Deeds

New Laws Allow Video-Conferencing Technology For Notarization of Legal Documents during COVID-19 Crisis

Update 4/28/20: Gov. Baker has signed the bill. Remote virtual notarizations are now allowed during the COVID-19 State of Emergency!

After what seemed like an eternity during this unprecedented COVID-19 crisis, the Legislature has finally passed a bill providing for the remote virtual notarization of legal documents through video-conferencing technology. The measure will be in place temporarily during Gov. Baker’s declared COVID-19 State of Emergency, and will dispense with the legal requirement for in-person notarizations of real estate, probate and other legal documents requiring a notary public stamp. After over a month of intense lobbying by attorneys and the banking industry, and several revisions to the original bill, the House and Senate finally agreed on a final language today. The measure now goes to Gov. Baker’s desk where he is expected to sign it shortly. This is great news for everyone in the real estate industry as the new law will allow attorneys, paralegals, buyers, and sellers to sign important legal documents safely in their homes during the COVID-19 crisis.

The new law, An Act Providing for Virtual Notarization to Address Challenges Related to COVID-19, provides for a series of requirements and steps to effectuate a valid remote virtual notarization —

  • Remote notarizations may be conducted through video-conferencing technology such as Zoom or FaceTime. No specific type of technology is spelled out, but we are hearing that title insurance companies and lenders will require real estate closing attorneys to use approved virtual notary software. Some may not however.
  • All remote notarizations must take place with both the notary and the signatory within Massachusetts state lines. For example, a Massachusetts notary cannot notarize a document of a person signing in New York.
  • The signatory must show the notary a government issued photographic form of identification (a state issued driver’s license is OK). Non-US citizens must show a valid passport or government I.D. A copy of the front and back of the I.D. must be sent to the notary which must be retained for 10 years.
  • The notarization must otherwise be conducted in the usual manner over video-conference with the notary observing the actual signing of the legal document and taking the required affirmation, i.e., “this is your free act and deed.”
  • The original notarized documents must then be sent back to the notary, and for real estate closings, a second video conference must be conducted where the signatory authenticates the signed documents.
  • Once the above process is complete, the notary or attorney can stamp the documents as notarized, and must also complete and sign an affidavit attesting that all requirements have been met. The affidavit must be kept on file for 10 years.
  • Each video-conference conducted under the law must be recorded and retained for 10 years.
  • For real estate transactions and certain probate documents (will, trust nomination of guardian or conservator, durable power of attorney, health care proxy or caregiver authorization, only licensed attorneys (or a paralegal under their supervision) may conduct a remote notarization. For real estate closings, a second form of I.D. may be required.

The new law expires 3 days after Gov. Baker lifts the COVID-19 State of Emergency, at which time, only standard in-person notarizations will be allowed. The text of the bill is embedded below.

Massachusetts Virtual Remot… by Richard Vetstein on Scribd

{ 1 comment }

Legislation Would Temporarily Allow Video-Conferencing Technology For Attorney Notaries

Update: 4/23/20 — The bill (now Senate Bill 2645), has passed both Senate and the House, and will soon be on the way to the Governor’s desk where he is expected to sign the bill. Click here for my new post: Legislature Passes Remote Virtual Notarization Act for COVID-19 Emergency.

Update: 4/22/20 — The Senate has passed a new revised version of the Bill, now it moves on to the House where it is expected to pass.

The real estate legal community, including yours truly, have been working and lobbying tirelessly to address the various impacts of the Coronavirus (COVID-19) Crisis on real estate transactions and closings. One of the first solutions we proposed is legislation allowing for remote or virtual notarizations of deeds, mortgages and other closing documents so that buyers and sellers can sign documents in the safety of their own homes on their computers. Due to the COVID-19 crisis, many folks are subject to the Governor’s Stay At Home Order or don’t feel safe traveling outside to an attorneys’ office for a real estate closing. Meanwhile, while the economy heads towards a recession, real estate is one of the few assets with available equity for consumers.

Under our proposed legislation, An Act Relative To Remote Notarization During COVID-19 State of Emergency (S.D. 2882), a licensed Massachusetts attorney may notarize legal documents using video-conferencing technology. There is a two-step process laid out in the legislation to complete the notarization process where the signer shows the attorney his/her state issued identification, sends the original signed documents back to the attorney, and then verifies the authenticity of the signed documents. Once that process is complete, the attorney can stamp the documents as notarized and must also complete and sign an affidavit attesting that all requirements have been met. Those notarized documents may then be recorded with the Registry of Deeds as valid, legal and binding recordable instruments. Additionally, the two video-conferences must be recorded and kept on file for 10 years. The bill would only be in effect during the COVID-19 State of Emergency.

The bill has widespread industry support from the Real Estate Bar Association (including the Probate Section), the Massachusetts Bar Association, the Massachusetts Association of Realtors and Greater Boston Real Estate Board. Twenty three (23) states have now passed remote notarization bills, including just recently due to the COVID19 crisis, including New York State, Vermont, Connecticut, Florida, Virginia, Texas, and Nevada. Moreover, a nationwide bill has been proposed by the American Land Title Association.

There are a number of technology companies that offer end-to-end remote notarization systems and are approved by national title insurance companies and lenders. They include:

To our real estate partners and colleagues, WE NEED YOUR HELP NOW! We need you to email or call your State Rep. and Senator and tell them you support our proposed legislation, An Act Relative To Remote Notarization During COVID-19 State of Emergency (S.D. 2882). To search for your state legislator, please click here.

Thank you! I will keep you posted as to developments and hopefully passage of the bill. Also many thanks to Attorneys Kosta and Nik Ligris on spearheading the bill!

Massachusetts Act relative to remote notarization during COVID-19 state of emergency. by Richard Vetstein on Scribd

{ 3 comments }

Significant Impacts Hitting: Registry and Court Closures, Closing and Financing Delays, Social Distancing, School Closings, Quarantine Potential

As I was writing this post tonight, Gov. Baker ordered the shutdown of all schools through April 6, closed down restaurants and bars, and is banning gatherings over 25 people. Also announced tonight is the shut down of all Trial Court facilities on March 16 and March 17, which includes the Cambridge and Suffolk (Boston) Registries of Deeds. We are now hitting the tipping point, and going forward there will be substantial impacts on the real estate and legal industry.

I first wrote about the Coronavirus (COVID-19) global pandemic five days ago. Seems like an eternity ago. As of that writing (data as of March 9), there were 729 reported cases in the US, with 27 deaths. As of tonight March 15, cases have over quintupled with Johns Hopkins reporting 3,722 confirmed cases and 61 deaths. With the well publicized testing delays, the real number of cases are likely far higher.

Registry of Deeds Impacts

As mentioned above, Gov. Baker just ordered the closure of all Trial Court facilities for Monday March 16 and Tuesday March 17. Both Cambridge and Suffolk (Boston) Registries are housed in Trial Court facilities so they will be closed for those two days. I spoke to Maria Curtatone, Registrar of Deeds for Cambridge Middlesex South, and she indicated that this may well be the precursor to widespread shutdown of all registries of deeds and courts throughout the state. We will await further announcements on that.

Update (3/17/20) — Suffolk and Cambridge are closed to the public until at least April 6. Currently, they are both still processing electronic recordings for recorded land. All Land Court recordings and plans must be sent in by overnight or regular mail.

We have just received a chart below showing current Registry status:

I remain concerned, however, that all Registries will be forced to shut down and will not offer in person, mail or electronic recordings. If that occurs, we will see a potentially catastrophic impact to real estate in Massachusetts. Title insurance companies have assured its attorney agents that they will offer “gap coverage” in case recordings are delayed. This coverage offers insurance coverage between the time of the physical closing and the time of actual recording of documents at the registry. However, it remains to be seen how this will play out. Will mortgage payoffs still be processed even though deeds will not be recorded? Will sellers allow buyers to get keys and move into homes if deeds aren’t recorded and their sale proceeds are held in escrow? We will need to work through these issues.

I am also concerned if COVID-19 starts hitting closing attorney offices. If a lawyer or staff member is infected, it could result in the quarantine of their entire office, essentially shutting it down for some time.

COVID-19 Contingency Provision

In my previous post, I discussed a new COVID-19 Impact Clause for Offers Purchase and Sale Agreements. (Sample language below). It is imperative that these clauses are used in both Offers and PSA’s. It’s also very important that all parties and their attorneys work together cooperatively throughout this crisis, acknowledging that there will likely be substantial impacts and delays. The goal, as always, is to get to the closing and complete the deal, by any means necessary.

COVID-19 Impact Provision. The Time for Performance may be extended by either Party by written notice for an Excused Delay which materially affects the Party’s ability to close or obtain financing. As used herein an Excused Delay shall mean a delay caused by an Act of God, declared state of emergency or public health emergency, pandemic (specifically including Covid-19), government mandated quarantine, war, acts of terrorism, and/or order of government or civil or military authorities. Notwithstanding anything to the contrary contained in this Agreement, if the Time for Performance is extended, and if BUYER’S mortgage commitment or rate lock would expire prior to the expiration of said extension, then such extension shall continue, at BUYER’S option, only until the date of expiration of BUYER’S mortgage commitment or rate lock.  BUYER may elect, at its sole option, to obtain an extension of its mortgage commitment or rate lock. Notwithstanding the foregoing, said Extension shall not exceed [insert number of days].

Virtual and Remote Closings

Another impact that we are already seeing is that parties to the real estate transaction are afraid of traveling outside their homes right now (or even being visited at home) and being in contact with other people, especially those who are high risk. My colleagues and I are working on an emergency executive order for Gov. Baker to sign which would temporarily authorize remote or virtual closings using such technology as Zoom and Docusign.

For more information on this please read my new post, Massachusetts Remote Notarization Bill Filed in Legislature

Court Closings

Update (3/17/20): The Supreme Judicial Court today ordered that, because of the public health emergency arising from the COVID-19 pandemic, beginning tomorrow (March 18, 2020) and until at least April 6, 2020, the only matters that will be heard in-person in Massachusetts state courthouses are emergency matters that cannot be held by videoconference or telephone. Each of the seven Trial Court departments, in new standing orders to be issued today, will define emergency matters for their departments.  As a result of the SJC order, courthouses will be closed to the public except to conduct emergency hearings that cannot be resolved through a videoconference or telephonic hearing.  Clerk’s offices shall remain open to the public to accept pleadings and other documents in emergency matters only.  All trials in both criminal and civil cases scheduled to commence in Massachusetts state courts between today and April 17, 2020, are continued to a date no earlier than April 21, 2020, unless the trial is a civil case where the parties and the court agree that the case can be decided without the need for in-person appearance in court. Where a jury trial has commenced, the trial will end based on the manifest necessity arising from the pandemic and a new trial may commence after the public health emergency ends. Courts, to the best of their ability, will attempt to address matters that can be resolved or advanced without in-person proceedings through communication by telephone, videoconferencing, email, or other comparable means.

A link to the SJC Order OE-144 is here.

In addition to the closings on March 16-17, the Massachusetts Court System announced over the weekend major “triage” changes reducing the number of persons entering state courthouses. These rules are effective Wednesday March 18, 2020. A link to all of the new changes can be found here — Court System Response to COVID-19. A summary of each court and respective changes are as follows:

Superior Court — All jury trials postponed until April 22. Motions handled by individual judges with preference for telephonic hearing and postponement where necessary to limit number of people entering courtroom. Emergency matters may proceed normally. The new Standing Order 2-20 can be found here.

Housing Court — All cases including evictions (except emergencies) postponed until after April 22. Matters may be heard earlier upon a showing of good cause. New Housing Court Standing Order is here.

Probate and Family Court — Trials postponed until May 1. Motions and pre-trials heard telephonically or postponed until after May 1. Modification complaints won’t be heard until after May 1. New Probate and Family Court Standing Order 1-20 is here.

District Court — No jury trials until after April 21. All criminal appearances rescheduled for 60 days, and no earlier than May 4. Arraignments and Bench trials may proceed. The new District Court Standing Order is here.

Land Court — All trials postponed until after April 21. All other motions and proceedings shall be held telephonically at judge’s discretion. Registration of title documents should not be done in person. Mail or email is now preferred. (Not sure how that will work). New Land Court Standing Order 2-20 is here.

Appeals Court — Oral argument for March will be telephonic.

Supreme Judicial Court — Please see the Court’s website.

As you can glean from the changes, virtually all trials are being pushed out through the end of April. Motion hearings are court specific with telephonic hearings being substituted for in-person hearings. Of course, if the courts are all shut down, all bets are off. With no staff, the courts will not even be able to handle new filings. The system would just stop in its tracks, except for the most emergency of matters.

Lender/Financing Delays

This week we will see if there are any major disruptions to lenders’ ability to provide financing. I am seeing some smaller mortgage companies moving to remote employee staffing. I’m also hearing about appraisal delays. If there are government employee impacts such as at the IRS for processing tax transcripts, there could be delays with underwriting. I think it’s inevitable that we will be seeing lender delays moving forward.

Municipal Closings

I am also hearing of closings of municipal departments, which may affect the availability of final water/sewer readings and possibly smoke detector certificates. Title 5 inspections could also be impacted.

25 Person Social Gathering Restriction

New restrictions on crowd sizes that Gov. Charlie Baker issued on Sunday, March 15, could upend open houses. The restrictions banned gatherings of 25 or more people. Brokers seemed to anticipate a possible drop-off in attendance, even before Baker’s restrictions and despite strong numbers the past couple of weeks. “Next week may be a different story,” Jason Gell, a Keller Williams broker and president of the Greater Boston Association of Realtors, said on March 12. “Unfortunately, any decline in open houses or listings is likely to make the conditions for buyers even more difficult.”

Social Distancing, School Closures and Possible Lockdown

The impacts of COVID-19 are manifesting not necessarily in the actual infection and sickness of patients (which I’m not discounting at all) but all the measures we are taking to “flatten the curve.” I want to urge all my readers that COVID-19 could wind up being the worst global pandemic since the Spanish Flu and should be taken as seriously as life and death. If you can work from home, do that and don’t go into the office. If you can arrange for remote employee access, please do that. Take advantage of technologies like Zoom, Docusign and Dotloop. Please keep your kids at home. No playdates, family gatherings or hang-outs. They say we are only 2 weeks behind Italy and you see what’s going on there. Stay safe! More updates to follow as I get them.

-Rich

{ 2 comments }

Allen Seymour – Arraignment Brookline District Court

Summary Judgment Ruling In Favor of Forgery Victim Allows Case to Proceed to Trial

As I’ve written here, I have been representing three victims in a brazen and complex real estate forgery scam. The ringleader was Allen Seymour of Oxford, who used forged deeds, fake notary stamps and driver’s licenses to sell properties out from under homeowners, flipping their properties to wealthy investors, and pocketing the cash. Seymour targeted properties in Cambridge, Brookline, and Somerville. By accounts, he made off with over $2M in illicit sale proceeds. Seymour also worked with a group of accomplices including a Newton police lieutenant. The cases have been featured in several Fox News 25 segments. While Seymour remains in jail awaiting trial on 22 felony indictments, the civil cases have been ongoing for almost two years, and are heading towards trial.

I just received the first major court ruling in the cases from Superior Court Justice Douglas Wilkins. The ruling is noteworthy because it appears to be the first time a Massachusetts judge has issued a written decision dealing with the unique type of forgery that occurred in this case.

The Deed Forgery Scam

Forged Deed First Page
Forged Deed Second Page

The facts of the case are pretty surreal. My client is the owner of a three family property in Brookline, assessed at $1.5 Million. He was behind on his mortgage, and Seymour (using the alias “Rich Chase”) approached him with a foreclosure rescue scheme. Seymour had him sign a mortgage payoff authorization form which contained a separate signature page with a notary block – which would be used later to perpetrate the fraudulent scam. Ordinarily, mortgage payoff authorizations are not notarized. Behind my client’s back, Seymour took the notarized signature page of the payoff form and attached it to a quitclaim deed and recorded it with the registry of deeds. This deed “sold” the property from my client to Seymour’s accomplice for some 30% of its value, at $480,000. While this was happening, Seymour orchestrated a flip of the property for $750,000 to an LLC owned by Fred Starikov, the owner of City Realty in Boston. Starikov’s LLC then took out a $850,000 mortgage on the property from Bee Investments LLC. Seymour then made off with the sale proceeds, and tried to flee the country with a duffle bag of cash and a trash bag filled with Oxycontin. Fortunately, he was caught in South Carolina by the FBI, and brought back to Massachusetts to face multiple felony charges.

Lawsuit Asserts Claims for Forgery and Fraud

On behalf of the victim, I brought claims for quiet title and fraud, asserting that the quitclaim deed was a forgery. Under Massachusetts law, a forgery of a deed conveys no title. It is null and void, and title reverts back to the original owner as if the forgery never occurred. This is very important in these cases, because a forgery would also avoid the defense asserted by Starikov and his lender being a “bona fide good faith” purchase or lender. This defense, if successful, could allow them to keep title to the property. Starikov and his lender also asserted a claim for “equitable subrogation.” This theory is used to enable a lender to seek repayment of monies paid out in the transaction (typically mortgage proceeds) on the theory of unjust enrichment and mistake.

What is a Forgery?

Starikov and his lender filed a motion for summary judgment to dismiss the case prior to trial, arguing that the deed wasn’t a forgery because my client’s signature was “genuine” and on the deed itself, and asserting the good faith and equitable subrogation defenses. In what appears to be a case of first impression, Justice Wilkins held that the transfer of an altered signature page onto a deed was in fact a forgery under the common law definition. As he wrote in his decision:

Red Flags: Good Faith and Equitable Subrogation

Judge Wilkins also rejected the good faith purchaser and equitable subrogation defenses. As I argued, the judge recognized that there were several “red flags” with the deed and the purchase and sale agreement (which was also forged) which could have put a closing attorney on notice of the irregularities in the transaction. These red flags are properly considered at trial, the judge ruled.

What’s Next?

Overall, I’m very pleased with Judge Wilkin’s ruling. He understood the issues, and provided some much needed justice for my client. So now the case will proceed to trial (or settlement). I will keep you appraised of any further developments. I’ve embedded the entire opinion below for your reading pleasure.

Nelson v. Chandler Cazenove LLC (Middlesex Mass. Superior Court) Jan. 23, 2020 by Richard Vetstein on Scribd

{ 0 comments }

Benefits and Affordability Of Owner’s Title Insurance Coverage Praised In Widely Read Article

When my friend Jim Morrison, formerly of Banker and Tradesman and now a freelance real estate reporter, contacted me about an article on owner’s title insurance, I was rather surprised. After all, title insurance isn’t the most “sexy” of real estate topics. However, I did have a whole bunch of horror stories to tell Jim about what happens when buyers don’t elect to get owner’s title insurance coverage. I told Jim the stories and, as always, recounted how I got owner’s title insurance on my own house purchases, even though I was pretty certain the title was clean. The article would be posted on Boston.com, Jim said. Sound great, Jim, thanks for letting me comment, I said.

Well, Jim wrote a fantastic article. And what do you know, but the article was so widely read and shared that the Globe decided to put it in the Boston Sunday Globe Magazine with yours truly featured in the inset! I was thrilled — not only for the good press, but more importantly, to spread the word that owner’s title insurance is a “must-have” for every buyer and a good deal financially.

You can find a link to the article here: What Is Title Insurance, and Why Do You Need It? It is really one of the best articles on owner’s title insurance that I’ve seen in a long time. For all my fellow law colleagues, real estate agents, and mortgage professionals, it’s a great piece to share on your social media feed and client newsletters!

{ 0 comments }

Local Loan Shark Stopped In His Tracks

by Rich Vetstein on September 14, 2019

NEW CASE ALERT: Our Firm Files Lawsuit Against Local Predatory Lender, Charging 50% Interest and Attempting to Evict Local Family

On Monday, a new client came into my office with an unbelievable story. My client had some financial difficulties and was in pre-foreclosure with his second mortgage holder. Looking for some unconventional solutions, he was introduced to a local “hard money” private lender who offered a workout loan to stop the foreclosure. This lender sold him on a $50,000 loan, with 50% interest rate with a 6 month balloon payment. 

Under the Massachusetts criminal usury law, however, a lender cannot charge more than 20% interest without first registering with the Attorney General’s Office. This private lender was not registered. That was the first red flag. The next red flag was that in addition to a standard mortgage, the private lender demanded that my client (and his wife) take the highly unusual step of signing over a “reverter deed” to their house, as additional security. Under duress, my clients signed the deed.

Only days later, the private lender recorded the deed, thereby becoming the record owner of the clients’ home, then, unbelievably, started eviction proceedings against my client and his family. Mind you, the loan was not even due for payment until March 2020. The lender appeared to have pulled a fast one over the local district court judge, and was able to get an eviction move out order. (My client did not have the means to retain counsel, unfortunately). The loan shark also sent threatening text messages like “TELL YOUR KIDS THEY ARE MOVING OUT!!!”

On the eve of the sheriff’s move out, I filed a multi-count civil action against the private lender, alleging predatory and illegal loan shark activities and unfair debt collection practices. I was able to get a temporary restraining order to stop the eviction, as well as a lis pendens (notice of claim), in order to rescind the loan and the deed.

This family of four can now sleep knowing they won’t be thrown on the street. And my father has come up with a new nickname for me….Robin Hood Vetstein. I’ll take it! I will keep you posted on developments. Hopefully, the Attorney General’s Office will take interest in this lender. If this story sounds familiar, please contact me…I do not want to divulge the lender’s name here on this platform, but I would be happy to provide it to you privately.

{ 0 comments }

It’s been awhile since I’ve posted, and that’s due in large part to my work on several complex cases involving challenges to deeds. So I figured since I’ve done a ton of legal research and writing on the subject in the actual cases, why not write about it?

When you think about undue influence and mental capacity, one conjures up the classic scene of the “evil” son putting a deed to the family house in front of a dying parent in the hospital, signing over the house and excluding all of the other siblings. Now, I’ve had a case where that actually occurred! But these cases run the gamut of situations.

These cases are often intra-family disputes, and can involve challenges to deeds and real estate transfers, as well as wills. Will contests are a different animal altogether, so I won’t cover those in this post. The common theme in these cases is that someone (say an heir of a deceased person or a sibling) is unhappy that a parent or sibling signed over a deed to someone else (say a brother or son) and thinks there was something nefarious behind it, and wants to essentially un-do that transfer.

Legal Standards Governing Deeds and Notaries Public

Let me start with some basics about the law of deeds and notarizations. In order to be considered enforceable and accepted for recording at the registry of deeds, a quitclaim deed must be executed before a notary public. A notary public’s job is essentially to ensure that the signatory is signing the deed is doing so freely and voluntarily. A Notary Public is governed by a comprehensive set of regulations under Executive Order No. 455 — Standards of Conduct for Notaries Public passed by Gov. Romney in 1994. A notary must examine a government issued form of identification in order to verify the identify of the person signing the deed. The notary does not have to make a medical or psychological determination as to whether the signatory is legally competent. Under the regulations, however, the notary is prohibited from notarizing a deed if the signatory “has a demeanor that causes the notary public to have a compelling doubt about whether the principal knows the consequences of the transaction or document requiring the notarial act,” or “in the notary public’s judgment, the principal is not acting of his or her own free will.”

A notary must also keep a journal of all notarizations performed (however, attorneys are exempt from this rule). The journal must contain the date, time and location of the notarial act, the signature, name and address of the person signing the document, the type of identification provided, and a description of the document notarized. The notary journal can prove to be a critical piece of evidence in a deed challenge case. (Note that the absence of a journal entry or journal itself does not render the deed or document invalid on its face).

Importantly, a notary public does not act as a lawyer or judge overseeing the legality of the deed or the conveyance in general. The regulations specifically provide that a “notary public has neither the duty nor the authority to investigate, ascertain, or attest to the lawfulness, propriety, accuracy, or truthfulness of a document or transaction involving a notarial act.”

Now this is very important. A quitclaim deed that is validly executed and acknowledged properly by a notary public and recorded with the registry of deeds is presumed by the law to be valid and enforceable. So how can someone challenge a deed which looks to be validly executed and notarized? Let me explain.

Undue Influence

Undue influence typically arises when the signatory to a deed (often elderly or mentally challenged) is under the influence of someone he or she trusts (often a close relative), and that person uses such influence to make them sign a deed under coercion or duress of some kind. The law defines undue influence as “whatever destroys free agency and constrains the person whose act is under review to do that which is contrary to his own untrammelled desire.” Four factors are usually present in a case of undue influence: (1) an unnatural disposition is made (i.e, the recipient would not otherwise have been entitled to own the property) (2) by a person susceptible to undue influence to the advantage of someone (3) with an opportunity to exercise undue influence and (4) who in fact has used that opportunity to procure the contested disposition through improper means. If undue influence can be established, a court can render the deed voidable and essentially undo the transaction in certain circumstances.  

Proof of undue influence is often challenging and involves recreating the circumstances of the deed signing and also examining the medical history of the person signing the deed many years ago. Medical records will need to be obtained. We often hire medical experts to give opinions on the victim’s neurological state. These cases are complex and can be expensive to litigate.

Lack of Mental Capacity

A person signing a deed must have a minimum level of mental capacity and awareness to know and understand what they are doing and that they are doing so under their free will. Mental capacity and undue influence often overlap. Lack of mental capacity may be found where a person may be affected by congenital deficiencies in intelligence, mental deterioration that accompanies old age, the effects of brain damage caused by accident or organic disease, and mental illnesses evidenced by such symptoms as depression, bipolar, or other neurological impairment. Like undue influence, proof of mental capacity can be challenging and involves medical records and expert medical witnesses as to the signatory’s mental state. A notary public should usually be the first line of defense in a situation where the signatory appears mentally incompetent, but often that does not happen or the signatory does not appear mentally challenged for the few minutes it takes to sign a deed. If lack of capacity can be established, a judge can invalidate the deed.

Forgery

Forgeries are a different situation all together. A forgery occurs when the person who is supposed to sign the deed did not sign it at all — someone else forged their signature on the document, and somehow had it notarized (often falsely). In my publicized forgery cases involving the accused criminal Allen Seymour, he allegedly forged victims’ signatures on deeds, then used a fake notary stamp on the deeds.

Under the law, if a deed is forged it is completely null and void — as if the deed never existed in the first place. Title reverts back to the original owner, and any subsequent good faith buyer or mortgage companies are out of luck. (That’s why you always get owner’s title insurance).

Proof of forgeries often requires a handwriting expert. Handwriting analysis is an interesting science, and I’ve dealt with it in several cases. Experts are usually former FBI agents or police detectives.

Litigating Challenges to Deeds

These cases are often brought in the Superior Court or Land Court under their quiet title jurisdiction. Sometimes they are brought in Probate Court. Claimants often seek a lis pendens (notice of legal claim) at the start of the case in order to prevent the property from being transferred or mortgaged while the case plays out. Sometimes, the signatory to the challenged deed is deceased, making the evidentiary history far more difficult to obtain and prove. Sometimes, the notary public is deceased or cannot be located. And sometimes the attorney who drafted the deed and participated in the signing has passed or cannot be located. Each case presents its own unique factual history and challenges.

It goes without saying that you need a very experienced real estate litigation attorney to handle this type of case. They are complex, both legally and factually, and can get very expensive, very quickly. But the stakes are usually quite high, with property values being so astronomical here in Massachusetts.

If you are dealing with one of these situation, please feel free to call (508-620-5352) or email me [email protected], and I would be happy to take a look at your case.

Good luck, Rich

{ 0 comments }

Allen Seymour, 50, formerly of Oxford, MA

As I’ve written here before, I have been representing three families victimized in a well publicized criminal real estate scheme involving forged deeds and the theft of millions of dollars in real estate.

I’m happy to report that Attorney General Maura Healy’s Office has announced a new round of indictments issued by a statewide Grand Jury against the suspected mastermind of the scheme and his son. Allen Seymour, 50, was indicted on charges of larceny of more than $1,200 and four counts of forgery. Seymour’s son, Corey Seymour, 26, of Worcester, was indicted on one count of conspiracy to commit money laundering and three counts of money laundering.

Thanks to my clients’ grand jury testimony, Seymour was previously indicted on 22 felony charges of forgery and money laundering. His former wife, Tina Seymour, was also indicted in the scheme.

Seymour, who used the alias “Rich Chase,” targeted elderly and unsophisticated homeowners, using forged deeds and fake notary stamps to sell their properties out from under them, flipping them to wealthy investors, and pocketing the cash. Seymour targeted properties in Cambridge, Brookline, and Somerville. As claimed in my lawsuits, Seymour also worked with a group of accomplices including Newton police lieutenant, Francis Foley III, who was not indicted but remains under investigation and on paid leave from the force.

I have filed three separate civil lawsuits seeking to undo the fraudulent transactions which remain pending. I am hopeful that all of my clients will receive the justice they deserve.

{ 0 comments }

Attorney General Healy Announces Indictments Against Allen Seymour and Ex-Wife

As I’ve written here before, I have been representing three families victimized by convicted felon, Allen Seymour, in a brazen complex real estate forgery scam. As a result of the courageous testimony from my clients, I’m happy to report that a statewide Grand Jury has just handed down a 22 count indictment against Seymour on charges of forgery, uttering, larceny, and money laundering. Seymour’s ex-wife, Tina Seymour, was also charged with conspiracy to commit forgery.

Seymour, who used the alias “Richard Chase,” targeted elderly and unsophisticated homeowners. He used forged deeds and fake notary stamps to sell their properties out from under them, flipping them to wealthy investors, and pocketing the cash. Seymour targeted properties in Cambridge, Brookline, and Somerville. As claimed in my lawsuits, Seymour also worked with a group of accomplices including Newton police lieutenant, Francis Foley III, who was not indicted but remains under investigation and on paid leave from the force.

Allen Seymour fled the state and was apprehended in South Carolina in May, and is currently being held without bail pending probation surrender hearing scheduled for a later date. He will appear in Worcester Superior Court on Jan. 7, 2019 for a hearing regarding his probation surrender. Tina Seymour will be arraigned in Hampden Superior Court at a later date.

I have filed three civil actions in Middlesex Superior Court, seeking to quiet title and restore ownership to the victims. The cases are ongoing.

First American Title Company has issued a statewide Fraud Agent Alert concerning this scheme.

Boston 25 News reported on the indictment below

{ 1 comment }

Cases Subject of Attorney General and FBI Investigation, Oxford Man Under Arrest

Over the last month, I’ve been representing the victims in two significant forgery lawsuits, the likes and brazenness of which I have not seen in 20 years of practicing law. The matters are now the subject of criminal charges by the Attorney General’s Office.

As alleged in the two lawsuits, Allen J. Seymour, of Oxford, Massachusetts, is the alleged mastermind behind a sophisticated forgery scheme to defraud property owners out of their ownership to their homes. In one of the schemes involving a Brookline property, Seymour, using an alias, approached my client with a foreclosure assistance plan, getting him to execute a mortgage payoff form with an unusual second signature page. Unbeknownst to my client, that signature page was then attached to a quitclaim deed to a straw-person (an individual known as Kayla Turner, also of Oxford, MA), and recorded with the Norfolk Registry of Deeds. The straw-person then purported to sell the deal to local investors, with the sale proceeds wired to a bank account controlled by Seymour and his associates.

In another case involving a Cambridge property, a deed was forged using a fake notary public stamp, then sold to investors who took out a $2 Million mortgage loan against the property. My client found out about the scam when a locksmith arrived at his house, attempting to drill out his front door lockset. As alleged in the lawsuit and shown by records kept by the Secretary of State’s Office, the straw entity, the Dudley Group, LLC, used in the Cambridge transaction was managed by a Francis Foley III, who is a Lieutenant in the Newton, Massachusetts Police Department.

This is not Allen Seymour’s first run in with the law. He pled guilty in 2009-10 to a slew of federal and state crimes stemming from a similar foreclosure and mortgage fraud scheme in the Worcester County area whereby he defrauded homeowners out of millions of dollars. Seymour was arrested at a Florida airport in February 2008 with $1.37 million in cash hidden in his luggage. He was sentenced to six years in prison.

As a result of the lawsuits filed by my office and cooperation with the Attorney General’s office, Seymour was recently arrested in South Carolina. Seymour was arraigned in Brookline District Court on June 18, with bail set at $2.5 Million. Forgery (also known as uttering) of a deed is a felony with a maximum state prison sentence of 10 years.

I have filed a civil action in both cases to quiet title to the property, asking the court to reverse the fraudulent transactions. Under the law, a deed procured by forgery conveys no title. The cases are complicated because there are many parties involved and there have been mortgages recorded against the properties which will need to be discharged.

Early estimates are that up to $1,500,000 in sale proceeds were taken in these fraudulent transactions. The investors who purchased the properties are also pursuing Seymour and his associates.

I was recently interviewed by Fox News 25 (see video below) on these cases which are sure to attract some local media attention. There are also reports of many more potential fraudulent deals that were pending. If you have any knowledge of these, please contact me at [email protected]

I will keep you updated with any important developments!

Related Links:  Read the Lawsuit in Anzalone v. Dudley Group LLC, Middlesex Superior Court; Nelson v. Chandler Cazanove LLC, Middlesex Superior Court

{ 3 comments }

A Path to Electronic Notary Acknowledgements

by Rich Vetstein on August 7, 2017

COVID-19 Update (3/25/20): Emergency Legislation Filed To Allow for Remote Notarizations

By Richard P. Howe, Jr., Registrar, Middlesex North Registry of Deeds

As young people who have known nothing but digital commerce enter the home ownership market, the conveyancing community in Massachusetts will face increased pressure to leave paper behind in favor of purely electronic closings. The statutory basis for this technological transition has been in place since 2004 with the adoption of MGL c.110G, the Massachusetts Uniform Electronic Transactions Act. Since then, all registries of deeds in the commonwealth have implemented electronic recording systems. Still, some uncertainly remains, especially regarding acknowledgements.

Earlier this year I wrote about electronic acknowledgement statutes in other jurisdictions in “Remote electronic acknowledgments,” published in the March 2017 edition of REBA News. In the same article, I explained why registries of deeds in Massachusetts should record documents electronically acknowledged outside of Massachusetts, but not record those electronically acknowledgement within Massachusetts. The primary basis for that opinion was that Massachusetts law requires a notary to affix a notary stamp to an acknowledgement, and that our law provides no electronic equivalent of that notary stamp.

With the demand for electronic acknowledgements looming but not yet fully upon us, now is the time to amend our notary statute to accommodate new technological practices. The starting point for such an amendment should be a shared understanding of the purpose of an acknowledgement, particularly with regard to real estate documents.

In colonial Massachusetts, registries of deeds and the requirement that real estate documents be acknowledged arose simultaneously. The purpose of the registry was to provide a public record of who owned what land as a means of curtailing secret sales that muddled ownership and created uncertainty in real estate transactions. The purpose of requiring deeds to be acknowledged before recording was meant to curtail fraud, either in the guise of a forged signature or of an actual signature that was later denied by its maker.

Conceived in the seventeenth century, the rationale for these rules, and the rules themselves, persist today. Registries of deeds perform the same core function of making public real estate ownership records, using new technology to do it.

So what is the core function of an acknowledgement? Primarily, it is to assure the public that the person who signed a document is who he or she purports to be. In Massachusetts, a notary does this by personally witnessing the signing of the document while positively identifying the person who signed it. The notary attests to this by signing the acknowledgement clause, printing his name and the expiration date of his notary commission underneath his signature, and then affixing his notary stamp to the document.

MGLc.222, s.8 requires a notary stamp to include “the notary public’s name exactly as indicated on the commission; the words ‘notary public’ and ‘Commonwealth of Massachusetts’ or ‘Massachusetts’; the expiration date of the commission in the following words: ‘My commission expires _____’; and a facsimile seal of the commonwealth.”

Not to minimize the importance of the facsimile seal of the commonwealth, but I am not sure how including that on an inked stamp that anyone, anywhere may purchase in any name from multiple vendors adds appreciably to the authenticity of a document or the signature upon it. To me, the basic reason for requiring a notary to include identifying information such as a printed name and a commission expiration date in the acknowledgement clause is to help identify and locate the notary if questions arise about the document.

While the notary stamp does require those two bits of information, so does the notary clause itself, which seems to make the notary stamp superfluous. Perhaps it would be more useful to assign each notary public a unique identifying number, much like an attorney’s BBO number, and require that number to be included in the acknowledgement clause in lieu of a stamp. Such a unique number would expedite the identification of the notary and his whereabouts. It would also be easy and inexpensive to implement, both on paper and in electronic form.

In reviewing electronic acknowledgement statutes already adopted elsewhere, it seems that many states have created a dual commission regime, one for regular notaries, the other for electronic notaries. Other places require notaries to invest in sophisticated (and presumably expensive) technology that renders the electronic document being acknowledged tamper-proof. Perhaps the tasks assigned notaries in other jurisdictions are more complex than those in Massachusetts, but both of these practices – a dual commission system and requiring sophisticated software of electronic notaries – greatly exceed anything now required or expected of notaries in this commonwealth.

In crafting rules for electronic acknowledgements in Massachusetts, we should strive to duplicate the functions now being performed by our notaries while allowing those functions to be performed on tablets and computer screens, not just on paper. Complex and expensive systems are not needed to do this, and such additional requirements would needlessly delay our ability to keep pace with the evolving expectations of those we serve.

Dick Howe has served as register of deeds in the Middlesex North Registry since 1995.  He is a frequent commentator on land records issues and real estate news.  Dick can be contacted by email at [email protected]

Reprinted with permission from the REBA Blog.

{ 0 comments }


notary-public-2An Act Regulating Notaries Public to Protect Consumers And The Validity And Effectiveness Of Recorded Instruments

On October 6, 2016 Governor Charlie Baker signed Chapter 289 of the Acts of 2016, An Act Regulating Notaries Public to Protect Consumers And The Validity And Effectiveness Of Recorded Instruments. The Act is a product of cooperation between the Real Estate Bar Association and the title industry. The Act officially codifies Mitt Romney’s Executive Order No. 455 (04-04), which in 2004 reformed the standards of conduct for notaries.  It also codifies the prohibition that a notary public cannot oversee and conduct a real estate closing; only a licensed attorney can handle closings. It also addresses several bankruptcy court rulings which called into question the effectiveness of notary acknowledgements involving powers of attorney.

Unauthorized Practice of Law
In the last decade, the practice of so-called “witness-only closings,” or “notary closings,” by non-lawyer notaries has spread from other states to Massachusetts. This practice has been vigorously opposed by REBA which filed a successful lawsuit effectively barring the practice in REBA v. National Real Estate Information Services, 459 Mass. 512 (2011). The Act codifies the rule of law that a non-attorney notary may only notarize documents but may not conduct a real estate closing. Only licensed attorneys may conduct real estate closings in Massachusetts.

Title Curative Provisions

Recent rulings from the Bankruptcy Court called into question the validity of mortgages with notary acknowledgements involving powers of attorney. The result of these rulings were that many mortgages were held null and void due to defective acknowledgements. The Act addresses these issues by providing, among other things:

● A revision to the standard acknowledgment clause, when the document is executed by the signatory in other than an individual capacity, to assist the notary in making clear that the document is the voluntary act of the principal, not merely the signatory [M.G.L. c. 222, § 15(b)]
● Notaries may vary from the forms set forth in the statute if they are using a form that is authorized or required by statute, regulation or executive order, including one executed in a representative capacity by one who acknowledges his voluntary act but fails to acknowledge the deed or instrument as the voluntary act of the principal or grantor [M.G.L. c. 183, § 42, as revised] [M.G.L. c. 222, §§15(h), 20]
● Failure to state that a document signed by an attorney in fact or in another representative capacity is in fact being signed as the voluntary act of the principal, not merely the signatory, shall not make the document invalid.  [M.G.L. c. 222, § 20(b)(iii)]

Other Provisions

Chapter 289 includes most of the Executive Order’s provisions, some in a modified form. The legislation also added other new provisions in M.G.L. cc. 183 and 222 —

● Notaries shall continue to maintain a chronological official journal of notarial acts, except that attorneys and their office staff shall continue to be exempt from this requirement.  [M.G.L. c. 222, §§ 12, 22, 24]
● Requirements for the notarial seal or stamp (expiration date affixed, exclusive property of the notary, etc.), except that a failure to comply shall not affect the validity of any instrument or the record thereof [M.G.L. c. 222, § 8, as revised]
● Qualifications for a notary; the grounds for which the Governor may decline an application for appointment or renewal of a notary commission, and the seven-year term of office, all as incorporated into the statute [M.G.L. c. 222, §§ 13, 14]
● Types of notarial acts that a notary may perform and prescribed forms for an acknowledgment, jurat, signature witnessing or copy certification [M.G.L. c. 222, § 15]
● Obligations of the notary to determine the appropriateness of the circumstances under which the notary is asked to perform a notarial act (identity and demeanor of the principal, incomplete notarial certificates, no undue influence by the notary, the notary’s relationship to the transaction or to the parties, etc.) [M.G.L. c. 222, §§ 16, 19, 20]
● Prohibition against notarizing signatures of family members shall not apply to notaries who are Massachusetts attorneys, as when the attorney takes the acknowledgement of an employee family member who witnesses a will, as provided in the Executive Order, but also if the family member employed by the attorney is the notary who takes the acknowledgement of the attorney.  [M.G.L. c. 222, § 16(a) (vii)]
● Failure of a document to contain the statutory forms shall not have any effect on the validity of the document or the recording thereof.  [M.G.L. c. 222, §§ 16, 19, 20]
● Notary public’s commission may be revoked for official misconduct, or for other good cause.  [M.G.L. c. 222, §§ 1, 26]

For more information, go to the Mass.gov Notary Public Page.

{ 11 comments }

Foreclosure2-300x225.jpgMany Titles Automatically Cleared As Of Dec. 31, 2016

While 2016 may have been a tough year for some, the new year brings some relief to those affected by foreclosure related title defects. For some homeowners saddled with bad titles due to improper foreclosures, when the Times Square ball dropped, their titles defects magically disappeared under The Act Clearing Title to Foreclosed Properties. They are now free to sell or refinance after waiting many years in most cases.

The Act, now codified in Mass. General Laws Chapter 244, section 15, was enacted by Gov. Charlie Baker last year in an effort to minimize the impact of several troublesome SJC rulings which cast doubt on titles coming out of foreclosures, including the seminal case of U.S. Bank v. Ibanez. The Act, which I testified in support of at the State House, establishes a new three year statute of limitations for challenging foreclosures and clears titles with foreclosures conducted prior to Dec. 31, 2013, unless the homeowner brought a lawsuit and records it with the Registry of Deeds.

Practice Pointer: Under the Act, any defective title stemming from a foreclosure completed prior to Dec. 31, 2013 is now cured, provided there is no legal challenge filed and complaint recorded with the Registry of Deeds and no other statutory exemption applies. Speak to your title underwriter or consult an attorney for guidance.

Covered Time Period

The Act establishes a three-year statute of limitations period to bring a challenge to a foreclosure. To timely bring a challenge, an aggrieved homeowner must file lawsuit challenging the validity of the foreclosure sale, and must also record a copy of the lawsuit in the registry of deeds before the limitations period expires. The Act reaffirms the mortgagee affidavit requirements of the foreclosure law, including the provision that the recording of a valid affidavit is “evidence that the power of sale was duly executed.”  The Act also provides that after three years from the date that the foreclosing lender records a validly executed affidavit, the affidavit serves as “conclusive evidence” that the power of sale was duly executed.

Retroactive Application

The Act applies retroactively. To address constitutionality concerns, for mortgagee affidavits recorded prior to December 31, 2015, the statute of limitations period is the longer of the full three-year period or one year from the effective date of the Act, December 31, 2015. Thus, by the terms of the Act, for all foreclosures completed prior to December 31, 2013, the deadline to assert and record a challenge was December 31, 2016. For foreclosures completed between January 1, 2014 and December 31, 2015, the three year statute of limitations runs from the date of the foreclosure.

No Relief to REO/Fannie Mae Owned Properties, But….

The Act does not apply to mortgagees, noteholders, servicers, their affiliates, or government entities like the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) that continue to hold title to properties following foreclosure sales. The Act only applies “arm’s length third party purchasers for value,” defined as a party who either (1) purchased the property directly at the foreclosure sale, or (2) purchased the property from the bank or another entity at some point after the foreclosure sale, to the extent the power of sale was not duly exercised.” While foreclosing parties, noteholders, and mortgagees will not benefit directly from the Act on properties that they own or service, they will benefit from the resolution of title disputes, the insurability of properties they formerly owned or foreclosed, and the validity of mortgages that they currently service.

Broader Applicability?

The Legislature clearly intended for the Act to resolve title defects arising out of the Ibanez case. But the Act, as drafted, is not limited to just Ibanez defects. It could also be applied to defects arising out of other SJC rulings, including Eaton (promissory note status), Pinti (cure notice) and Schumacher (cure notice).  Because the Act is retroactive and silent as to what specific title issues it resolves, a recorded mortgagee affidavit could cure many other issues aside from Ibanez issues. We will see how title underwriters and the courts apply the Act in the months to come. As always, the best practice is to get your title underwriter’s opinion in an email and place in your file.

{ 1 comment }

Tales From The Boundary Line Trenches

by Rich Vetstein on January 31, 2016

41 Oakland Street image 3A picture is worth a thousand words.” – Old Photograph Found In Attic Key to Victory

I handle a fair amount of Massachusetts boundary line and adverse possession disputes. For those who don’t know, adverse possession is a legal doctrine in Massachusetts where one property owner can make a claim of ownership over his neighbor’s land if such use was “open, hostile, adverse, notorious and exclusive” for 20 or more years. These disputes often come up where neighbors don’t know the true location of their property line, and one neighbor puts up a fence, retaining wall or has essentially annexed the land of the other neighbor.

In my most recent case, I am defending a gentleman whose next door neighbor claims adverse possession to an area about 15 feet into my client’s side yard which includes a small portion of the neighbor’s driveway. The dispute arose because my client wanted to put up a 6 foot privacy fence along the lot line. The neighbor sued, asking the court for a preliminary injunction to stop the installation of the fence.

My opponent claimed adverse possession dating back to when he purchased the property in 1985. The first problem I had was that my client bought his property in 2009. Thus, in order to poke holes in the claimed 30 year period, I had to track down the former owners of his property. Luckily, I found them — a charming elderly couple living in Medway. I met them over the weekend and sat down at their kitchen table with the case file and photographs. They said my opponent was a liar and disputed virtually everything he said in his lawsuit.

The elderly man went up to his attic and found several old photographs showing his then young grandchildren playing in the sideyard. That’s the picture in this post. In the background of the photo dating back two decades, you can see a fence in the disputed side yard area. The fence essentially destroyed my opponent’s adverse possession claim because he was physically prevented from using the disputed area, and thus, could not prove 20 years of uninterrupted and adverse use. When I showed the photos to opposing counsel, the response was that his client didn’t remember the fence despite the fact it was there for at least 10 years of his ownership. How convenient!

After working all weekend on the case and armed with the photographs and affidavits from the prior owners, I felt optimistic heading into the injunction hearing before a judge in Norfolk Superior Court. In order to obtain an injunction, the plaintiff is required to show a “likelihood of success on the merits.” The bottom line was that I caught my opponent in a lie, given that he never disclosed the existence of the fence in his original complaint, then came up with the convenient excuse that he didn’t remember it. The judge ruled that the neighbor could not establish adverse possession at this juncture of the case, and denied his motion for an injunction.

As with every adverse possession case, relentless preparation and determination to investigate the history of the property is critical. I was more prepared than my opponent, and that is one of the reasons why I won this round.

_______________________

100316_photo_vetstein-2-150x150.pngIf you are dealing with a Massachusetts boundary or property line dispute involving adverse possession, please contact me at [email protected] or 508-620-5253. I’ve handled scores of these cases successfully through trial and appeal.

{ 0 comments }

Foreclosure Title Clearance Bill Signed Into Law

by Rich Vetstein on December 1, 2015

Charlie BakerNew Law Will Resolve Thousands of Foreclosure Title Defects In Wake of U.S. Bank v. Ibanez Ruling

After a five year legislative struggle (in which I testified before the Joint Judiciary Committee), I’m very pleased to report that Governor Baker has signed into law the Act Clearing Title To Foreclosed Properties (Senate Bill 2015), embedded below. The bill will resolve potentially thousands of land titles which were rendered defective and un-transferable after the SJC’s landmark ruling in U.S. Bank v. Ibanez. The Ibanez ruling invalidated thousands of foreclosures across the Commonwealth due to lenders’ paperwork errors.

The problem addressed by the legislation is that scores of innocent buyers purchased these foreclosed properties, fixing them up, renting them out, etc., but they were unaware of the title defects — only to discover them once they went to refinance and sell. Title insurance companies have been bogged down trying to solve these defects, and in the meantime, many of these innocent folks are left with homes which cannot be sold or refinanced. The same bill passed the Legislature last year, but former Gov. Patrick, bowing to housing activists, vetoed it with a poison pill. After several amendments addressing housing activists’ concerns, a new bill was again passed, and just signed into law by Gov. Baker on November 25, 2015.

The bill, which is effective on Dec. 31, gives foreclosed owners a three (3) year statute of limitations to file a challenge to a foreclosure, after which the foreclosure is deemed to have been conducted legally. For foreclosures which have already been concluded, the new law has a one year waiting period, so that a defective foreclosure would be considered non-defective on Dec. 31, 2016. The bill does retain a homeowner’s right to seek compensatory and punitive damages for a wrongful foreclosure, provided it is within the statute of limitations. The bill also requires the Attorney General’s Office to spearhead more robust foreclosure prevention solutions with the HomeCorps Program and housing activists groups.

The passage of the bill is fantastic news for both owners and potential buyers/investors of foreclosure properties. There is a  shadow inventory of defective title properties which will be able to go on the market.

The bill was sponsored by Millbury Democrat Michael Moore whose office (especially Julie DelSobral) worked tirelessly for the passage of the Act.

MA Act Clearing Title to Foreclosed Properties by Richard Vetstein

{ 3 comments }

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.

{ 0 comments }

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 [email protected] or 508-620-5352.

{ 4 comments }

photo.aspx

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!

{ 0 comments }

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.

{ 0 comments }

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.

_______________________________________________

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 [email protected] or 508-620-5352.

 

 

{ 0 comments }