Massachusetts Agencies

Betterments and the Standard Purchase and Sale Agreement

Purchase and Sale Agreements

Paragraph 4 of the standard purchase and sale agreement provides that the buyer shall take title subject to "any liens for municipal betterments assessed after the date" of the agreement. What do the words "assessed after the date" in this provision refer to? The lien that arises to secure the betterment, or the betterment assessment itself? In other words, what does the phrase modify? I would have to say that the phrase must be modifying the word "betterments," because the word "assessed" connotes a determination of a monetary amount, rather than being descriptive of an encumbrance on a title, like a lien. So, under the provisions of Paragraph 4 the lien for the betterment can arise any time before closing, and can even be an encumbrance on the date the purchase and sale agreement is signed, but the buyer agrees to take subject to it only if it secures a betterment "assessed" after that date. Why would there be such a provision in the agreement anyway? The provision apparently is inserted to address the situation where the amount of the assessment has not been finally determined before the agreement has been signed (even though there may be a recorded order that assessments will be made), so the seller is unable to account in the purchase price for the value that will be added to the premises by reason of the betterment, thus requiring the buyer to pay the betterment, once assessed after that date, since it will improve the value of the property at that time. See Mendler, Massachusetts Conveyancers' Handbook with Forms (Third Edition, West Group, 1984), §1:8.03

So, when is a betterment "assessed." Mendler states that, "The date of assessment is the date on which the order for municipal improvements is adopted, and a lien arises upon recording of the order." This statement may not be entirely true. G.L.c. 80, §2 40 states that "no betterments shall be assessed for such improvement unless the order, plan and estimate are recorded." This statute contemplates an order and the recording thereof, both followed by the assessment of betterments, which would indicate, of course, that the date of the assessment is not necessarily the date of the order, but some time thereafter. So, although the recording of the order will create a lien, it does not necessarily mean that an assessment for a betterment has actually been made. In other words, the order is not the assessment; a final determination of the increased value to the property (and not an estimate of it) must be made before the betterment can be "assessed." But if an assessment has in fact been made -- that is if the amount actually due has been determined and not simply estimated -- it will be important to find out when it was made (either before or after the date of the purchase and sale agreement) in order to determine whether the buyer must accept title subject to the lien that the order creates or whether the seller must pay off the betterment.