not ensure that the homes were outfitted with the necessary life safety equipment, think smoke detectors and CO detectors, or that they had the necessary points for ingress and egress required of traditional lodging units like hotels, motels, and inns. As such, short term rental units likely create compliance issues that other lodging accommodations would not. Their owners also may not carry sufficient commercial liability insurance to protect them should any issues arise. These complaints are often brought by members of the State’s hotel industry, who do have to comply with stringent, and often costly, regulation.
3.    Housing Stock Shortages: It has been argued that the proliferation of short term rental units has harmed the year-round rental housing markets in Maine’s larger towns and cities. For example, consider a real estate investor who purchases a small house in a quiet Portland neighborhood. He or she could rent it to a local resident for $2,000 a month, or the house could be listed on AirBnB for $100 a night, leading to a much larger return. This sort of profit margin has prompted out-of-state investors to swoop in and scoop excess housing stock — and  while this approach could work for the investor, it leads to that house being taken off the year-round market, leading to a general increase in the price of rental housing. Housing advocates have connected these dots, pointing out that if unchecked, short term rental units could create negative effects for those struggling to find affordable housing.

So what is a municipality to do? Not surprisingly, those Maine towns that have tackled these issues have come up with a number of different approachesPortland, for example, has recently considered a new set of regulations that would endeavor to rein in the rapid growth in short term rentals. Included would be an annual registration and inspection requirement (to promote safety), and a city-wide cap on units that are not owner-occupied (to combat an ongoing housing shortage). Towns in York County, like Ogunquit, have also added an annual registration requirement and are ramping up enforcement against owners who don’t comply. Others, like Rockland, have required planning board approval for any short-term rental of an entire residence, rather than a single room within an owner-occupied house.

Yet not all Towns are going along for the ride. Many coastal and ski-resort towns, that rely heavily on tourism for general revenue, have decided to simply let short term rentals be, judging that a “the more the merrier” approach was best. Instead of adding new regulations, they remain content dealing with issues posed by short term rentals on a case by case basis, and using existing parking, noise, and nuisance ordinances to do the heavy lifting.

The bottom line is that municipalities have only recently begun to grapple with the opportunities and issues that short term rentals present. There is certainly no “one-size-fits-all” approach, but municipalities across Maine should give some thought to this new area of the law. Although most short-term rental issues may seem to only affect larger towns and cities, all municipalities should look at taking steps to better understand the unintended impact that this new type of property can create.

Of course, increasing regulation can also present problems for those who wish to rent their own homes. Regardless of which side of the equation a party is on, Bergen & Parkinson is eager and ready to help.

For more information, contact Ben McCall at 207-985-7000, or by email at

Friday, September 30, 2016

Marijuana Legalization in the State of Maine

By Leah Rachin 

On November 8th, Mainers will go to the polls to vote on a number of statewide ballot questions. Among them is whether or not the State should allow (and subsequently regulate and tax) the sale and possession of marijuana for recreational purposes, under the proposed Marijuana Legalization Act (the “Act”). Not only would the bill permit the possession and recreational use of up to 2 ½ ounces of marijuana, but perhaps more importantly, it would allow the state and municipalities to license both “retail marijuana establishments” (including stores and cultivation/manufacturing facilities) and “marijuana social clubs.”

Whether marijuana legalization in Maine becomes a reality is still an open question; however, many Maine municipalities are exploring their own regulatory options, should this measure pass.
First, it is important for municipalities to note what they cannot do if this ballot measure passes. Municipalities may not prohibit the private use or cultivation of marijuana completely, so long as that use is by a person over the age of 21. Additionally, municipalities may not pass ordinances that universally prohibit marijuana use of any kind.   

However, municipalities have numerous options available to ensure that possible legalization of recreational marijuana is regulated in a way that is appropriate for their particular city or town.  The options include: 

  1. Moratoria: As an initial measure, municipalities can choose to enact a moratorium on all marijuana establishments, allowing additional time to plan and study their potential impact. This action is explicitly allowed by Maine law (30-A M.R.S.A. § 4356) upon a finding that a development moratorium is necessary either to prevent an overburdening of resources or because existing regulations are inadequate to prevent serious public harm. Arguably, the need for additional public safety officers, or the need for additional time to amend the municipality’s comprehensive plan and ordinances would satisfy these criteria. It should also be noted that there may still time in some municipalities to enact moratoria before Election Day.  Counsel should be consulted as soon as possible if such an option appeals.
  2. Zoning: The Act explicitly allows a municipality to use its zoning power to regulate both the operation and the location of any marijuana “retail establishment or social club.” This means that similar to the use of heavy industrial or retail zones to protect predominantly residential areas, a municipality can limit where and how many businesses selling or growing marijuana may set up shop.  The Act even allows municipalities to prohibit them entirely.
  3. Independent Review: Before any marijuana retail establishment or social club can operate, municipalities have the option of creating and using their own licensing process (separate and distinct from the State of Maine’s). This process can include a public hearing on each proposed establishment, and can be tailored to meet the specific needs of the community. 
  4. Odor Ordinances: Some municipalities may also consider adopting ordinances to combat the smell of marijuana, and other odors that residents may find offensive. If drafted properly, the ordinance could allow regulation of a whole variety of offensive odors, providing a valuable tool for local code enforcement officers. Counsel should be consulted to ensure both that the ordinance fits the needs of the municipality and that it is drafted to survive common legal challenges based on whether or not the ordinance properly defines exactly what types and what amounts of odor may be prohibited.   

While the possibility of marijuana legalization may cause anxiety for some municipalities, you should rest assured that many options exist to help adapt to the potential new reality. Counsel should be consulted, however, to ensure that any proposed ordinances or other actions comport with the proposed Marijuana Legalization Act and existing law.   

Leah Rachin is an attorney with Bergen Parkinson, LLC and is a member of the firm’s Municipality Practice Group. The group routinely represents and counsels city and town municipalities in the state of Maine.  Contact: 

Thursday, May 1, 2014

Your Online Reputation - Protecting Your Business from Social Media
“It takes 20 years to build a reputation and five minutes to ruin it.”
—Warren Buffett

You have worked hard for years to build a well-respected, profitable business in Maine.  Yet things are slow.  You search for an answer.  You Google your company’s name and find misleading, negative reviews. Is the author a disgruntled ex-employee or an underhanded competitor hiding behind a fake Internet persona?  What do you do?  While social media has revolutionized how businesses and consumers interact, it has also created new legal risks and challenges for businesses attempting to capitalize on the Internet’s vital role as a source of consumer information.  Facebook and Twitter are now common ways for businesses to connect with their customers.  Similarly, consumers use a host of other social media platforms, including Yelp, Google, YouTube and blogs to share their experiences and opinions—both good and bad—of a company’s product or service.  Legal developments typically trail behind societal changes.  The same is true in the social media context:  Our society’s almost universal use and reliance on social media is now just beginning to reveal a number of legal risks to businesses, including two primary risks:  (1) consumers or competitors posting false negative reviews that adversely impact sales, profits and the company’s reputation, and (2) a company creating its own liability by posting false (or confidential) information online. Communicating untrue information that negatively affects a person’s or a business’ profits, sales or monetary gain is known as defamation.  These statements are either slander (spoken defamation) or libel (written defamation) and can be the basis of a lawsuit.  The laid-back, shoot-from-the-hip style of most social media users for posting their comments online can have monumental consequences for the reputation and liability of your business.
Although there is some variation from state to state, defamation generally occurs when Person A makes a false statement to Person B about Person C, and that false statement causes economic loss to Person C.  In the resulting lawsuit, Person C sues Person A for defamation.

At one time, a word-of-mouth recommendation was the most trusted and valued endorsement a company could earn.  While word-of-mouth still exists today, it takes on a modern format:  Internet reviews, product or service ratings and user comments.  This information creates a company’s reputation in the 21st century. With today’s ever-increasing reliance on the Internet, a company’s online reputation is one of its most valuable assets.  A recent market survey by Cone, a Boston-based market research firm, found that 80 percent of people have changed a product or service decision due to a bad review.[1]  Therefore, it is not surprising that companies go to great lengths to protect, maintain and improve their online reputations. Historically, companies avoided confronting negative reviews under the theory that more attention would heighten the damage.  But recently, this trend has been changing.  Companies are more quickly responding to defamatory comments by taking legal action against the authors of false and misleading online reviews. 

If someone makes false or defamatory statements about your company, consider taking the following steps: (1) react to the false statement in a positive way, (2) use the site’s administrative procedures to remove untrue content, and (3) request a retraction of the statement.  If these attempts are unsuccessful or if you wish to pursue a defamation case, be sure to obtain the name and any other identifying information of the author of the untrue statement, take a picture or “screen shot” of the defamatory statement, and keep track of all related business expenses and losses that result from the defamatory statement.

Companies operating in today’s environment must recognize they too face liability for defamatory statements made by even low-level employees.  A company’s public communications, whether made by the CEO or a newly hired employee managing its Facebook or Twitter page, can be actionable for defamation if the statements are untrue and cause monetary damage.  To protect your business from potential social media liability, you should:

1.      Have a clear company policy that provides guidance regarding the proper use of social networking sites;
2.      Train all employees on your social media policy and the importance of appropriate social media use;
3.      Carefully select and limit the number of employees who will be the voice of the company on social media sites; and
4.      Be careful and respectful.  Post only truthful statements, as truth is a defense to defamation; and obtain appropriate insurance coverage (be sure to understand the scope of the coverage and the

Implementing a social media policy is an essential to protect your business.  We recommend that you consult with an attorney to be sure you are in compliance with the latest rulings in your state.  Companies often fail to properly implement their social media policy.  Be sure your employees know its importance and how to conduct themselves.  As social media continues to play a vital role in how businesses and consumers interact, be aware that while defamation lawsuits can be a powerful tool to protect your online reputation, they are also something to guard against.  Closely monitor online reviews of your company, as they substantially affect your business.  As unscrupulous individuals and businesses use social media to harm others, defamation claims will continue to present one avenue to protect your company.  But first, limit the risk.  Take proactive steps to avoid inappropriate online posts and manage the unforeseeable risks through company-wide training and the purchase of insurance. 

Social media is here to stay.  Businesses must accept the challenge of operating in this new environment.  By understanding these rules and turning them to your advantage, you will maximize your chances of operating a successful business.

William J. Gallitto is an attorney with Bergen & Parkinson and is a member of the firm’s Civil Litigation Group.  He routinely represents and counsels companies and businesses in litigation, planning and risk management.  Bill can be reached at     

[1] Cone Communications, Cone Online Influence Trend Tracker, and Game Changer: Cone Survey Finds 4-out-of-5 Consumers Reverse Purchase Decisions Based on Negative Online Reviews.

Tuesday, April 15, 2014

Caution:  Even Unsigned Emails Can Bind Real Estate Deals
by Jason G. Howe, Esq.

Careful what you put in an email – it might bind you to a contract.

Real estate and business attorneys deal with this daily, but it is frequently a shock to sellers and buyers, landlords and tenants.

In the recent case McClare v. Rocha, Maine’s highest court found that emails between the parties’ representatives can create a purchase and sale agreement - even without a seller’s signature.

The McClare case reiterates the importance of carefully choosing the words used when discussing not only home sales, but also leases and other contracts via electronic mediums like emails, texts, Facebook, Twitter, etc.  It may not take much. 

In McClare, the seller’s representative wrote: “The assessed value of the real estate is $430,600 . . . Jim [Rocha] believes that in this market, and particularly at that location, the assessed value probably is higher than the actual market value. Jim has offered to acquire the McClare interest for one third of the assessed value . .  . Jim says that he would be happy to speak with the
McClares directly if that would facilitate an agreement . . .”

The buyer’s representative wrote back: “My client accepts your clients offer of $143,533 for his 1/3 interest in the Bangor Tire property. Please let me know how much time you need if any to raise funds. I will prepare the deed.

Look sparse?  It is.  But it was still enough for the Court to overturn a lower court’s ruling that had tossed out the Buyer’s claim that a contract existed.  Now, the case is back in litigation.

Regardless of the electronic medium, words like “offer” and “acceptance,” combined with the property or rental location and a price term can be enough to create a binding contract.  While this can be a handy tool for business and real estate professionals, McClare illustrates that the law (technically called the Uniform Electronic Transactions Act) cuts both ways.

To avoid unexpected contractual obligations, seek legal counsel to clarify electronic communications and/or provide guidance to the real estate professionals representing you in a listing, loan, or business negotiation.

Attorney Howe practices in the firm’s Corporate/Real Estate group.  He is available at, and by phone at 207-985-7000.

Wednesday, March 19, 2014

Bergen & Parkinson Legal Blog

Welcome to the Bergen & Parkinson legal blog!  Through this blog, my colleagues and I will share information from each of our practice areas that we think you’ll find helpful, relevant, and – yes – even interesting.  We'll talk about things like business formation and transactions, employment law issues, litigation, and real estate transfers. My colleague, Sarah Neault, and I will be blogging about our practice area of estate planning.  Every day we help our clients identify their personal and financial goals and create estate plans to achieve them.  We find that many of our clients have the same questions and concerns, and through this blog we’ll be sharing answers to some of those common questions - questions that you might have too.  We also plan to post interesting articles we come across, and explain unique estate planning tools that you may not know about but that could be useful to you.  Our hope is to break through the legal jargon and make information more accessible to you.  So please check back here from time to time for posts from me and my fellow attorneys, and look for updates on our website,  Thanks for reading!

Brin Richer, Esq.