Deeds

massachusetts notary publicCourt Points Out Potential Problem with Standard Notary Acknowledgment Form

Could the the standard form notary acknowledgment clause used in virtually every recent Massachusetts deed, mortgage and other recorded instrument be defective in certain situations involving power of attorneys? That may be the result of a recent court decision by the First Circuit Bankruptcy Appellate Panel in Weiss v. Wells Fargo Bank (click for link to case).

The ruling is causing quite a bit of angst in the real estate conveyancing community. Since Revised Executive Order 455 – Standards of Conduct for Notaries Public was passed by Gov. Romney in 2004, notaries public and attorneys have been using the approved notary acknowledgment form providing that the document is signed “voluntarily for its stated purpose. ” In the Weiss case, however, the court held that the notary acknowledgment of an attorney-in-fact under a power of attorney was defective as it failed to indicate that the principal has signed under “his free act and deed.

The facts in the Weiss case are rather unique so it may have limited effect. But it should serve as a wake-up call for notaries public, attorneys and lenders that the better practice may be to use a notary public acknowledgment with the “free act and deed” language as was common before the 2004 notary rules.

Practice Pointer:  Going forward, I recommend that real estate attorneys, notaries public and lenders should consider using “free act and deed” language in notary public acknowledgments. See below for form language. 

Fact of the Case: Botched Notarization With Power of Attorney

In the Weiss case, a bankruptcy trustee for Chicopee homeowners attempted to use his “strong-arm” powers to void a refinance mortgage. The borrowers took out a refinance loan on their Chicopee home with Wachovia Mortgage. They signed a limited power of attorney to enable a one Shannon Obringer (who I assume was a bank employee) to sign the mortgage. The actual signing of the mortgage occurred in Pennsylvania by a Pennsylvania notary (I assume at Wachovia’s offices). You know this wasn’t going to end well….

The pre-printed notary acknowledgment form on the mortgage was the approved MA Executive Order form, which the notary partially completed as follows:

On this 11 day of June 2007, before me, the undersigned notary public, personally appeared Shawn G. Kelley and Annemarie Kelley by Shannon Obringer as Attorney in Fact, proved to me through satisfactory evidence of identification which was/were ________________ to be the person(s) whose name(s) is/are signed on the preceding document, and acknowledged to me that he/she/they signed it voluntarily for its stated purpose.

Although there was some ambiguity from the wording as to who actually appeared before the notary and the notary failed to fill out the identification form blank space, the Court held that these were not necessarily fatal. However, the Court ruled that the language in the notarization that it was signed “voluntarily for its stated purpose” was fatally defective because it did not sufficiently demonstrate that it was the borrowers’ “free act and deed” by the attorney-in-fact’s signature, as required by Massachusetts statutory and case law. The Court went on to void the mortgage in favor of the bankrupt debtor.

New Notary Public Acknowledgment 

Going forward, I would consider using a notarization acknowledgment with the older “free act and deed” language in power of attorney signing situations. The 2004 acknowledgment should be ok for typical individual notarizations. Of course, you should consult with your title company, lender and/or attorney before notarizing in any tricky situations.

If you have any questions about notarization after this court ruling, please contact me at rvetstein@vetsteinlawgroup.com or 508-620-5352.

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Or What Happens When Condo Docs Suck…

A recent case handed down by the Appeals Court illustrates the fundamental importance of careful condominium document draftsmanship concerning what amenities are included within the definition of a “unit” — and the unintended results when deficient documents get in the hands of judges.

The case is Sano v. Tedesco (Mass. App. Ct. Aug. 28, 2013) and concerned a Lynn condominium dealing with a large repair bill for its crumbling balconies. Half of the 8 unit building enjoyed their own private balconies. Faced with a substantial repair bill, the unit owners without balconies balked at paying the bill, arguing that the balconies were part of the units they served.

The problem was that due to poor draftsmanship, the master deed inconceivably made no mention of the balconies or the support beams. Left with little guidance, the court turned to the Mass. Condominium Act, which defines a unit as ”a part of the condominium including one or more rooms, with appurtenant areas such as balconies, terraces and storage lockers if any.”  The judges ultimately came down the middle, ruling that each unit owner was responsible for repairs to their own balcony, but that the condominium trust was responsible for the support beams for each balcony. And even the three justice court panel couldn’t agree on that bizarre result! A dissenting judge thought that each unit owner should have been responsible for both the balconies and support beams.

I doubt any of the unit owners expected this peculiar result, with a split of responsibility over balconies and support beams. If the master deed was drafted properly in the first place with the balconies being designated as either a limited common area (with sole repair responsibility lying with the unit owner) or common area with an exclusive easement for each unit owner (with the responsibility on the condo trust), this confusing result would have been avoided. The moral of the story is make sure you hire a competent Massachusetts condominium conversion attorney who is experienced in drafting condo docs!

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Signing or not signing?Bar Counsel Tightening Ethical Standards and Expectations

On the second anniversary of the SJC’s important ruling in Real Estate Bar Assoc. (REBA)  v. National Real Estate Information Services (NREIS), which banned “witness-only” notary closings in Massachusetts, the Office of Bar Counsel has issued an important advisory opinion to Massachusetts real estate closing attorneys. The advisory opinion can be found here.

In the advisory, Bar Counsel first reaffirms the SJC’s pronouncement of the critical and mandatory role that Massachusetts attorneys play in a real estate purchase, sale or refinance transaction. The core functions at a real estate closing — certifying good, clear and marketable title, ensuring that title is properly conveyed, and holding and disbursing funds under the good funds law — are all acts constituting the practice of law and must be handled by a licensed Massachusetts attorney. Accordingly, as the SJC held, Massachusetts attorneys must “substantially participate” in all facets of the real estate conveyance transaction.

Following the SJC’s requirement of “substantial participation,” Bar Counsel advises attorneys that they must closely manage and oversee each conveyance transaction:

“It is not the appropriate course for the lawyer’s only function to be present at the closing to hand legal documents that the attorney may have never seen to the parties for signature, and to witness the signatures…A witness only appearance by an attorney would necessarily be inadequate, professionally and ethically, except in the perhaps unlikely event that the attorney is first assured that steps constituting the practice of law are being or have been properly handled by other Massachusetts attorneys.”

There are some closing attorneys and conveyancing mills who hire inexperienced contract attorneys to run around the state to do closings. These attorneys are nothing more than glorified paralegals. Bar Counsel’s advisory opinion calls this unfortunate practice into serious question, unless the managing attorney can ensure that the contract attorney is familiar with the title and file (which is unlikely as Bar Counsel notes).

Bar Counsel is clearly tightening the ethical standards on real estate attorneys. And this is good thing for the profession and consumers alike.

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nail in the coffinWhy A Massachusetts Real Estate Nominee Trust Is Worthless and Useless

Since the concept of currency and debt was created, debtors have been playing a cat-and-mouse game with creditors in order to avoid satisfaction of their debts. A ruling last week by the Massachusetts Appeals Court in Citizens Bank v. Coleman (May 15, 2013) is notable because it put the kibosh on a formerly popular estate planning practice in Massachusetts where a husband conveys property into a real estate nominee trust held by his wife. The problem, of course, was that the husband was being chased by a creditor holding a $600,000+ judgment, so any action he took with his assets would ultimately come under the judicial microscope. And that’s exactly what happened in this case, as the Court unwound the transfer and ruled in the bank’s favor.

Old Debts Come Back to Haunt Developer

In the 1980′s, Martin Coleman, a real estate developer, purchased two multifamily rental properties in Waltham. Coleman furnished all the cash to acquire these properties. In 1986, Coleman married his wife, Pamela, who began managing the properties. She dealt with all issues relating to the tenants (including rent collection and filling vacancies) and superintended the maintenance, repairs, and payment of bills. In 1988, Coleman defaulted on a $6.2 million construction loan, which he had personally guaranteed.

In 1989, Coleman transferred, for $1.00, title to both rental properties into two real estate nominee trusts, with Pamela named as the sole beneficiary of each trust. Pamela continued to assist with the management of the properties, but Martin paid for all the property expenses.

In 1994, Federal Savings Bank obtained a $600,000 plus judgment against Mr. Coleman which was subsequently acquired by Citizens Bank. Citizens sued the Colemans, attempting to “reach and apply” Pamela’s interest in the two Waltham properties to satisfy the large judgment.

Interfamily Conveyance = Resulting Trust = Creditor Wins


The Appeals Court ultimately ruled that Mr. Coleman’s conveyance into the nominee trusts was a “resulting trust” — essentially a fraudulent transfer to avoid satisfaction of the large judgment. With respect to transfers between husband and wife, the law presumes they are not designed to avoid creditors. This presumption, however, can be overcome through evidence that the conveyance did not result in any change in behavior or financial responsibilities between husband and wife, as compared to before the transfer. In this case, the evidence showed that Mr. Coleman still held himself out as the owner of the rental properties, nothing changed as to the wife’s property management duties, and the conveyance was not truly part of a legitimate estate plan, as the Colemans contended. The Court ruled that Citizens Bank will be able to sell the two Waltham properties at auction to satisfy the judgment which is likely now seven figures.

Moral Of The Story: Trash the Nominee Trust

Real estate nominee trusts were all the rage in the 1980′s and into the 1990′s. A series of court rulings, however, exposed serious flaws with the asset protection security these trusts were supposed to provide. They are now out of favor, yet, they are still being used. Perhaps this case will put the proverbial nail in the nominee trust coffin. Memo to estate planners: They don’t work, so stop using them. Go with a limited liability company instead.

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RDV-profile-picture-larger-150x150.jpgRichard D. Vetstein is a Massachusetts real estate attorney who is frequently consulted by property owners looking to shelter their assets. Please contact him at info@vetsteinlawgroup.com or 508-620-5352.

 

 

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Electronic-signature1Electronic recording (e-recording) of deeds, mortgages and other title instruments has been available in Massachusetts for almost 5 years now, and is finally gaining widespread acceptance within the conveyancing community. E-recording is now fully operational in Berkshire, Bristol, Essex, Hampden, Middlesex, Norfolk, Plymouth and Worcester North and South registries of deeds. (Suffolk, please hurry up!). Legislation has recently been filed to require that all registries have electronic recording capabilities by July 2014. (Thank you Attorney Hugh Fitzpatrick, a newly appointed member of the Registry of Deeds Modernization and Efficiency Commission, for your efforts!).

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. It also eliminates the need to fight traffic and hold closings at Cambridge or other hard-to-get-to registries.

Indeed, if we have the deed, mortgage and homestead signed at the beginning of the closing, we can be “on record” halfway through the closing! Music to seller, buyer and Realtor’s ears…

The process of e-recording is pretty easy.

  • Sign up with one of the registry’s authorized electronic recording vendors (Simplifile, Erxchange,Ingeo/CSC, or New England Title/Escrow)
  • Conduct closing
  • 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 official 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, and we can avoid the usual $35 rundown fee. E-recording fees run about $4-5 per document.

E-recording is legal and binding, and accepted by Fannie Mae, Freddie Mac and virtually every major lender. It is a major benefit to all parties involved with a real estate closing, and I’m well-versed in how to use the system to ensure a faster and more convenient closing. Please contact me at rvetstein@vetsteinlawgroup.com for more information.

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stop20foreclosure1Court Uses Novel Equitable Assignment of Mortgage Theory 

In what could be the first test case of a new theory to clear up defective foreclosure titles — and much welcome news for property owners stuck with toxic titles — Massachusetts Land Court Judge Gordon Piper has ruled that the theory of equitable assignment of an improperly foreclosed mortgage can be used to clear title of an improperly foreclosed property.

The case is Cavanaugh v. GMAC Mortgage LLC, et al., 11 MISC 447901 (embedded below) and was recently appealed by noted foreclosure attorney, Glenn Russell, Esq., who represented the prevailing homeowners in the landmark U.S. Bank v. Ibanez case. The case will now go up to the Massachusetts Appeals Court, or, given its importance, perhaps taken up by the Supreme Judicial Court on direct appellate review.

In this case, GMAC Mortgage foreclosed a mortgage given by Maureen Cavanaugh of Fairhaven, then granted a foreclosure deed to Fannie Mae. The foreclosure, however, was defective because notice of the foreclosure sale was not published in the local newspaper as required by Massachusetts foreclosure law. Fannie Mae later sold the property to Timothy Lowney.

Ms. Cavanaugh sued the lenders and Mr. Lowney in a Land Court “quiet title” action to re-claim her property back. This is essentially the same situation as presented in the Bevilacqua vs. Rodriguez case where a property owner was stuck with a defective foreclosure title. The Court in Bevilacqua suggested an alternative theory to solve the defective title by using the conveyance of the foreclosure deed as an equitable assignment of the original mortgage, so the new property owner could foreclose and obtain clear title in the process.

Judge Piper used this equitable assignment theory in the Cavanaugh case, ruling that Lowney, the new buyer, holds the GMAC Mortgage through equitable assignment, and may now foreclose upon Ms. Cavanaugh, thereby clearing the way to get clean title. Equally important, Judge Piper ordered GMAC and Fannie Mae to assign the underlying promissory note from Ms. Cavanaugh to Lowney so that he holds both the note and the mortgage as required by after the important Eaton v. Fannie Mae case several months ago.

This is an important and much-needed judicial development for assisting homeowners who have been unable to refinance or sell their properties due to “Ibanez” and other foreclosure related title defects. This case also illustrates the importance of obtaining an owner’s policy of title insurance which appears to have provided coverage to Mr. Lowney in this matter.

Cavanaugh v. GMAC Mortgage — Massachusetts Land Court by

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Update: My Clients Prevail (Click Here for Judge’s Ruling)

Effective Preparation and Historical Timeline Key To Trial

I just completed a four day jury waived trial in an adverse possession case in Superior Court. I wanted to share some of my experience as a Massachusetts adverse possession attorney, and what I learned during this case. (For confidentiality reasons, I will not disclose the name of the case or the county in which it was brought). We are waiting for a decision from the judge, which will take several months.

Side Property Line Dispute

The case was a fight over land between two homes in a suburban town.  The dispute arose after my client, “Ms. Jones,” surveyed her property in anticipation of doing an addition project. The survey unfortunately revealed that a portion of the driveway and nearby retaining wall owned by her next door neighbor, “Mr. and Mrs. Smith,” encroached the side lot line. Efforts to resolve the encroachment dispute were unsuccessful, and the Smiths ultimately filed the adverse possession lawsuit, claiming that they had used not only the small encroached area, but a much larger 2,200 square foot area of Ms. Jones’ side yard, for more than 40 years.

Tracking Down Old Owners

Since the Smiths were claiming adverse possession going back to the 1960’s, the first and most important thing we had to do was to track down all the old owners of my client’s property and put together an accurate historical timeline of the property.  Including my client, there were seven owners of the property! This was the only way my client could mount a defense against the Smith’s claim, since the Smiths owned their property all that time. One of the old owners lived in Florida, and he came up to testify about having pig roasts near the disputed area, among other stories. Other former owners testified and a few were not exactly thrilled to be dragged into court. That’s the nature of the beast.

Proving The Timeline

Next, we had to demonstrate the historical use of the disputed area over four decades. These are very factually intensive cases. The key to every adverse possession case is what and how the parties actually used the disputed area. The parties’ knowledge or lack thereof of the true boundary line is really not the important issue. Generally, the more intense the use and the more the claimant takes action to exclude the other party from using the disputed land, the better the claim for adverse possession. Conversely, the less intense the use, the less successful the claim. Still, adverse possession is a very difficult claim to win as the law does not favor taking someone’s land.

Some important questions in any Massachusetts adverse possession case are:  Did the plaintiff mow the lawn? Did they maintain any landscaping? Did they install a fence or other barrier? Did they demarcate where they used the land? Did they make any permanent improvements to the disputed area? Did they plant anything or install a garden? Did they clear brush? Did they cut down trees or plant new trees? Did the defendant grant permission to use the disputed area. (Permissive use destroys an adverse possession case).

Preparation Is Key

Compared to my opposing counsel, I had a lot more work on my side with triple the number of testifying witnesses and cross examination of the claimants. I prepared for a solid two weeks before this trial, and by the trial, I knew every blade of grass and rock on the disputed area.  I also had deposition testimony of the claimants which I used to impeach them when they inevitably changed their stories or failed to remember key details. I also had blowups of aerial photos of the property from Bing Maps which were very helpful. Lastly, I convinced the trial judge to take a “view” of the property, and he did visit the property with counsel the day after the trial was over.

We are filing post-trial briefs at the end of August, and then the judge will make a decision. I’ll let you know how it turns out.

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Richard D. Vetstein, Esq. is an experienced Massachusetts adverse possession and boundary line dispute attorney who has tried numerous adverse possession cases in Land Court and Superior Court. Please contact me if you are dealing with a Massachusetts adverse possession dispute.

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Real Estate Crash Has Resulted In Many More Forms and Disclosures

These days buyers are leaving closing rooms with not only their keys but a mild case of carpal tunnel syndrome! The reason for sore forearms and wrists is the voluminous stack of closing documents which are now required to be signed and notarized at every Massachusetts real estate purchase or refinance closing.

One of my opening “break the ice” lines at closings is to suggest that the buyers start massaging their writing hands. Then I show them the 2 inch stack of documents they must review and sign, and they usually say, “Are you serious? We have to sign all that?” Yep, I reply. You can thank Fannie Mae and the real estate collapse for that! All the new rules and regulations passed in the last 5 years have resulted in, you guessed it, more forms. Do you think the Feds and state ever eliminate old or out-dated forms? Nope.

Let me quickly go over some of the more important — and less important — documents signed at a typical Massachusetts real estate closing.

The Closing Documents

  • HUD-1 Settlement Statement. This is arguably the most important form signed at closing. It breaks down all the closing costs, lender fees, taxes, insurance, escrows and more. We did a full post on the HUD-1 and all the closing costs you can expect to pay here. Under the newer RESPA rules, most closing costs must be within 10% tolerance of the Good Faith Estimate provided by the lender (which you will also re-sign at closing).
  • Promissory Note & Mortgage. These two documents form what I like to call the “mortgage contract.” The promissory note is the lending contract between borrower and lender and sets the interest rate and payment terms of the loan. It is not recorded at the registry of deeds. The Mortgage or Security Instrument is a long (20+ page) document and provides the legal collateral (your house) securing the loan from the lender. The Mortgage gets recorded in the county registry of deeds and is available to public view. Read a full explanation of the Note and Mortgage in this post.
  • Truth in Lending Disclosure (TIL). The Truth in Lending should really be called “Confusion In Lending,” as the federal government has come up with a confusing way to “explain” how your interest rate works. This is a complex form and we’ve written about it extensively in this post. Your closing lawyer will fully explain the TIL form to you at closing.
  • Loan Underwriting Documents. With increased audit risk on loan files, lenders today are requiring that borrowers sign “fresh” copies of almost all the documents they signed when they originally applied for the loan. This includes the loan application, IRS forms W-9 and 4506′s.
  • Fraud Prevention Documents. Again, with the massive mortgage fraud of the last decade, lenders are requiring many more forms to prevent fraud, forgeries, and straw-buyers. The closing attorney will also make a copy of borrowers’ driver’s licenses and other photo i.d. and submit the borrower’s names through the Patriot Act database. They include Occupancy Affidavit (confirming that borrowers will not rent out the mortgaged property), and the Signature Affidavit (confirming buyers are who they say they are or previously used a maiden name or nickname).
  • Escrow Documents. Unless lenders waive the requirement, borrowers must fund an escrow account at closing representing several months of real estate taxes and homeowner’s insurance. This provides a cushion in case borrowers default and the taxes and insurance are not paid.
  • Title Documents. For purchase transactions, Massachusetts requires that the closing attorney certify that a 50 year title examination has been performed. Buyers will counter-sign this certification of title, as well as several title insurance affidavits and documents which the seller is required to sign, to ensure that all known title problems have been disclosed and discovered. Of course, we always recommend that buyers obtain their own owner’s title insurance which will provide coverage for unknown title defects such as forgeries, boundary line issues, missing mortgage discharges, etc.
  • Property Safety Disclosures. In Massachusetts, buyers and sellers will sign a smoke/carbon monoxide detector compliance agreement, lead paint disclosure, and UFFI (urea formaldehyde foam insulation) agreement. These ensure that the property has received proper certifications and will absolve the lender from liability for these safety issues.
  • Servicing, EOCA and Affiliated Business Disclosures. Chances are that your lender will assign the servicing rights to your mortgage to a larger servicer, like JP Morgan Chase or CitiMortgage. You will sign forms acknowledging this. You will be notified of the new mortgage holder usually within 30-60 days after closing. In the meantime, the closing attorney will give you a “first payment letter” instructing you where to send your first payment if you don’t hear from the new servicer. You will also sign forms under the federal and state discrimination in lenders laws and forms disclosing who the lender uses for closing services.

Well, those are most of the documents that buyers will sign at the closing. Sellers have a slew of their own documents to be signed at closing, and I’ll cover that in a future post. As I said, at your closing, massage your signature hand, grab a comfy pen, and sign your life away!

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney. He can be reached by email at info@vetsteinlawgroup.com or 508-620-5352.

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Bar Assn. Lawsuit Targets Kentucky Based Settlement Service Company Employing Local Contract Attorneys

As first reported today by Massachusetts Lawyers Weekly, the bar association for Massachusetts real estate attorneys (REBA) has filed a lawsuit against National Loan Closers, Inc., a Kentucky closing services company, and a Holyoke attorney for allegedly conducting illegal “witness-only” real estate closings. REBA was behind last year’s landmark Supreme Judicial Court ruling in REBA v. National Real Estate Information Services, which held that Massachusetts attorneys are legally required to oversee all residential real estate closings in Massachusetts.

REBA’s suit against National Loan Closers is notable because NLC is alleged to have side-swiped the REBA v. NREIS court ruling by contracting with local attorneys to attend real estate closings. According to the suit, NLC’s model is for these contract attorneys to act similarly to the robo-signers who sign foreclosure documents, as they are simply there to witness and notarize documents and are contractually prohibited from giving legal advice to the parties at closing. Thus, this model runs afoul of the REBA ruling’s mandate that attorneys “substantially participate” in the closing process by reviewing the title and ensuring that title passes legally.

REBA argues, and I agree, that such closings put home buyers and mortgage lenders at risk, erode the public’s confidence in the state’s recording and registration system, and deprive the Massachusetts Interest on Lawyer Trust Accounts program — IOLTA — of thousands of dollars of revenue.

No home buyer wants to close on the single biggest purchase of their life with a contract attorney who knows nothing about the transaction and cannot answer the most basic of legal questions. In the standard model, a supervisory Massachusetts attorney will examine the title and certify under state law that the title is good, clear and marketable, and often that same attorney (or a junior associate with full familiarity with the file and title) will be the closing attorney.

The complaint filed in The Real Estate Bar Association for Massachusetts, Inc. v. National Loan Closers Inc., et al. can be found by clicking here.

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Tips For Massachusetts Real Estate Cash Buyers & Sellers

As Yogi Berra once humorously said, “cash is just as good as money.”

This is especially true in real estate transactions where a cash buyer is often perceived as better and less risky than a mortgage financed buyer. (Please note that we often encourage buyers to obtain a conventional mortgage where possible given the federal tax benefits through the mortgage interest deduction and also because of the low interest rates available).

What Is A Cash Buyer?

The term cash buyer means a buyer who plans to buy real estate without using a mortgage. The term can also apply to a buyer who plans on using a mortgage, but doesn’t plan on using a mortgage contingency with the purchase contract. (This carries significant financial risk, which we typically do not recommend except for rare instances).

Cash Deals On The Rise In Mass. and U.S.

Massachusetts cash real estate transactions have risen considerably in the last few years, as reported by the Boston Globe. Cash sales accounted for a surprising 34% of all Massachusetts residential real estate transactions in 2011, according to data provided by the Warren Group. According to the Globe, cash buyers include baby boomers downsizing to Boston condominiums with profits from the sales of their suburban houses, well-off parents purchasing homes for college-age children, and investors seeking discounted properties they can rent or sell. They are turning to cash for various reasons, including tighter lending guidelines that have made mortgages less attractive, dwindling bank financing for investment properties, and a volatile stock market that has sent people looking for other places to put their money.

Frequently Asked Questions For Cash Transactions

If you are a cash buyer, or considering selling to one, you may ask whether the transaction will proceed the same way as in a mortgage based transaction and whether there are any other special considerations involved. The short answer is that the transaction, for the most part, will proceed in the same manner, and often with a shorter time-frame than a mortgage financed deal, but there are a few special considerations that a cash buyer needs to be aware of, which I’ll outline below.

Do I Need A Real Estate Agent?

Absolutely. A cash buyer needs a real estate agent for the same reasons a financed buyer needs one. Those reasons include market knowledge and savvy; skilled negotiation; being a critical liaison between the parties; and keeping the transaction and all the players on target for a successful closing. Plus, as with all transactions in Massachusetts, including cash, the seller, not the buyer, pays for the real estate commission.

Do I Need A Real Estate Attorney?

Yes, it’s not only the smart choice but it’s the law. Massachusetts law now provides that only licensed attorneys can conduct real estate closings. In mortgage backed transactions, the lender will assign a closing attorney (who is often the same attorney working for the buyer) to close the transaction. With a cash transaction, however, there’s no lender, and thus, no lender appointed closing attorney to rely on. So a cash buyer must select his or her own attorney to close the transaction.

A cash buyer’s attorney will act as the closing attorney and legal “quarterback” on the deal, having the ultimate responsibility for the vast majority of legal work on the transaction. Here is an outline of all the responsibilities which will fall upon the attorney for a cash buyer:

  • Reviewing and editing the draft Purchase and Sale Agreement (“P&S”)
  • Drafting a “Rider” to the P&S to provide additional protections to the Buyer
  • Negotiating the P&S with the Seller’s attorney
  • Keeping the Buyer updated throughout the negotiations
  • Advising the Buyer about the provisions in the P&S
  • For condominiums, reviewing the condominium documents, including the Master Deed, the Declaration of Trust, and the Operating Budget
  • Conducting a 50 year title exam;
  • Ordering the Municipal Lien Certificate and Seller’s Payoff Statement(s)
  • Reviewing the 6(d) Certificate, Smoke Cert and Unit Deed
  • Preparing the HUD Settlement Statement
  • Procuring an Owner’s Policy of Title Insurance and Declaration of Homestead
  • Preparing Documents for Closing
  • Conducting the Closing;
  • Receiving and Disbursing Funds at Closing
  • Conducting final title run-down then recording the Deed, MLC and Homestead.
  • Post closing issues: mortgage discharge tracking, payment of outstanding real estate taxes

Without an attorney, the cash buyer is simply lost. I would never recommend that the buyer hire the same attorney who is representing the seller. Not only is this a huge conflict of interest, but the seller’s attorney allegiance will rest with the seller, not the buyer.

Do I Need Title Insurance?

As we always recommend, yes! There are two types of title insurance policies: lender’s and owner’s. In a cash transaction, there will be no lender’s policy, and the owner should always opt to obtain an owner’s  owner’s title insurance policy. We’ve written extensively about owner’s title insurance here. It’s especially important in this day of paperwork irregularities with mortgage assignments and discharges, robo-signing, and botched foreclosures.

When Do I Need That Cash Again?

As with all transactions in Massachusetts, a cash buyer will put down between $500 – $1,000 with the Offer and 5% of the purchase price with the signing of the purchase and sale agreement. With no mortgage lender involved, the cash buyer must realize that at the closing they must have liquid funds for the remaining “cash to close” (usually hundreds of thousands) in the form of a cashier’s check or bank check at the closing. Accordingly, the cash buyer must make all investment withdrawals, transfers and receipt of gift funds well in advance of the closing date. Since cash deals proceed much quicker than financed deals, my advice to cash buyers is to have all necessary cash in hand and in a no-risk account when the purchase and sale agreement is signed. Don’t stick your cash in some stock fund which crashes weeks before the closing.

What Happens If I Have Second Thoughts or Don’t Have Enough Cash To Close?

This is where the cash buyer is at more risk than the mortgage financed buyer who has the benefit of a mortgage contingency. If the mortgage buyer cannot obtain financing within the agreed upon deadline, he can opt out of the deal with no penalty. By contrast, after signing the standard purchase and sale agreement, the cash buyer is locked in to going forward with the deal with little, if any, wiggle room to get out. Generally, if the cash buyer has to default, he will lose his deposit (5% of the purchase price). So for any cash buyer, make sure you don’t get any buyer’s remorse!

Best of luck on your Massachusetts cash real estate purchase

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Richard D. Vetstein, Esq. and Marc Canner, Esq. are experienced Massachusetts real estate cash buyer’s attorneys. They can be reached by email at info@titlehub.com or 508-620-5352.

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computer-searchAll of the Massachusetts registries of deeds now offer free online document search capabilities. The main portal for most registries is www.masslandrecords.com operated by the Secretary of State’s Office. Other registries have their own systems.

Here is a handy list of all registries liked to their online search portals:

Here is the link to the Massachusetts Registry of Deeds County Map to determine in which county your town is located.

How To Search Masslandrecords

1. By Name/Basic

In the basic search form, you input the property owner’s last name and first name and hit search. For common names, this will often generate too many names results as the search function is not limited to town.

2. By Name/Advanced

In the basic search form, click the Advanced button on the right side. The search will expand to the screenshot above. This is the optimal search method as you can limit the search by town and document type. I usually leave the search on “all document types.”

3.  By Book and Page

Massachusetts Registry of Deeds documents are organized by “book and page.” Before electronic records, land records were recorded in actual thick book volumes. The “book” reference refers to the volume number and the page refers to the page number. Each recorded instrument has its own unique book and page reference at the top of the document’s first page. Even with the proliferation of electronic records, the book and page reference is still in operation in Massachusetts.

4. By Property Address


A newer functionality, you can also search by street address. In my experience, however, the results are often inaccurate so I would not rely on this search method.

Search In Action

So, let’s give this a try. Find your registry where you live. Use the Registry County Map if you don’t know. In the basic search form, click advanced. Input your first and last name and click your town in the drop down menu. Press Search. Voilá, there’s a list of all recorded instruments on your title. For viewing and printing, click any of the documents. The details will appear on the right side of the search page. Click View Images and the image will appear in a new window. You can print from there. Pretty cool, huh?

Feel free to email me with any questions!

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney. Please contact him if you need assistance with a Massachusetts purchase or sale transaction.

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Massachusetts Plot Plan

Plot Plans, also called Mortgage Inspection Plans, were once part of every Massachusetts real estate purchase closing. These days, some lenders do not require them and I will tell you why in this post. However, despite the limitations of a plot plan, I think it’s a good idea for buyers to purchase a plot plan at closing. The typical cost of a plot plan is around $125.00 so it’s affordable.

While it is not nearly as accurate as a full instrument land survey, a plot plan will give the buyer a visual of the lot lines, the approximate location of the home and accessory structures, and any easements running through the land. Also, when you go to sell your property, a plot plan is helpful for prospective buyers to review as part of the marketing package.

What Is A Plot Plan?

A plot plan, also called a Mortgage Inspection Plan, confirms the following information:

  • Does the house or building, as well as accessory structures (pools, sheds, etc), conform to the local setback zoning by-laws?
  • Does the house or building, as well as accessory structures, fall within the FEMA flood hazard zone (which would require flood insurance)?
  • Are there any building encroachments?
  • Are there any recorded easements running through the property?

In addition to answering these questions, a plot plan includes helpful reference information such as the deed book and page numbers, property plan numbers, land court plan numbers (if applicable), assessor map and lot numbers and F.E.M.A. rate map numbers. This information can be very helpful to the homeowner and a potential buyer as well.

How Is A Plot Plan Prepared?

It is important to point out that a plot plan is NOT a land survey, and is not prepared using standard instrument survey instruments. A plot plan is prepared using visual inspection and measuring tapes only. A physical inspection of the dwelling’s exterior is made, with tape measurements to show the approximate location of the dwelling. The preparer will review the recorded deed and plan(s) obtained at the Registry of Deeds or town offices to determine the lot configuration. Information from the field is merged with record information to create a drawing of the property (the plot plan) and the approximate location of the dwelling on the lot. The flood zone is determined. A quality review performed by Professional Land Surveyor.

The accuracy of a plot plan is usually within two to three feet. The field work involved in preparing the Mortgage Inspection Plan does not include the setting of property line stakes. Therefore, although tape measurements are sufficient to make zoning and flood hazard determinations, the plan should not be used as a substitute for a “Building Permit Plot Plan” or to determine property lines. A plot plan cannot be used as a substitute for a full instrument land survey.

What is Not Provided by a Mortgage Plot Plan?

As stated before, a plot plan has its limitations, which is a reason cited by lenders for not requiring them, such as:

  • No representation is made as to the accuracy of the depicted property lines.
  • No attempt has been made to verify the boundary configuration or, typically, the mathematical correctness of the legal property description.
  • Property corners can not be located based on this type of plan, therefore no fences, hedge rows or other improvements can be determined or located.
  • The location of any improvements shown are approximate, and therefore any planned construction should not be based on the locations as shown.

What is a Certified Plot Plan, Boundary, Land or Instrument Survey?
An accurate instrument land survey involves the location of established monuments or survey control points, which are then mathematically tied in to the property being surveyed. This process utilizes sophisticated, state-of-the-art equipment, and precisely locates both the property lines and the improvements on the property in relation to those property lines. The cost of a full instrument survey can range from $1,000 to $5,000, depending on the property. You can use a land survey for construction, Land Court, and Registry of Deeds plans.

How Do I Get A Plot Plan?

If your lender requires a plot plan at closing — check your Good Faith Estimate or closing cost worksheet — it will order one for you and you’ll have it at closing. If your lender does not require a plot plan, speak to your closing attorney and they will gladly order one for you!

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney. Please contact him if you need assistance with a Massachusetts purchase or sale transaction.

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Worcester Businessman Built Regulation Sized Baseball Field In His Backyard

Harking back to the old days when sandlot ballfields were packed with neighborhood kids, David Massad II, a Worcester car dealer, didn’t plow over a cornfield in Iowa to build a baseball field in his yard; he just leveled the trees behind his 7,382-square-foot home in Shrewsbury to build a regulation sized baseball field for his kids and friends to play on. This being Massachusetts, his neighbors cried foul. The case was just decided by the Appeals Court which, not surprisingly, ruled in favor of the neighbors, holding that the homeowner’s association rules and regulations prohibits the use.

Field of Dreams

In 2004, Massad decided to build a regulation sized baseball field, complete with clay infield, fencing, sprinklers and bleachers, behind his upscale Grey Ledge development home in Shrewsbury. After neighbors cried foul, Mr. Massad and his wife just lost a legal battle with neighbors who say they didn’t buy season tickets to ball games when they purchased their homes. Massad, meanwhile, says he was just trying to provide a place for kids to play ball in a town that sorely lacks ball fields.

According to the Worcester Telegram, “It sounded pretty simple,” said Massad, 52, whose business is only coincidentally named Diamond Chevrolet. “The kids needed a place to play, so I built a field. It’s in the middle of nowhere, and I’ve never charged anyone to use it.” The Massads even obtained a special permit from the zoning board to allow for the field.

Massad Field, Shrewsbury. Credit: Worcester Telegram

As reported by the Telegram, the field may be isolated, set well in the rear of Massad’s 14-acre property, but the issue is the cars that go up and down the development to get there. In 2009, Massad built a private driveway and parking lot on his property, but players and fans still must use the private common driveway that lines the eight-home development and ends at Massad’s handsome brick Colonial at the top of the cul-de-sac.

HOA Covenants & Restrictions Control

The Grey Ledge Homeowners Association had recorded standard Covenants and Restrictions providing that:

“The Lots shall be used for single family residential purposes only.” It further provides that “[t]he acceptance of a Deed to a Lot by any Owner shall be deemed an acceptance of the provisions of this Master Declaration, the Trust and the By-Laws and rules and regulations of the Grey Ledge Association, as the same shall be amended from time to time, and an agreement by such Owner to be bound by them in all respects;” and that “[t]he Lots … shall have the mutual burden and benefit of the following restrictions on the use and occupation thereof, which restrictions, except as otherwise provided or allowed by law, shall run with the land.”

The Appeals Could held that, despite the Massads obtaining local zoning approval for the baseball field, it was not consistent with the character and planned use of the luxury development as a single family enclave. “As matter of law, the hosting of organized league baseball games (whether formal games or mere practices) for such leagues as American Legion Baseball and Worcester Heat violates the master declaration’s restriction to use for ‘single family residential purposes only,’” Justice Joseph Grasso held.

On legal grounds, the ruling is not surprising and correct, in my opinion. It’s unfortunate that Mr. Massad and his neighbors couldn’t have worked out a “collective bargaining revenue sharing” plan so the kids could just play ball.

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney and devoted Red Sox fan. Please contact him if you need legal assistance purchasing residential or commercial real estate.

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No Easy Fix For Defective Foreclosure Titles After U.S. Bank v. Ibanez Ruling

The Massachusetts Supreme Judicial Court issued its opinion today in the much anticipated Bevilacqua v. Rodriguez case considering property owners’ rights when they are saddled with defective titles stemming from improper foreclosures in the aftermath of the landmark U.S. Bank v. Ibanez ruling last January. (Text of case is embedded below). Where Ibanez consider the validity of foreclosures plagued by late-recorded or missing mortgage assignments, Bevilacqua is the next step, considering what happens when lenders sell defective foreclosure titles to third party purchasers. Previously, I discussed the oral argument in the case here and detailed background of the case here.

The final ruling is mix of bad and good news, with the bad outweighing the good as fixing defective Massachusetts foreclosure titles just got a lot harder and more expensive. But, contrary to some sensationalist headlines, the sky is not falling down as the majority of foreclosures performed in the last several years were legal and conveyed good title. Bevilacqua affects those minority percentage of foreclosures where mortgage assignments were not recorded in a timely fashion under the Ibanez case and were otherwise conducted unlawfully. Importantly, Bevilacqua does not address the robo-signing controversy, which may or may  not be considered by the high court in another case.

The Bad News

First the bad news. The Court held that owners cannot bring a court action to clear their titles under the “try title” procedure in the Massachusetts Land Court. This is the headline that the major news outlets have been running with, but it was not a surprise to anyone who has been following the case. Contrary to the Daily Kos, the court did not take the property away from Bevilacqua. He never held good title it in the first place–and you can blame the banksters for that. If you don’t own a piece of property (say the Brooklyn Bridge), you cannot come into court and ask a judge to proclaim you the owner of that property, even if the true owner doesn’t show up to defend himself. It’s Property Law 101.

The Good News

Next the good news. The court left open whether owners could attempt to put their chains of title back together (like Humpty-Dumpty) and conduct new foreclosure sales to clear their titles. Unfortunately, the SJC did not provide the real estate community with any further guidance as to how best to resolve these complicated title defects.

Background: Developer Buys Defective Foreclosure Title

Frank Bevilacqua purchased property in Haverhill out of foreclosure from U.S. Bank. Apparently, Bevilacqua invested several hundred thousand dollars into the property, converting it into condominiums. The prior foreclosure, however, was bungled by U.S. Bank and rendered void under the Ibanez case. Mr. Bevilacqua (or presumably his title insurance attorney) brought an action to “try title” in the Land Court to clear up his title, arguing that he is the rightful owner of the property, despite the faulty foreclosure, inasmuch as the prior owner, Rodriguez, was nowhere to be found.

Land Court Judge Keith Long (ironically the same judge who originally decided the Ibanez case) closed the door on Mr. Bevilacqua, dismissing his case, but with compassion for his plight.

“I have great sympathy for Mr. Bevilacqua’s situation — he was not the one who conducted the invalid foreclosure, and presumably purchased from the foreclosing entity in reliance on receiving good title — but if that was the case his proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied,” Long wrote.

Given the case’s importance, the SJC took the unusual step of hearing it on direct review.

No Standing To “Try Title” Action In Land Court

The SJC agreed with Judge Long that Bevilacqua did not own the property, and therefore, lacked any standing to pursue a “try title” action in the Land Court. The faulty foreclosure was void, thereby voiding the foreclosure deed to Bevilacqua. The Court endorsed Judge Long’s “Brooklyn Bridge” analogy, which posits that if someone records a deed to the Brooklyn Bridge, then brings a lawsuit to uphold such ownership and the “owner” of the bridge doesn’t appear, title to the bridge is not conveyed magically. The claimant in a try title or quiet title case, the court ruled, must have some plausible ownership interest in the property, and Bevilacqua lacked any at this point in time.

The court also held, for many of the same reasons, that Bevilacqua lacked standing as a “bona fide good faith purchaser for value.” The record title left no question that U.S. Bank had conducted an invalid foreclosure sale, the court reasoned.

Door Left Open? Re-Foreclosure In Owner’s Name?

A remedy left open, however, was whether owners could attempt to put their chains of title back together and conduct new foreclosure sales in their name to clear their titles. The legal reasoning behind this remedy is rather complex, but essentially it says that Bevilacqua would be granted the right to foreclosure by virtue of holding an “equitable assignment” of the mortgage foreclosed upon by U.S. Bank. There are some logistical issues with the current owner conducting a new foreclosure sale and it’s expensive, but it could work.

That is if the SJC rules in the upcoming Eaton v. FNMA case that foreclosing parties do not need to hold both the promissory note and the mortgage when they foreclose. An adverse ruling in the Eaton case could throw a monkey wrench into the re-foreclosure remedy–it would also be an even bigger bombshell ruling than Ibanez, as it would throw into question the foreclosure of every securitized mortgage in Massachusetts.

In Bevilacqua’s case, he did not conduct the new foreclosure sale, so it was premature for the court to rule on that issue. Look for Bevilacqua to conduct the new foreclosure and come back to court again. The SJC left that option open.

Other Remedies & What’s Next?

The other remedy to fix an Ibanez defect, which is always available, is to track down the old owner and obtain a quitclaim deed from him. This eliminates the need for a second foreclosure sale and is often the “cleanest” way to resolve Ibanez titles.

Another option is waiting out the 3 year entry period. Foreclosure can be completed by sale or by entry which is the act of the foreclosure attorney or lender representative physically entering onto the property. Foreclosures by entry are deemed valid after 3 years have expired from the certificate of entry which should be filed with the foreclosure. It’s best to check with a real estate attorney to see if this option is available.

The last resort is to demand that the foreclosing lender re-do its foreclosure sale. The problem is that a new foreclosure could open the door for a competing bid to the property and other logistical issues, not to mention recalcitrant foreclosing lenders and their foreclosure mill attorneys.

Title insurance companies who have insured Ibanez afflicted titles have been steadily resolving these titles since the original Ibanez decision in 2009. I’m not sure how many defective foreclosure titles remain out there right now. There certainly could be a fair amount lurking in titles unknown to those purchasers who bought REO properties from lenders such as U.S. Bank, Deutsche Bank, etc. If you bought such a property, I recommend you have an attorney check the back title and find your owner’s title insurance policy. Those without title insurance, of course, have and will continue to bear the brunt of this mess.

More Coverage:

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Richard D. Vetstein, Esq. is an experienced real estate litigation attorney who’s handled numerous foreclosure title defect matters & cases in Land Court and Superior Court. Please contact him if you are dealing with a Massachusetts foreclosure title dispute.

Bevilacqua v. Rodriguez; Massachusetts Supreme Judicial Court October 18, 2011

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Benjamin Franklin once said famously that “the only certainties in life are death and taxes.” That’s certainly true in real estate practice. Today, I will go over how real estate passes when the owner dies  –  with a will or without a will – and how the probate process affects the real estate process.

Tenancy by the Entirety

Married couples in Massachusetts are recommended to hold real estate as “tenants by the entirety.” It’s a special form of joint tenancy for married couples. If one spouse dies, the surviving spouse succeeds to full ownership of the property, by-passing probate. By law, tenants by the entirety share equally in the control, management and rights to receive income from the property. Property cannot be “partitioned” or split in a tenancy by the entirety. A tenancy by the entirety also provides some creditor protection in case one spouse gets into financial distress as creditors cannot lien the non-debtor spouse’s interest in the property.

Death Without A Will—Intestacy Laws

Clients were often surprised to learn that when one spouse dies without a will, the law of intestacy in Massachusetts leaves a portion of the estate to the surviving spouse and a portion to the decedent’s children. This is changing as of January 2012 with Massachusetts’ adoption of the Uniform Probate Code. Under the “UPC,” if a spouse with children of the marriage dies, the surviving spouse gets the entire estate, including the marital home. If there’s no surviving “descendant,” or child, of the deceased, but a surviving parent of the deceased, the surviving spouse gets the first $200,000 of the estate, plus 75% of the balance of the estate. The laws of inheritance remain rather complicated to explain fully here. A good guide to the new Uniform Probate Code can be found here.

Death With A Will — Testate

The basic rule is that if the owner dies with a will, which includes a power to sell real estate, the executor or administrator of the estate is generally authorized to convey title without further authority from the probate court. If the will does not provide for a power of sale, the executor will have to obtain a license to sell from the probate court.  If a final account has been filed and allowed, the heirs (in the case of an intestacy) or devisees (in the case of a will) are able to convey title.

Missing Probates

If the title examination turns up an interest that is not accounted for by a probate, and the death of the interested party occurred less than 25 years ago, a probate may need to be opened to convey the property. Deaths over 25 years old where a special affidavit has been filed, may pass without probate.

Federal & Massachusetts Estate Tax Liens

A federal and state estate tax lien arises immediately upon death and attaches at the time of death to the gross estate of the decedent. The gross estate includes all property, wherever situated, that the decedent owned or in which the decedent had an interest at the time of death. The threshold for federal gross estates for 2011 and 2012 is $5 Million for an individual and $10 Million for a couple. The Massachusetts estate threshold remains at $1 Million. For estates below those amounts, the executor must merely file a simple Affidavit of No Estate Tax Due. Estates over the thresholds must file the more complicated release of lien from the Department of Revenue which requires the filing of a full estate tax return.

Bought A House? Get A Will!

Julie Ladimer, Esq.

Danielle Van Ess

After every closing, I always have a chat with my new buyers about setting up a will and other estate planning vehicles. It’s very important on all fronts. For those in the MetroWest area, I recommend Julie McQuade Ladimer, Esq. of Framingham (email: jml@michaelgatlinlaw.com; Tel: (508) 788-0028. For those on the South Shore, I recommend Danielle Van Ess, Esq. in Hingham (email: info@dgvelaw.com; Tel: 781.740.0848. Both are very good and well regarded estate planning attorneys.

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Richard D. Vetstein, Esq. is an experienced real estate attorney who’s handled over 1,000 closings. Please contact him if you need legal assistance purchasing residential or commercial real estate.

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Prospective real estate buyers tend to think of the “mortgage” as the contract they are signing with the bank. This is misleading. The promissory note is the actual contract to loan and borrow money between lender and borrower. The mortgage is the lender’s instrument, or more accurately, its security interest, to enforce that loan contract. This is an important distinction because, if for example, a couple purchases property or refinances, and the loan is taken out solely in the wife’s name, then lining up the correct parties on the signing documents becomes important. But before discussing how to properly configure the closing documents, it is important to understand the definitions.

The Deed

The deed is the legal instrument conveying an ownership interest of the property to a grantee (buyer). The deed is typically drafted by the seller’s attorney. It includes the grantor (seller), the grantee (buyer), the manner in which the buyer is taking title (the tenancy), the consideration (the amount of the purchase price), a legal description of the property, and a cite to the recording information of the prior deed. Click here for an example of a Massachusetts quitclaim deed.

The Promissory Note

The promissory note is the lending contract between the borrower and the lender. The note includes the name(s) of the borrower and the property address. It also includes the amount of the loan, the term (number of years), and the interest rate. The lender generates the note and uses a FannieMae/ Freddie Mac standard template which reflects that it is a uniform instrument. A typical note includes a provision of whether the loan is fixed or adjustable, contains a “no pre-payment fee” clause, and includes language that sets the deadline for the 15th of the month for the lender to receive payment (and sets out a late fee penalty). Click here for a standard form Fannie Mae promissory note.

The Mortgage

The mortgage is the lender’s security interest in the property. In Massachusetts, a “title state,” the borrower is conveying his ownership interest in the home to the lender, such interest would be exercised only in the event of default. Thus, the lender has a lien on the property, which gives it authority to foreclose in the event of continued non-payment. The mortgage is also a uniform instrument whose template is typically generated by the lender and designed and approved by the above-referenced government housing agencies. The only unique terms in the mortgage are the names of the borrowers, the property address and the exhibit which provides a legal description of the property. The rest of the mortgage is standard, providing that the borrower agrees to keep the property insured and maintained, make it her primary residence (unless it’s an investment loan), and not to contaminate the property with hazardous waste, among other requirements. Click here for a sample Massachusetts Fannie Mae mortgage.

Thus, to return to our example, if husband and wife purchase a home and only wife is to be on the loan, then the grantees on the deed are husband and wife, reflecting their ownership interest in the property. The note will contain only the wife (since she alone is taking out the loan). The mortgage however must contain both owners of the property since this instrument tracks the deed. Thus, the husband and wife are both on the mortgage.

After the closing attorney explains the deed, mortgage and promissory note, there are a stack of other loan documents and disclosure to review. We’ve written posts about all the important ones:

Good luck with your closing!

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Attorney Marc E. Canner brings years of experience working closely with Buyers, Sellers, mortgage brokers, loan officers and realtors to provide expert counsel on closing residential real estate transactions. Marc is the founding partner of the Law Offices of Marc E. Canner and a founder of TitleHub Closing Services LLC.

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images-10The deed is the cornerstone of property ownership in Massachusetts and throughout the country. In Massachusetts, there are three types of deeds: a quitclaim deed, a warranty deed, and a release deed. By far the most common deed used in Massachusetts is the quitclaim deed (scroll down for example below), and I’ll focus on that in this post.

Quitclaim Deed Covenants

The quitclaim deed is by far the most common and standard form of deed for Massachusetts residential real estate conveyances. Quitclaim deeds in Massachusetts are similar to “special warranty deeds” in other states. A quitclaim deed carries with it statutory quitclaim covenants by the seller as provided in Mass. Gen. Laws ch. 183, § 17: “The grantor, for himself, his heirs, executors, administrators and successors, covenants with the grantee, his heirs, successors and assigns, that the granted premises are free from all encumbrances made by the grantor, and that he will, and his heirs, executors, administrators and successors shall, warrant and defend the same to the grantee and his heirs, successors and assigns forever against the lawful claims and demands of all persons claiming by, through or under the grantor, but against none other”.

Taking Title

How would you like to take title? This is an important question that buyers must consider. For single individuals, there really is no choice. You take title individually. For married couples, there are three choices: (1) tenancy by the entirety, (2) joint tenants with rights of survivorship, or (3) tenants in common.

Tenancy by the Entirety

This is often the best choice for married couples, and only husband and wife can benefit from this type of ownership. In a tenancy by the entirety form of ownership, if one spouse dies, the surviving spouse succeeds to full ownership of the property, by-passing probate. By law, tenants by the entirety share equally in the control, management and rights to receive income from the property. Property cannot be “partitioned” or split in a tenancy by the entirety. A tenancy by the entirety also provides some creditor protection in case one spouse gets into financial distress as creditors cannot lien the non-debtor spouse’s interest in the property. In the example, below you can see how the Obamas take title as tenants by the entirety.

Joint Tenants

Like tenants by the entirety, a joint tenancy with rights of survivorship provide that the surviving spouse or joint tenant automatically succeeds to ownership, by-passing probate. You don’t have to be married to create a joint tenancy. These are common when siblings share property or as between elderly parents and their children. Unlike a tenancy by the entirety, joint tenants can “partition” or split ownership of the property through a court process.

Tenants in Common

The least used type of ownership, in a tenancy in common, there is no right of survivorship. So when a tenant in common passes, their interest goes to their surviving heirs and the property must be probated for further sale or mortgage. Most folks want to avoid probate like the plague. Like a joint tenancy, a tenancy in common can be split or “partitioned” by court order.

Purchase Price

All deeds must recite the consideration or purchase price paid. So if you are looking to hide the amount you paid for your home, forget about it. The purchase price is also used to calculate deed/transfer taxes due the seller which is $4.56 per $1,000. For more info about deed/transfer taxes read I Have To Pay Tax On Selling My Home?!

Legal Description

Every deed must adequately describe the property conveyed. In the diagram below, you can see the formal legal description called a “metes and bounds” description. This will often reference a plan of the land recorded with the registry of deeds or reference markers on the property such as stone walls, surveyor points, etc. The deed may also recite easements, restrictions, covenants or takings on the property. It will also recite the last prior deed to track ownership.

Drafting, Fees, Notaries, Etc.

In Massachusetts, local practice is for the seller’s attorney to draft the deed. The registry of deeds charges a fee of $125 to record the deed which the buyer pays. All deeds must be notarized by a notary public who must verify the sellers’ identification through a state issued driver’s license or acceptable form of identification. The notary must also confirm that the sellers are signing the deed voluntarily by their own free act and will. Once the closing is finished, the closing attorney will courier the deed to the registry of deeds, perform a final title run-down, and record the deed, mortgage and other documents. The sale is then official!

Massachusetts Deed Example

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Click here to read about my most recent adverse possession trial victory.

Massachusetts Adverse Possession Law

Robert Frost ‘s famous poem The Mending Wall says “good fences make good neighbors.” When that fence encroaches over a neighbor’s property line, however, that good neighbor can turn nasty very quickly.

When boundary or encroachments disputes arise, a little known legal doctrine often comes into play:  adverse possession. Adverse possession is a common law concept in Massachusetts under which homeowners may lose title to their land by sleeping on their property rights for 20 consecutive years against a neighbor who has taken actions contrary to their property interests. Yes, a neighbor can effectively take over ownership of your land if you sleep on your rights. Massachusetts adverse possession law reflects a public policy aimed at inducing landowners to actively protect their land.

The classic example of adverse possession is a neighbor who puts up a fence or paves a driveway several feet over their neighbor’s property line, without permission, and this “adverse possession” continues without objection for 20 consecutive years.  Despite the fact that the neighbor’s fence or driveway encroaches the property line, under the adverse possession doctrine, the property owner may lose title to the disputed strip of land by not doing, saying or even knowing anything about it.

Click Play to listen to my latest Radio Appearance on adverse possession!

Requirements For Adverse Possession

A landowner can obtain adverse possession only by filing a lawsuit and establishing several elements of the claim.  (My property law professor used a handy acronym called OCEAN to help students remember them). The use of another’s land must be Open, Continuous (for 20 years), Exclusive, Adverse and Notorious. Each element has its own specific requirements, and all adverse possession cases are very fact-specific. The law does not favor adverse possession, so the burden of proof on the claimant is relatively high.

Adverse possession can also occur through multiple prior owners during the 20 year period under a theory called “tacking.” Adverse possession can also be in the form of an easement, or merely a right to use property, called a “prescriptive easement.” This could apply to the gamut of utility, pathway, or access easements.

Surveys and Stakes

Surveys typically form the genesis, and play an important role in, adverse possession cases. The parties must know where the true lot lines are on the property. Sometimes, there are disputes as to the survey in cases of old, poorly laid out lots. Remember that even if you believe the neighbor is wrong about the lot line, it is against the law in Massachusetts to remove survey stakes. (Mass. General Laws Chapter 266, Section 94).   Also under Massachusetts law, a surveyor is allowed to enter upon your land, with reasonable notice, for purposes of completing a survey.

Tips To Prevent Adverse Possession

The key to preventing adverse possession is to be proactive regarding your boundary lines and property rights. If you suspect an encroachment, obtain a full instrument survey, not a mortgage plot plan which can be inaccurate. If an encroachment is found, consult an attorney for further advice.

Generally, the most effective methods to prevent adverse possession are to:

  • Posting “No trespassing” signs (can be helpful, but is not fail-safe)
  • Physically demarcate lot lines with a fence, gate or the like (survey stakes alone may not be enough)
  • Document giving permission to an encroaching neighbor by written document or agreement
  • For prescriptive easements, record a statutory Notice to Prevent Acquisition of Easement. Note: this notice will not prevent a claim of adverse possession to the entire land.
  • Bring a lawsuit to “quiet title”
  • Submit your land to the Land Court registration system

The more land you own (especially raw woodlands) the more proactive you need to be.

Lastly, when buying new property, consider getting an enhanced title insurance policy which has coverage for encroachments and boundary issues, at a small premium over standard rates.

Adverse Possession Lawsuits

Given the high cost and low supply of land in Massachusetts, adverse possession disputes often wind up in litigation. Adverse possession litigation can be expensive because these cases are very fact-specific and require a fair amount of witnesses, factual investigation, title research, and even expert testimony. Adverse possession cases are generally difficult to win, but they can be successful with the right facts and good preparation.

The Massachusetts Land Court hears adverse possession cases along with the Superior Court. Depending on the facts of the case, the plaintiff can do a bit of “forum shopping” between the two courts.

Click here to read about my most recent adverse possession trial victory.

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Richard D. Vetstein, Esq. is an experienced Massachusetts adverse possession attorney who’s handled numerous adverse possession cases and trials in Land Court and Superior Court. Please contact me at rvetstein@vetsteinlawgroup.com or 508-620-5352 if you are dealing with a Massachusetts adverse possession dispute.

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