Articles Posted in Real Estate

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Few things sour relations between neighbors as quickly as a boundary dispute. Determining common boundaries or establishing a property line with your neighbor is usually a matter of reviewing record title documents that set forth the metes and bounds of the properties, record plans and tax maps. However, over years of actual use, occupation, improvements, landscaping or fencing, complicated legal issues can arise affecting the ownership of boundaries and causing disputes between or among adjoining land owners. Despite plans and surveys and metes and bounds legal descriptions, ownership of land and the actual boundary line can be challenged in certain circumstances.  This happens with adjoining land owners throughout the North Shore including Danvers, Saugus, Lynn and Peabody.

commerce-acts-books-477966-mFor example, title to land can be acquired (or lost) if the land at issue is used in a particular way for a long time (no less than 20 years) by someone who is not the record owner.  This is known as the legal doctrine of adverse possession.

In Massachusetts title by adverse possession can be acquired by proof of nonpermissive use which is actual, open, notorious, exclusive and adverse for twenty years. A determination of adverse possession is fact driven and each element needs to be proven in court to have clear title through adverse possession. In the Commonwealth of Massachusetts, claims for adverse possession can be brought in the Land Court or the Superior Court in the county where the disputed land is situated. For instance, if the property is here in Lynnfield, an action for adverse possession may be commenced in the Land Court or the Essex County Superior Court.

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On November 25, 2015 Chapter 141, Acts of 2015, An Act Clearing Titles to Foreclosed Properties, was signed into Massachusetts law by Governor Baker.  Massachusetts Senate Bill 2015 now Chapter 141 of the Acts of 2015 is commonly called the Massachusetts Foreclosure Title Clearing Statute and it became effective on December 31, 2015.  The general purpose of this new law was to alleviate uncertainty in titles to foreclosed properties after the Ibanez decision and establish a deadline by which challenges to them may be raised or forever barred.

commerce-acts-books-477966-mThe Act amended Mass. Gen. Law c. 244 s. 15 to include a three-year time limit for challenging a recorded foreclosure affidavit.  After three years from the date of recording, a foreclosure affidavit shall be conclusive evidence in favor of arm’s length purchasers for value against challenges by foreclosed borrowers who no longer occupy the subject property.  After that the affidavit of sale provides clear title to the arm’s length third party purchaser even if the underlying foreclosure contained certain defects.  In order to have a right to challenge the validity of a foreclosure sale in Massachusetts under the new act, an action (lawsuit) must commence  AND a correct copy of the complaint or pleading asserting the challenge must be recorded in the registry of deeds for the county in which the property lies, all within the three-year period.

The Statute also provided a one-year grace period for borrowers to challenge pre-2016 foreclosures that occurred under mortgagee’s power of sale in Massachusetts. Aggrieved parties who wished to challenge such a foreclosure had from January 1, 2016 through December 31, 2016 to comply with the terms of the new statutory requirements to preserve their challenge or they would be barred from doing so.

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It has been a strong year for residential real estate sale prices in Massachusetts. The median house price topped $400,000.00 for the first time ever.   Much of the rising home prices were in Boston neighborhoods, but the red hot residential real estate market has also been felt on the North Shore, in Towns such as Lynnfield, Saugus and Danvers, with the median price of homes in Essex County up 7.5 percent from last year. According to the Boston Globe, the driving force behind the high cost for homes is attributed to the lack of housing inventory in Massachusetts. Many homeowners looking for an upgrade are opting to fix-up their homes to meet their needs rather than sell and wade into the real-estate frenzy in search of a new home.

commerce-acts-books-477966-mOptions for funding home projects include refinancing existing mortgages, opening a home equity line of credit or taking out a second loan on your house. Each of these financing options are considered “real estate transactions” and in Massachusetts an attorney is required to conduct the closing. Obtaining a loan secured by real property may seem like a straightforward transaction, however it remains complicated and fraught with potential problems. As such, MA law requires the services of an attorney to conduct a closing. Understanding the scope of the transaction and the scope of the closing attorney’s duties to the borrower and the lender is important to the borrower.

A recent Massachusetts Supreme Judicial Court case, Fergus v. Ross, SJC-12231 (August 2, 2017), discusses how principals of agency may complicate the scope of a closing attorney’s duties to the parties. In Fergus, the plaintiff sought a loan to complete renovations on his property. The plaintiff contacted Bernard Laverty, Jr. (“Laverty”) who recommended securing a loan from the defendant, an attorney who operated a private lending operation through his law firm. The defendant agreed to loan the plaintiff $260,000.00, which loan would be secured by a mortgage on the plaintiff’s property. Throughout the process leading up to the closing of the loan, the plaintiff and the defendant never met. All communications between the defendant and the plaintiff were conducted through Laverty. Laverty and the plaintiff had a side agreement wherein the plaintiff agreed to loan Laverty $120,000.00 from the loan proceeds from the defendant in exchange for a deed-in-lieu of a mortgage for property located in Marshfield; however, unknown to the plaintiff at the time, Laverty did not have title to the Marshfield property. Laverty represented to the plaintiff that the defendant would act as the closing agent for both the loan from the defendant and for the side loan.

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commerce-acts-books-477966-mA loan secured by a mortgage that goes into default often provides the lender with various options to pursue repayment. One option involves foreclosure by the lender in a public auction and the property sold to the highest bidder. To control costs or to prevent a deficiency, lenders and borrowers may agree to a deed in lieu of foreclosure. A deed in lieu may be an appropriate remedy for residential or commercial property for owners and lenders in Middlesex County, Essex County or throughout the Commonwealth of Massachusetts. A deed in lieu of foreclosure occurs when a property owner is willing to transfer the property and deliver a deed to the lender and the lender is willing to accept the deed instead of pursuing a foreclosure.

Although the process results in delivery of a deed from the owner to the lender, instead of the formality of foreclosure, in some circumstances a deed in lieu is still construed to be a “foreclosure” to the extent it determines the rights and obligations of interested parties. This is particularly relevant in the area of condominium law. Under M.G.L. c. 183A, § 22, “[i]n the event of a foreclosure upon a condominium development, the lender taking over the project shall succeed to any obligations the developer has with the unit owners and to the tenants, except that the developers shall remain liable for any misrepresentation already made and for warranties on work done prior to the transfer.”

A seminal case in Massachusetts regarding the applicability of section 22 to a lender that accepts a deed in lieu is Moloney v. Boston Five Cents Savings Bank, FSB, 422 Mass. 431 (1996). In Moloney, the lender acquired a deed in lieu of foreclosure from a developer on a loan secured by a condominium development. The lender asserted that it was not responsible for the developer’s obligations to the unit owners under section 22 because the term “foreclosure” in M.G.L. c. 183A, § 22 only applied to procedures of M.G.L. c. 244 or a bill in equity to foreclose, not a deed in lieu transaction.

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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.