Massachusetts Agencies

Trustees: Liens Against

Trusts and Trustees

Attachments against trust property are addressed by Massachusetts General Laws, Chapter 223, Section 67. This section essentially provides that an attachment in a suit against an individual does not impose a lien on real estate, the title to which is in the individual as a trustee, unless the attachment identifies the individual as such trustee. Accordingly, the attachments in this matter, which appear not to name Mr. Last as a trustee (your FAX transmission was not clear) need not appear as exceptions in Schedule B. (See also Massachusetts Conveyancers' Standard No. 38).

The Title Standard does not address tax liens, however, and it has been thought that they stood on a different footing. There is no statute specifically addressing the issue. In fact, in the recent case of The United States v. Dember, U.S. District Court Action No. 89-2903-Mc, the federal court held that as to federal tax liens against individuals holding title in their capacity as trustees, the lien may very well attach. Inasmuch as the Massachusetts Department of Revenue has taking a "piggy back" approach to the federal law on other issues (e.g., after acquired property), my position is that there should be an exception as to the Massachusetts Tax Lien in Schedule B, unless the same is otherwise disposed of.

It appears from Zuroff v. First Wisconsin Trust Company, 41 Mass.App.Ct. 491, 671 N.E.2d 982 (1996) the rule noted in the Title Standard has been expanded to cases involving federal tax lien. The court noted that nothing on the record disclosed who the beneficiaries of the 1408 Commonwealth Trust were and that under 26 U.S.C 6323(f)(4) "the Federal tax lien is not valid against a purchaser unless the fact of its filing is recorded in a public Federal lien index so that a reasonable inspection of the index will reveal the existence of the lien." The court concluded that the lien could not be reasonably discovered and, therefore, did not affect the title. This ruling and seems to in contradiction to the court's decision in Fairfield Associates v. General Builders Supply Company, 40 Mass.App.Ct. 1109, 662 1063 (Summary Disposition, 1996). In Fairfield Associates it was held that a mortgage from Ms. Iannacone individually, when she held title as trustee, was good as against subsequent attaching creditors who had filed liens against her as trustee, the court stating that "[n]o reasonable title examiner would have been misled by the state of the records." But for now Stewart Title Guaranty Company will permit the issuance of policies without exceptions for federal tax liens[1] based on facts consistent with those in Zuroff. It is likely that the decision will be further appealed and that the IRS will intervene, which may clarify the matter.

1 The Zuroff court cited the federal statute extensively in its decision. It is unclear what result the court would come to with regard to state tax liens.