Electronic Recording Update: (Almost) Available In Every Massachusetts Registry of Deeds

Electronic-signature1.jpgThis is a summary of the Boston Bar Association’s recent seminar, E-Recording: Practices and Pitfalls, a Roundtable Discussion, which I moderated last week. The speakers were:

Current Statistics

Electronic recording (e-recording) of deeds, mortgages and other title instruments has been available in Massachusetts registries since 2007. E-recording capabilities are now fully operational in every Massachusetts registry of deeds except for Bristol South (Fall River/New Bedford). E-recording is proving to be less expensive and faster than the traditional method of recording by sending a title examiner down to the registry of deeds to wait in line. In most cases, a transaction can be “on record” within 30 minutes of an in-office closing. It also eliminates the need to hire a courier or fight traffic and hold closings at Cambridge or other hard-to-get-to registries. E-recording is legal and binding, and accepted by Fannie Mae, Freddie Mac and virtually every major lender.

Middlesex South District Registry in Cambridge (which happens to be the 6th largest registry of deeds in the U.S.) leads the state in total number of documents electronically recorded and also has the lowest average recording time in the United States. Very impressive!

Electronic recording adoption rates have steadily increased with Middlesex (Cambridge and Lowell) leading the way at 40% of all recorded documents. That means, however, that 60% plus of registry business is still done through the traditional in person recording method.

E-Recording Process

As outlined by Brian Kilfoyle of Simplifile, one of the approved vendors for Massachusetts e-recording, the process of e-recording a document is relatively straight-forward:

  • Sign up with one of the registry’s authorized electronic recording vendors (SimplifileErxchange,Ingeo/CSC, or New England Title/Escrow). There is a $350 annual fee.
  • Scan original document to create an electronic image (pdf)
  • Log on to the secure website and enter data about the document and upload the document image
  • Perform a quick online title run-down to ensure no title issues have arisen since the first title exam
  • Press “send to the registry” button
  • The registry verifies the quality of the image and the accuracy of your data
  • Once accepted by the registry, the document is officially “on record” with recording data and document image immediately available on the registry website
  • The filer immediately gets an electronic receipt with all recording information along with an electronic copy of the recorded document.
  • Fees are paid by electronic funds transfer from the closing attorney’s bank account. There is a $5.00 surcharge for every e-recorded document which is typically passed along to the responsible buyer or seller.

Title Insurance and Gap Coverage

One of the earlier concerns about e-recording is the so-called “gap coverage” — dealing with the risk of an attachment or other lien recorded on your title while you are in the process of e-recording. As confirmed by Sarah Supple of Chicago Title, all Massachusetts owner’s title insurance policies will automatically protect the title agent (attorney) and the owner from any intervening liens recorded during the electronic recording process. Ms. Supple noted that the risk of an intervening lien was just as high when the title examiner is physically waiting in line as opposed to online.

Practice Pointer: Ms. Supple recommends that closing attorneys perform one run-down right before submitting the document into the e-recording “queue” and also a “mini-run down” right before disbursement of funds.

Fortunately, a survey of participants at the seminar revealed zero instances of an intervening lien/attachment filed in an e-recording situation.

What’s Next?

Hugh Fitzpatrick updated the audience on recent and future developments. As a member of the Registry Technology Commission and advocate, he is working with the Registries, Legislature and Governor’s Council on electronic notarization so documents can be signed and witnessed virtually in a secure system like DotLoop or Docusign. Another goal is to have all of the registries unified in their document search portals like masslandrecords.com. Right now, several registries have their own systems. Hugh also noted that the new CFPB rules are strongly encouraging electronic signing and recording.

Electronic recording is a very exciting development in the real estate title industry, proving to be cost-efficient, accurate and convenient for all parties to the transaction. My Needham office is fully e-recording capable, and we often have the documents recorded within 30 minutes of the closing.

Please note that the BBA Real Estate Section’s Next CLE is Real Estate Attorneys, Are You Ready for CFPB Compliance? Nov. 18, 2014, 3pm at Boston Bar Association. Click here for more info and to register.

Stakes Raised In Real Estate Agent Independent Contractor Case

Tax-Information-about-Employees-and-ContractorsSJC To Hear Important Employment Classification Case

The critical question of whether real estate agents are governed by the state’s strict independent contractor law is now headed to the Supreme Judicial Court, the highest appellate court in Massachusetts. The SJC will hear arguments in December, and a decision is expected in the Spring of 2015.

Hanging in the balance is the fate of the historically independent, commission based real estate brokerage office model. An unfavorable result at the SJC would essentially turn this model upside-down, requiring brokerages to pay their agents minimum and overtime wages and provide all the statutory benefits afforded to employees. The real estate office as we know it today would likely cease to exist.

The case is Monell v. Boston Pads, LLC, a class action brought by a group of disgruntled real estate agents at Jacob Realty, one of the largest real estate offices in Boston. As I wrote about in this post, Judge Robert Cosgrove ruled last year that the agents should be considered independent contractors and not employees. Given the importance of the case, the SJC granted direct appellate review.

The Massachusetts Association of Realtors has filed a friend of the court brief, in support of classifying agents as independent contractors. I agree with the MAR that real estate agents should be classified as independent contractors given its unique and historically independent business model.

However, this is a very difficult case to handicap. The problem arises when brokerages, such as Jacob Realty, ask its agents to do many of the things traditional employees must adhere to, such as required office hours, dress code, and performance benchmarks. This is especially so where courts have, in the last few years, strictly interpreted the independent contractor and wage laws in other industries. The more requirements imposed on agent, the more likely they should be treated as employees and not independent contractors, the argument goes.

Also likely to play a large role is that in 2008 the Legislature tried — and failed — to amend the law to make real estate agents exempt from the independent contractor law. Governor Patrick vetoed the legislation. This legislative history hurts the brokers.

There is a decent chance this case could go against the industry. In that event, I hope the MAR has legislation ready to preserve the existing office model so there will be no adverse effect on Realtors. And by then, Gov. Patrick — who’s been no friend of the real estate and title business — will be long gone from office.

Gillette Stadium Abutter Gets New Trial In $2 Million Eminent Domain Case

Parking Lot Owner Allowed To Introduce Evidence of Future Development Potential

8397753417_6c894cfcef_zI have not written about eminent domain on this blog. This isn’t intentional because the topic is one of the most interesting aspects of real estate law, although it does not come up very much in the residential context.

Eminent domain, or a “taking,” as it’s also called, is a power vested in the state (or federal government) to appropriate private property for public or other permissible use. The government, however, must pay the landowner “just compensation” for the land.

Massachusetts city planners have historically made judicious use of eminent domain power to construct some of the largest projects in Boston and beyond, including the Big Dig, the new Boston Convention Center, and the new Greenbush commuter rail line. Eminent domain trials are often high stakes, big money cases. In 2009, a jury awarded a Medford family $4 Million in connection with the Mystic River’s Edge Project. In 2011, a Cape Cod jury awarded Sagamore property owners $2.1 Million for takings in connection with the Sagamore “Flyover” Highway Project.

The battleground in eminent domain cases almost always centers on how much the land is worth, i.e, how much money the state should pay the landowner. The recent Appeals Court case of Rodman v. Commonwealth, Mass. Appeals Court (Oct. 7, 2014) gives an interesting glimpse into the complicated and difficult task of an eminent domain attorney. Often, the land taken by the state is either vacant or underutilized, and the attorney’s objective is to show the development potential of the land. There is a limit on how far the attorney can go, and the Rodman case illustrates that tension.

In the Rodman case, the Mass. Highway Dept. took by eminent domain 5 acres of a parking lot property in connection with highway improvements around Patriot Place/Gillette Stadium. As is common in these cases, the landowner’s engineering expert planned to testify that the takings made the property less valuable by some $2 million dollars based on a potential hotel/office/retail development on the land. However, the judge refused to allow the expert to proceed on that theory which was based on a hypothetical development and subdivision plan, as the property was merely used as a temporary parking lot at the time of the taking and no formal plans had been filed. This ruling essentially torpedoed the landowner’s case, and not surprisingly, the jury awarded him only $600,800.

On appeal, the Appeals Court sided with the landowner and granted him a new trial to put forth his $2M development plan theory. The Court reaffirmed that property owners in eminent domain cases are entitled to submit the “highest and best use” of the property which is “physically possible, legally permissible, and financially practicable” even if the land was vacant and undeveloped at the time of the taking. With a prime piece of real estate directly abutting Gillette Stadium and the new Patriot Place in a new economic development zone, the court agreed that the owner may have the opportunity to show a jury that the land could have been used for a hotel/office/retail development. This is true even though special permits and other zoning relief would be necessary. This is a huge victory for the landowner and his attorney.

If you are faced with an eminent domain situation, please contact me at rvetstein@vetsteinlawgroup.com. I can put you in touch with some of the best Massachusetts eminent domain attorneys in the state.

Realtor Murdered During Home Showing: Time For A Change?

Beverly-Carter-jpgShould The Real Estate Industry Change The Way Agents Do Showings and Open Houses?

What other industry requires unaccompanied female (and male) agents to meet perfect strangers in empty houses? None. One would think this is a recipe for disaster. It is.

Last night, authorities found the body of Arkansas real estate agent Beverly Carter, days after she vanished while showing a house to a prospective customer. Aaron Lewis, 33, has been apprehended and admitted to the kidnapping after being questioned by police, ABC News said.

This is not the first time an agent has been murdered, raped or assaulted while on the job. According to the latest Bureau of Labor study, the real estate industry experiences about a 40% higher rate of on-the-job crime than the average profession. Indeed, one my close Mass. Realtor friends was accosted several months ago and was very shook up about it.

My mother was a long time Realtor. My father recalls how nervous he was that some stalker would do something terrible at an open house or showing. Thankfully that never happened.

There must be a better way. I think the time has come for a change. What can be done?

Should open houses be outlawed? Should open houses be allowed only if there are two agents present? Most Realtors say they are a waste of time anyways. Should Realtors have a special exemption under the law to carry mace, a taser or even a handgun? What about a new lockbox system so prospective home buyers can peek into a home themselves without an agent present? What about some type of panic button device or other technology? Here is a great article on Using Technology for Realtor Safety.

What is your office doing to protect your personal safety? What is the National Association of Realtors and local chapters doing about this issue?

Regrettably, the NAR issued a rather weak statement on the Beverly Carter tragedy:

“As both a REALTOR® and an Arkansan, I am saddened by this morning’s news of Beverly Carter’s untimely death. My heart goes out to her family, her friends, her co-workers, and everyone whose life Beverly touched in her 49 years with us.

Working in real estate involves risk and, unfortunately, that risk takes many forms. As an industry, we collectively work very hard to promote safety awareness among our members. We are fully committed to educating REALTORS® about potential threats and providing them with resources to protect themselves.

I urge all REALTORS® to honor Beverly Carter by keeping safe and looking out for each other.”

“Keeping safe and looking out for each other” frankly isn’t going to cut the mustard in my humble opinion. The NAR should be at the forefront of this issue, and doing a lot more than telling agents to “keep safe.” That doesn’t help anyone. 

How about paying for some of the personal safety devices for agents as part of the membership dues? How about lobbying Congress and state legislatures for exemptions for personal defense weapons like mace, tasers and firearms? How about lobby for increased criminal penalties for crimes against Realtors? Anything but telling agents to “keep safe”….

For its part, the Massachusetts Association of Realtors has issued its own Realtor Safety Tips.

There has to be a better way.

As always, I’m here to support real estate agents anyway I can.

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100316_photo_vetstein-2.pngRichard D. Vetstein, Esq. is a Massachusetts real estate attorney who works with Realtors every day. He can be reached at rvetstein@vetsteinlawgroup.com.

Free Home Buyer Boot Camp Seminar BBQ On October 14 at Firefly’s Marlboro

I have a great FREE SEMINAR to announce for new and returning home buyers! A Home Buyer Boot Camp Seminar BBQ on October 14, 2014 at Firefly’s BBQ Restaurant in Marlboro, 350 E. Main St (Rt. 20). Sponsored by the Vetstein Law Group, David Gaffin of Mortgage Master and Amy Uliss and Heidi Zizza of mdm Realty in Framingham. Ribs, pulled pork and BBQ + great local real estate experts = AWESOME EVENT! Please RSVP to dgaffin@mortgagemaster.com.

boot camp flyer copy