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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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According to a recent report released by the Transport Research & Innovation Portal (TRIP), Massachusetts’ highways are some of the busiest and most congested in the nation. The Commonwealth’s highways have the tenth highest rate of vehicle travel per lane per mile and are ranked the sixth most congested in the country. Massachusetts’ ranking will come as no surprise to anyone driving through Middlesex County or Essex County or anywhere in the North Shore during rush hour.

commerce-acts-books-477966-mWith the high number of vehicles on the roads and severe congestion also come a high number of auto-accidents. Fortunately for those injured in a car accident in Massachusetts, the Commonwealth is a no-fault insurance state. As discussed in a prior blog about the types of Damages and Compensation available to someone injured in an auto-accident, no-fault insurance benefits, also known as Personal Injury Protection (PIP), allow an injured party to seek payment for certain economic damages from their own insurance company. If the injured person was a passenger, they must seek PIP benefits from the insurance company for the driver of the car they were in at the time of the auto-accident.

Massachusetts’ no-fault insurance requirements are contained in M.G.L. c. 90, §34M. As the name suggests, no-fault insurance benefits are available to an injured party regardless of liability. In Massachusetts, PIP Benefits cover the first $8,000.00 for costs of medical expenses, a portion of lost wages, and certain replacement services necessary due to injury from the auto-accident. There are certain requirements that an injured person must comply with to receive PIP benefits. For example, the injured person must report whether or not they have private health insurance to their auto-insurance company. If an injured person claiming PIP Benefits has private health insurance, PIP only covers the first $2,000.00 of the injured person’s medical expenses. The remaining $6,000.00 of PIP Benefits may still cover a portion of lost wages, replacement services and out-of-pocket costs to the injured party for medical care.

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According to a recent article published by ABC News, Americans “are living longer, in more comfort and in better health than ever before.” With a longer life expectancy, early financial planning has become even more critical to ensure that you will be comfortable and taken care of in your retirement. Also, although Americans seem to be healthier than we once were, nursing homes are full of residents and patients.

commerce-acts-books-477966-mThroughout the Commonwealth of Massachusetts there are over 400 nursing homes, with some of the highest ranked facilities here in the North Shore, including the towns of Reading, Saugus, Lynnfield and Peabody. Care at these facilities is expensive and can quickly drain your finances. A 2016 survey by Genworth Financial estimated the median annual cost for a semi-private room in a nursing home in Massachusetts to be more than $135,000.

Most seniors in need of long term healthcare are not able to afford the high costs without assistance. According to a study by the Massachusetts Medicaid Policy Institute, over 60% of residents of nursing facilities rely on MassHealth (the Massachusetts state Medicaid program) benefits to help them pay for long term healthcare.

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Long term healthcare and nursing home care are topics of concern for many with aging parents or grandparents.  A hot-button in the Commonwealth of Massachusetts, including the North Shore and towns such as Wakefield, Reading, Lynnfield, and Saugus, is MassHealth (Medicaid) and senior benefits. MassHealth is the government run health insurance plan in MA which combines Medicaid and CHIP (State Children’s Health Insurance Program) into one program. Qualified MassHealth members may be able to get doctor visits, prescription drugs, hospital stays, and many other important services.

commerce-acts-books-477966-m A recent court ruling from the Supreme Judicial Court (the highest court in Massachusetts)   presents some good news in determining qualification for certain benefits under MassHealth that may have an important impact on seniors. Daley v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12200, May 30, 2017) and Nadeau v. Director of the Office of Medicaid (Mass., No. SJC-12205, May 30, 2017).

For seniors to qualify for MassHealth, the general rule is that individuals must have assets of less than $2,000.00; and couples living together less than $3,000.00. This limit often requires individuals and couples to “spend down” or deplete their resources in order to qualify for Medicaid long-term benefits when they enter a nursing home.  One practice has been for seniors to engage in “‘Medicaid planning’ in an attempt to transfer or dispose of assets long before they need long-term care so that, when the need arises, they may satisfy the asset limit and qualify for Medicaid benefits.”  The purpose of Medicaid planning is essentially to give individuals whose assets exceed the aforementioned “limit” and would make them ineligible for long-term care benefits, the opportunity to qualify for Medicaid benefits.  Some transfer their assets to their children or other loved ones to meet the asset threshold and avoid using their own assets to pay for long-term care.  Medicaid rules enacted by Congress impose two restrictions on Medicaid planning, in an effort to prevent individuals from taking advantage of MassHealth benefits.  The first is the “look back” rule, which “imposes a penalty for any asset transfer for less than fair market value made by an individual within five years of the individual’s application for Medicaid benefits”.  For example, if elderly parents convey their home to their children for less than the fair market value.  The “look back” rule provides that if such a transfer were to occur within that five year period, the applicant would be “ineligible for Medicaid benefits for a period of time determined by dividing the value of the transfer by the average monthly cost of the nursing home facility”.

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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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Casualty insurance companies, upon being notified of a covered accident and injury, have a legal obligation to properly and timely investigate and then effect a fair settlement    If you are injured in an accident in Massachusetts because of the negligence of another who has insurance and responsibility for the injury is reasonably clear, the insurance company has an obligation to settle the case fairly and promptly.

commerce-acts-books-477966-m           Under Massachusetts law, it is an “unfair claim settlement practice” for an insurance company to fail “to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” M.G.L. c. 176D § 3 In circumstances where it  is reasonably clear that another person is at fault for the accident and has insurance coverage, the insurance company must act promptly, fairly and equitably in attempting to settle the claim against the responsible party and to justly compensate the injured.  Failure to do so, by the insurance company, may result in significant consequences or damages for the insurance company.

Anderson v. National Fire Ins. Co. of Pittsburgh PA  is one example of a recent Massachusetts decision out of the SJC applying M.G.L. c. 93A and c. 176D to an insurer.  On September 2, 1998 Odin Anderson was crossing the street in Boston when he was struck and injured by a bus.  The bus was owned by Partners Healthcare Systems, Inc. as was operated by a Partners employee.  As a result of the accident, Mr. Anderson suffered serious injuries including a fractured skull and intracerebral hemorrhage.  Mr. Anderson, through counsel, attempted to reach a settlement with the defendants.  The defendants rejected the plaintiff’s demand for settlement and refused to enter into settlement negotiations.  In May 2001, Mr. Anderson sued Partners and the employee who was operating the bus at the time of the accident.  In March 2003, Mr. Anderson filed a separate action under M.G.L. c. 176D, §3 and M.G.L. c. 93A, §9(3), alleging “willful and egregious failure to conduct a reasonable investigation of the plaintiffs’ claims, and failure to effectuate a prompt, fair, and equitable settlement, notwithstanding that liability had become ‘reasonably clear’ by the time the plaintiffs filed their initial complaint.”

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The importance of estate planning and the benefits of preparing a Will have been discussed in our previous blogs. Proper estate planning and a carefully drafted Will can ensure that your last wishes are carried out as you intend, wish and instruct. But let’s not kid ourselves, facing one’s mortality is hard. Many of us find it difficult to think of the end of our life and estate planning is often on the bottom of the “to do” list. A recent article from reported that nearly six out of ten Americans do not have estate planning documents. This is true across all socio-economic classes.  If you are part of that nearly 60% group of Americans without a Will, what happens to your possessions when you pass away? In Massachusetts, if you pass away without a Will, this is commonly known as dying “intestate”. Any assets or property you own at death will be probated in the county you resided in at date of death (if you lived in Essex County your estate will be probated as intestate in the Essex County Probate Court, if you lived in Middlesex County then it would be in the Middlesex County Probate Court and so on). Distribution of your property would be determined by statute and given to your closest legal heir(s) in a proportion as determined by Massachusetts intestacy law.

commerce-acts-books-477966-mThe Massachusetts intestacy statute is contained in the Massachusetts Uniform Probate Code (the “MUPC”).[1] The MUPC sets forth how your property will be distributed according to the makeup of your surviving family members. Many people believe that the Massachusetts intestacy statute simply divides the property in an estate equally among the surviving relatives, but the determination of “who gets what” is more complicated than that.

If the deceased was married, the portion of the decedent’s estate the decedent’s surviving spouse is entitled to depends on whether or not there are or were children; and in some circumstances, further affected by whether or not the decedent has a surviving parent. If there are no living children and no surviving parents of the deceased, a surviving spouse will get the entire estate. There is a second situation where the surviving spouse gets the entire estate: if all of the children of the decedent are also children of the surviving spouse and the surviving spouse has no other living descendants that are not descendants of the decedent. It gets even more complicated depending on whether or not there is surviving spouse, parents, or children or brothers and sisters of the deceased.  Here are a couple of examples:

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Testamentary Capacity is a legal term “used to describe a person’s legal and mental ability to make or alter a valid Will”.  In order to create a valid and binding Will or Codicil, you must have the requisite testamentary capacity. Throughout the Commonwealth of Massachusetts, including Essex County, Middlesex County or any of the towns and cities here in MA, there are two initial hurdles one must meet to have the testamentary capacity to make a valid Will: 1. be of sufficient age – which is generally 18; and 2. meet the mental capacity threshold; which means to have the ability to know the nature and extent of property, the natural objects of one’s property, the disposition that the Will is making and the ability to connect all of these elements together to form a coherent plan.

commerce-acts-books-477966-mAnother way to say it is one must have the mental ability to understand the nature and purpose of making a Will, have a general idea of what you own and what assets you have, and know who are members of your immediate family or other natural objects of your bounty.

Testamentary capacity requires that you have the ability to understand and to be mindful of the type of property and assets you own as well as who may inherit your property whether you have a Will or do not have a Will.  You are required to be of sound mind and free from any disease or weakness which could influence the way that you choose to dispose of your property. You are also required to have the ability at the time of the execution of the Will to comprehend the nature of the act of making a Will.  You must understand what you are doing by signing the Will.

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North Shore Winter is beautiful but when the roads and highways are snow covered it can also be dangerous.  Plows, sanders and salt trucks work to keep the ways clear but conditions and traffic from Route 95, 128, and Route 1, along with the feeder roads can become treacherous for automobiles during the winter months. For example, recently Massachusetts was hit with a couple of Nor’easters resulting in significant snow and ice accumulations.  According to CBS Boston, a massive car accident on Route 128 involving 55 vehicles occurred around 6:15 a.m. between Exits 39 and 40 in Wakefield, Massachusetts.  The highway was shut down and “eight people were transported to the hospital with… injuries”.  For those injured, a question arises as to damages and causation and compensation. Damages refer to the amount of money you may be entitled to for compensation by someone who has caused you harm as a result of their wrongdoing or negligence.  Massachusetts is a no-fault insurance state.  Under the no fault provisions, among other things, an injured person from a car accident must seek payment from his or her own insurance company for PIP (personal injury protection) for payment of medical bills. Generally, one may not claim damages for economic damages, against another’s insurance company, unless the reasonable medical bills exceed $2,000.00.

commerce-acts-books-477966-mThere is also the issue of different types of Damages. Chiefly they fall into two categories: Economic and Non-Economic. Damages for pain and suffering fall into the non-economic category. Here are some examples of the types of harm covered under economic and non-economic damages:

Economic damages:

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