Articles Posted in Real Estate

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Foreclosure law in Massachusetts was impacted by the Ibanez decision of January 2011.  Throughout Essex County, Middlesex County, the Northshore or elsewhere in the Commonwealth of Massachusetts, Ibanez and the string of Massachusetts cases that followed, such as Bevilaqua, Eaton, Pinti and Schumacher, examined and interpreted what does and does not constitute compliance with the Massachusetts foreclosure statute (M.G.L. c. 244) and what does and does not constitute an effective challenge to the validity of a foreclosure in Massachusetts.

commerce-acts-books-477966-mMassachusetts law allows the holder of a mortgage to foreclose without having to file suit in court (“Massachusetts does not require a [mortgagee] to obtain judicial authorization to foreclose on a mortgaged property.”  Pinti, citing Ibanez).  Because Massachusetts statutory law allows this streamlined, non-judicial process, Massachusetts courts narrowly interpret the statute and require strict compliance with it (“…we adhere to the familiar rule that ‘one who sells under a power [of sale] must follow strictly its terms…’”.  Pinti citing Ibanez)

In the Pinti case, borrowers in a standard Fannie Mae mortgage challenged validity of a foreclosure based on borrowers’ claim that that the lender/mortgagee, Emigrant Mortgage Company, Inc., failed to strictly comply with paragraph 22 in the mortgage.  Paragraph 22 states that prior to acceleration of the loan following a breach of the mortgage by the borrowers, the mortgagee must notice the borrowers of: “(a) the default; (b) the action required to cure the default; (c) a dated, not less than [thirty] days from the date the notice is given to [the plaintiffs], by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by [the mortgage].”  Paragraph 22 further requires that the borrower be informed “of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of [the plaintiffs] to acceleration and sale”.  Then, upon failure of the borrower to cure the default, Emigrant may proceed with the “statutory power of sale”.  The borrower, Pinti challenged Emigrant’s default notice because the notice stated that the borrowers “…have the right to assert in any lawsuit for foreclosure and sale the nonexistence of a default or any other defense [they] may have to acceleration and foreclosure and sale”.  Pinti.

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Ownership and title to real property in Massachusetts goes back to the Mayflower Compact. As roads, ways and cart paths were created throughout the Northshore, Middlesex County and other counties, easements to and from land were created for access and passage. An easement may exist over land, privately owned waterways or in the air. An easement may be created various ways: expressly by written contract, in a grant or deed, shown on a record plan, by use over a period of years; or they may be implied or arise due to necessity. Once created, does the easement last forever or may it be lost or extinguished?  The valid creation and the possible extinguishment of an easement is determined by Massachusetts statutes, case law and common law.

commerce-acts-books-477966-mWhen an easement is created on real property in Massachusetts there is a “dominant estate”, meaning the land that is benefitted by the easement. There is also a “servient estate”, or the land that is burdened by the easement.  For example if you have an easement that allows you onto your neighbor’s yard or driveway to access your property, your land is the dominant estate and your neighbor’s the servient estate.  Once an easement exists there are several methods that the burdened estate can free itself.

An easement can be extinguished by adverse use or prescription over a period of 20 years or more.  Massachusetts case law has confirmed extinguishment if the servient estate demonstrates “it, or its predecessors, had ‘used the way in a manner so inconsistent with the easement that it … [worked] an extinguishment of it after the lapse of twenty years.”’  Lemieux v. Rex Leather Finishing Corp., 7 Mass. App. Ct. 417, 423 (1979) (quoting Patterson v. Simonds, 324 Mass. 344, 352 (1949)). ‘“[A]n easement is extinguished by a use of the servient tenement … if, and only if …  (a) the use is adverse as to the owner of the easement and (b) the adverse use is, for the period of prescription, continuous and uninterrupted.”’ Yagjian v. O’Brien, 19 Mass. App. Ct. 733, 737 (1985) (quoting Restatement of Property § 504 (1944)).  However, “Mere non-use [of an easement] no matter how long, will not work an abandonment.” Desotell v. Szczygiel, 388 Mass. 153, 158-159 (1958).  A burden upon the easement must be inconsistent and irreconcilable with the dominant estate holder’s use for that burden to work as extinguishment of the easement.  Id. at 733.

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It has been a red-hot residential real estate market all over Massachusetts. Homes in good locations that are updated and priced fairly are going under contract quickly. The weather may be turning colder as we head into 2017 but the sale prices of good housing throughout the North Shore, including Lynnfield, Saugus, Danvers, Lynn and Wakefield have stayed firm.  As New Englanders know, after a snow-filled winter, a warm spring is always welcome.  Traditionally the housing market heats up once the snow begins to melt. However, with the small inventory of available homes today, potential buyers may wish to keep close watch on new listings during the winter too. If 2017 is the year you will buy your house, be mindful that there are many complications involved with purchasing a home, from start to closing. An experienced and knowledgeable real estate attorney to represent your interests only, throughout the process, can be valuable. Actually, is a lawyer required for closing?

commerce-acts-books-477966-mMassachusetts is one of the few states in the country that is considered an “attorney state” for residential real estate transactions. That means that home buyers and sellers in Massachusetts typically have an attorney represent them (unlike other states where most matters are handled by a real estate agent and a title company). An attorney’s involvement is required by G.L. c. 221, s. 46A, which prohibits the unauthorized practice of law by non-lawyers.

The MA Real Estate bar Association (REBA) takes the position that real estate closings conducted by non-attorneys, often called “witness-only closings” or “notary closings”, are not in the best interest of the consumer or buyer.  “Decisions made by home buyers and other mortgage borrowers are particularly susceptible of improper influence, and even predatory behavior, by individuals who are unqualified to give legal advice.” REBA strongly recommends that the Buyer and Seller each have their own attorney in addition to the attorney conducting the closing, to prevent an issue of conflict and to assure that each side is adequately represented.

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Tax planning is an important component of an overall estate plan. Depending on the type and the value of assets owned, the services of an attorney and a tax specialist may be appropriate.  Throughout the Northshore of Massachusetts, including Saugus, Danvers, Wakefield and Lynnfield, it may save significant money and gifts for heirs if one works with an experienced estate planning lawyer. Any number of life events may provide a good time to trigger setting up an appointment to review your estate and discuss options – marriage, divorce, an addition to the family, health issues or simply natural aging.

commerce-acts-books-477966-mOne example of a tax planning issue to consider is the taxable basis at death of assets acquired during one’s lifetime, such as stocks, a home and real estate. A properly prepared estate plan may enable the heirs to use a legal step-up in basis so that the starting point for valuation of an asset will be the value at the date of death – instead of the value at acquisition or some other starting value.

What is a step-up in basis and how does it work?

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Spring is in full bloom on the North Shore.  The trees are green again and pollen abounds.  “Open House” and “For Sale” signs grace the lawns of homes in Reading, Wakefield, Lynnfield, Peabody, Lynn and across the North Shore.  Spring is a great time for Buyers and Sellers.  A green lawn and blooming flowers help draw Buyers’ eyes and may enhance a home’s value.  Whether buying or selling a home, having a lawyer on your side from the beginning can help the process go smoothly.  Real estate closings are just one instance where buyers and sellers alike may want to consider hiring an attorney.

commerce-acts-books-477966-mNavigating an offer to purchase and then a purchase and sale agreement and finally the real estate closing can have challenges.  For one thing, paperwork with complex terms and forms can be confusing.  Negotiating the terms of the offer before signing anything, may prove very important.  Purchasing a home is a big investment; make sure you are protecting your investment from the beginning.  Closings can be particularly challenging if there are issues that arise from the title examination or the home inspection.  If you are unsure if you should handle a closing on your own, the best solution would be to hire an attorney to represent your interests and handle the details.

When it comes to getting answers to questions about a possible real estate transaction, it is invaluable to ask a lawyer who specializes in real estate.  You wouldn’t ask your local supermarket manager a question about a healthcare concern nor would you ask your doctor if the supermarket fish special is fresh!  Why then would you ask anyone other than a real estate lawyer a question about a real estate transaction?  Finding the real estate attorney may be a critical part of purchasing or selling a home.  Buying a home is a significant investment of both time and money and can be worrying for first-time home buyers and more experienced buyers and sellers.  Even if you have a family lawyer or a close friend that is a lawyer, it is important that you consider hiring an experienced real estate attorney to represent you for a sale, purchase or refi and to better protect your rights and interests.

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There are so many beautiful areas throughout Essex County, Middlesex County and the North Shore.  Raising a family, owning a home or renting an apartment, working or working out; all of these activities can result in the need to sign legal documents, Deeds, Wills and the like.  Often a signature on a legal document will require an acknowledgment from a notary public.  So just what is a notary acknowledgment?

commerce-acts-books-477966-mAccording to Revised Executive Order No. 455 (04-04) Standards of Conduct for Notaries Public a “Notary public” or “notary” means any person commissioned to perform official acts pursuant to Article IV of the Articles of Amendment of the Massachusetts Constitution and a “Notarial act” and “notarization” shall mean any act that a notary public is empowered to perform under this executive order.  An “Acknowledgment” is a notarial act in which an individual, at a single time and place: (a) appears in person before the notary public and presents a document; (b) is identified by the notary public through satisfactory evidence of identity; and (c) indicates to the notary public that the signature on the document was voluntarily affixed by the individual for the purposes stated within the document and, if applicable, that the individual had authority to sign in a particular representative capacity.

The notary acknowledgment is the same whether it is on a deed to a home, a mortgage, a Will, or even an Affidavit.  The acknowledgment is used to prove that the person who signed the instrument was the person intended to sign the instrument, that the signature is genuine, that the signor understood what they were signing and did so of their own free will and voluntarily.  It is important that the notary acknowledgment be properly completed because if not, the instrument could be rendered ineffective.  For example, as found in a recent bankruptcy case in Massachusetts (see Massachusetts Lawyers Weekly, Mortgages—Acknowledgement—Voluntariness by Tom Egan), In Re: Reznikov, Fanni (Chapter 7 Case No. 14-10589-FJB; Adversary Proceeding No. 15-1003-FJB) the Chapter 7 trustee challenged the validity of a mortgage arising from a question on the sufficiency of the notary’s acknowledgment.  The Chapter 7 trustee sought to “avoid a mortgage held by James B. Nutter & Company” granted to James B. Nutter & Company by the bankruptcy debtor, Fanni Reznikov.  The trustee argued that the “mortgage was defective under Massachusetts law because it does not express that the debtor executed the mortgage voluntarily or as “her free act and deed”.   James B. Nutter & Company as the holder of the mortgage tried to refute the trustee and argued that because the Acknowledgement stated that the Debtor ‘duly acknowledged to [the Notary] that [she] executed the [Mortgage].’ that should be “sufficient to express that the Debtor indicated to the Notary that she executed the Mortgage voluntarily or as “her free act and deed”.  The Bankruptcy Court judge disagreed and ruled that the notary acknowledgement was “materially defective because it fails to represent that the Debtor indicated to the Notary that she executed the mortgage voluntarily or as her free act and deed”.  The mortgage was deemed not a valid lien.

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The North Shore of Massachusetts is a great place to buy a home or to invest in real estate.  Purchasing a home may be your largest single purchase and perhaps your biggest investment.   When you spend a lot of money for real property, it is important that your home or property have clear, record and marketable title.  Just what is title?  According to the First American Title Insurance Company, title is “(1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein.  (2) The rights of ownership recognized or protected by the law”.

commerce-acts-books-477966-mIn Massachusetts a proper title search goes back at least 50 years.  But if you want to know the whole history, the search may go back as far as the 1620 Mayflower Compact.  The Mayflower Compact was the original creation of a “civil body politic” in Massachusetts and created the first rights of private land ownership.

Title is ownership of the land and improvements on it.  When property is transferred to one person from another, that transfer is a piece of what is referred to as the “chain of title”.  With each transfer, there is the potential for a problem to develop or arise.  According to Old Republic National Title Insurance Company, a “title” consists of three elements:

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In Massachusetts the real estate market has come into balance; perhaps a seller’s market.  Homes, condos and buildable house lots are in demand. With four beautiful seasons, from Boston to the Berkshires, living in Massachusetts is wonderful.  Gloucester has amazing seafood, Salem the witchcraft history and legends, Lynn, Lynnfield, Saugus and Wakefield have outstanding restaurants, shopping and nightlife.  Have you been to the Market Street shops in Lynnfield yet?  There is something for everyone.  Living on the North Shore is fantastic, and once you’ve found the perfect house or condo all you need is the right North Shore closing attorney to seal the deal.

commerce-acts-books-477966-mRegardless of whether you are the Seller or the Buyer, you should have an experienced closing attorney to handle your real estate transaction.  Real Estate Bar Association v. National Real Estate Information Services, Inc. ruled that an attorney is required to conduct residential home closings in Massachusetts.  Keep in mind that the closing attorney generally only represents the lender (the Bank) and it’s a good idea for the Buyer and Seller to each have their own lawyer at the closing.  The Lawyers’ responsibilities at a closing are different than those of the broker or real estate agent.  The attorneys make sure title is good, complex closing documents are done right, explain what is being signed and can resolve any last minute problems that come up.

The usual first step to buying or selling a home is the “offer to purchase”.  Beware, this is a binding contract!  John J. McCarthy, Jr. vs. Ann G. Tobin; Robert DiMinico  holds that an offer to purchase real estate “created binding obligations” of both the Buyer and Seller.  The Buyer is contractually obligated to purchase the property and the Seller is contractually obligated to sell the property.  This decision ruled that the Purchase and Sale Agreement is a mere formality unless the offer states otherwise.  You should speak to your attorney, before you sign the offer.  Once it is signed you may be legally obligated to that contract.