Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Summer 2003, Volume 2, Number 3
by Pamela Butler O'Brien, Underwriting Counsel
Question: I use the standard FannieMae Mortgage that has a release in it. Do I need to record a new homestead after my refinance mortgage?
Answer: No. There has been much debate among conveyancers about this question. Some people were of the opinion that the waiver language in the standard form served to terminate the homestead. Others felt it applied only to the mortgage containing the waiver. Some argued that since a mortgage is a deed in this Commonwealth that it operated to release the homestead under G.L.c. 188 §7 which provides that a homestead may be released by a deed signed by the declarant and the declarant's spouse. As with most of the case law involving homesteads, the answer comes from the bankruptcy court. A recent opinion out of the bankruptcy court, In re Vasiliki K. Heretakis, d/b/a Java Stop, a creditor argued that the series of refinances after the declaration of homestead was recorded, each containing a release, served to permanently terminate any homestead right the debtor may have had. The court pointed to G.L.c. 188 §6, which clearly states: "Property which is subject to a mortgage executed before an estate of homestead was acquired therein, or executed afterward and containing a release thereof, shall be subject to an estate of homestead, except as against the mortgagee." The court further relied on Atlantic Savings Bank v. Metropolitan Bank, 9 Mass. App. Ct 286 (1980) that the mortgage does not extinguish the homestead as to subsequent creditors.
Question: My seller owns the property individually, and has a recorded homestead. Do I need to do anything special?
Answer: Yes, you must inquire as to the marital status of your seller. If the seller is married, the seller's spouse must join in the deed and release any rights of homestead in the property. If the seller is unmarried, recite that in the deed and that will make record title clear.
Question: My seller is a single mom with a homestead. I know that this protects her kids somehow. Do I need a guardian appointed or a court order to sell the house?
Answer: Good thought. You obviously are aware that minors can't convey real estate, or an interest in real estate. Fortunately for us though, that is not required G.L.c. 188 §7 makes it clear that the deed conveying the property signed by the owner, and spouse if any, without reservation of any homestead rights, terminates the rights of the minor children in the property.
Question: My borrower owns the property individually and has a recorded homestead. Do I need to do anything special in a mortgagee refinance transaction?
Answer: Yes. Remember that part of the homestead right is the right of the spouse and children to occupy the premises. If your borrower is married, you must get the spouse to either subordinate his or her homestead right to the mortgage or he or she may sign the mortgage waiving their rights. If you do not do this, and the lender forecloses, they may own a great piece of property, but the borrower's spouse still has the right to live there. If your borrower is not married, it is good practice to either recite that in the mortgage, or to obtain an affidavit stating the borrower is not married. We are all aware of the cost of recording. This affidavit need not be recorded. In the event of a foreclosure, however, it will be invaluable to clear record title for your lender.
Question: May both the husband and wife declare a homestead in the property?
Answer: No. G.L.c. 188 §1 says "provided that only one owner may acquire an estate of homestead in any such home for the benefit of his family, and provided further, that an estate of homestead may be acquired on only one principal residence for the benefit of the family."
Question: My buyers are buying a second home on the Cape. Can they declare a homestead on the vacation house?
Answer: Remember that a homestead only protects a principal residence. Therefore, although nothing prohibits them from declaring a homestead, as long as the property is used solely as a second home, they will not be afforded the protections of homestead. If however, they relocate to the vacation home and intend to make that their principal residence, they will be afforded all the rights and protections of homestead. See, however, In Re Sebio, 237 B.R.1 (D. Mass. 1999), and In Re Roberts, _ B.R. _, Massachusetts Lawyers Weekly No. 04-034-02 (2002) which make it clear that the intent to occupy alone is insufficient. There must be an act in furtherance of the intent to occupy.
Names, Fax Numbers, and Email Addresses to Know
|ICL Requests||Andy Graham||FAX: 617-737-8241|
|Back Titles||Joanne Blair||FAX: 617-737-8241|
|Forms||Adina Potischman||Email: email@example.com|