Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Winter 2008, Volume 7, Number 4
by Melanie Kido, Underwriting Counsel
Question: My title examination reveals foreclosure proceedings against an LLC. Is compliance with the Servicemembers Civil Relief Act necessary?
Answer: No. While Massachusetts requires that a judicial determination be made that the owner of property to be foreclosed was not a person in the military service who was entitled to the protections of the Servicemembers Civil Relief Act prior to a foreclosure, whether by entry or under the power of sale, proceedings for such a determination need not be brought when the following entities are the record owner of the equity of redemption:
- a corporation;
- a limited liability company;
- a limited liability partnership;
- a Massachusetts business trust; or
- a general partnership or joint venture of which all of the general partners who appear of record appear to be one or more of the foregoing types of entities.
REBA Title Standard No. 56. Mortgage Foreclosures After 12-31-1990 provides as follows:
A title dependent upon a mortgage foreclosure commenced after December 31, 1990, is not on that account defective if:
(1) Judgment under the Servicemembers Relief Act (before December 19, 2003, the Soldiers and Sailors Civil Relief Act) has been obtained;
(2) If commenced after December 31, 1990 and the record owner whether domestic or foreign, of the equity or redemption on the thirtieth (30th) day next preceding the foreclosure sale (hereinafter called the “Record Owner”) was:
(i) a corporation,
(ii) a limited partnership,
(iii) a trust operating under a written instrument or declaration of trust, the beneficial interest of which is divided into transferable certificates of participation or shares, i.e., a Massachusetts business trust under M.G.L. c.182, or
(iv) a partnership or joint venture of which all of the general partners who appear of record are one or more of the entities described in (i), (ii), or (iii) (each of the entities described in (i), (ii), (iii) and (iv) being hereinafter called an “Exempt Entity”);
(3) If commenced after June 28, 1998 and the Record Owner was:
(i) a limited liability company,
(ii) a limited liability partnership, or
(iii) any Exempt Entity described above;
(1) The notice of sale and the affidavit (complying with M.G.L. c. 244, § 14) required under M.G.L. c. 244, § 15 were recorded;
(2) Three years have elapsed since a Memorandum or Certificate of open and peaceable entry to foreclosure has been recorded in accordance with M.G.L. c. 244, § 2.
If an Exempt Entity transfers its interest to a non-Exempt Entity prior to the foreclosure sale, a judgment under the Soldiers and Sailors Civil Relief Act may be required.
For purposes of this Standard, the date of commencement of a mortgage foreclosure is the date the first notice of sale is sent out pursuant to M.G.L. c. 244 as to an Exempt Entity and the date of filing the complaint to foreclose as to a non-Exempt Entity.
Adopted November 2, 1992
Amended May 15, 2000 (To reflect grammatical clarification in Clause I. (1), and to reflect St.1998. c. 142, and grammatical clarification in Clauses I. (2) and I. (3), and to reflect St.1994, c. 341 and grammatical clarification in Clause II. (1), and to delete Clause (3) and Caveat (1), the terms of which are no longer effective because of legislative and regulatory amendments occurring since they were originally adopted. Caveat (2) is deleted to reflect St.1994, c. 341 and Caveat (3) is deleted to reflect the US Supreme Court decision in BFP v. Resolution Trust Corp., 114 S.Ct. 1757 (1994) and St.1989, c. 157. Comment (1) is amended to reflect that there is no legal precedent for the 30-day period as previously contained therein. Supersedes Clauses (1) and (2), Caveat (4) and Comment (1), and deletes Clause (3) and Caveats (1), (2) and (3) of Title Standard No. 56, originally adopted November 2, 1992.)
Amended May 5, 2008 (reflected amendment and new name of the Act)
Copyright, The Real Estate Bar Association for Massachusetts
Question: My title examination reveals a foreclosure proceeding which does not disclose compliance with the Soldiers and Sailors Civil Relief Act, now known as the Servicemembers Civil Relief Act. How do I address this issue?
Answer: Since G.L.c. 244 does not provide a mechanism by which one may waive compliance with the Servicemembers Civil Relief Act, this may require an action to quiet title to clear the record title of the cloud on title that resulted from noncompliance, which action will typically be limited to an inquiry into whether the borrower was entitled to protection under the Servicemembers Civil Relief Act at times relevant to the foreclosure proceedings.
If the foreclosure proceedings are over 20 years old and there is nothing on the record which discloses an adverse claim of ownership during such 20-year period, it is not necessary to do anything further. REBA Title Standard No. 7. Mortgage Foreclosures Not Complying With The Soldiers’ And Sailors’ Civil Relief Act provides as follows:
The existence of a mortgage foreclosure in which the holder of the mortgage failed to comply with the provisions of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (USC Title 50, App. § 532), as amended, does not render the title to the mortgaged premises unmarketable provided:
(1) a period of at least 20 years has elapsed since the recording of the certificate of entry required by M.G.L. c. 244, § 2 or the mortgagee’s affidavit required by M.G.L. c. 244, §§ 2 or § 15 and
(2) the record does not disclose any adverse claim of ownership during said 20-year period.
Since February 21, 1941, a court proceeding for a determination that no interested party is in the military service is required before a foreclosure sale. Since October 6, 1942, the Act applies also to foreclosure by entry.
The Soldiers’ and Sailors’ Civil Relief Act of 1940 applies only to mortgages upon real or personal property owned by a person in the military service at the commencement of the military service and still owned by him at the time of foreclosure and only to mortgages securing obligations originating prior to the period of military service. The possibility of any action to enforce the provisions of the Act is remote after twenty years. If such action were commenced, the doctrine of laches would probably provide a proper defense. See Marvel v. Cobb, 200 Mass. 293, 86 N.E. 360; Hoffman v. Charlestown Five Cents Savings Bank, 231 Mass. 324, 121 N.E. 15; Morse v. Stober, 233 Mass. 223, 123 N.E. 780; and, Institution for Savings in Newburyport, Petitioner, 309 Mass. 12, 33 N.E.2d 526.
For the Massachusetts Soldiers’ and Sailors’ Civil Relief Act see St.1941, c. 25, St.1943, c. 57, as amended by St.1945, c. 120, St.1959, c. 105, and St.1982, c. 127. See also editorial note to annotations to M.G.L. c. 244, § 14.
The doctrine of Hoffman v. Charlestown Five Cents Savings Bank that off-record equitable interests were entitled to the benefits of the Soldiers’ and Sailors’ Civil Act of 1940, already diluted by Guleserian v. Pilgrim Trust Company, 331 Mass. 431, 120 N.E.2d 193, has now been nullified by St.1982, c. 127, effective September 1, 1982. Chapter 127 limits the Act protection to record owners of the equity of redemption. However, Morse v. Stober holds that while a title may be marketable even where the chain includes a foreclosure without compliance with the Massachusetts Soldiers’ and Sailors’ Act, such a title is not a “perfect” record title. A person in the military service at the time the mortgage is given by such person is not entitled to the benefits of the Act; a person is entitled to the benefits for six months after separation.
Adopted May 17, 1973
Amended March 21, 1978 (added first and third paragraph of Comment)
Amended September 1, 1982 (added reference to 1982 Acts and fourth paragraph of Comment)
Copyright, The Real Estate Bar Association for Massachusetts
Question: Does a foreclosure by entry require compliance with the Servicemembers Civil Relief Act?
Answer: Yes. While foreclosure by entry alone pursuant to G.L.c. 244, §1, which provides that an open and peaceable entry by the mortgagee (i.e., one that is not opposed by the mortgagor or any other party), if continued peaceably by the mortgagee or its successors in title for three (3) years, will extinguish the mortgagor’s right of redemption, is a proper method of foreclosure, compliance with the Servicemembers Civil Relief Act is still mandated. It is important to note that the filing of a Bankruptcy proceeding during the three (3) year period will extend the limitation period for the ripening of the possession under foreclosure by entry by the duration of the bankruptcy proceeding.
Question: I am accepting a Deed from someone who is currently serving in the military. Who can take his/her acknowledgment?
Answer: While it depends upon the branch of the military in which your grantor is serving, G.L.c. 222, §11 provides as follows:
Persons serving in or with the armed forces of the United States or their dependents, wherever located, may acknowledge any instrument, in the manner and form required by the laws of this commonwealth, before any commissioned officer in the active service of the armed forces of the United States with the rank of second lieutenant or higher in the army, air force or marine corps, or ensign or higher in the navy or United States coast guard. Any such instrument shall contain a statement that the person executing the instrument is serving in or with the armed forces of the United States or is a dependent of a person serving in or with the armed forces of the United States, and in either case the statement shall include the serial number of the person so serving. No such instrument shall be rendered invalid by the failure to state therein the place of execution or acknowledgment. [Emphasis added.]
No authentication of the officer’s certificate of acknowledgment shall be required.
Instruments so acknowledged outside of the commonwealth, if otherwise in accordance with law, shall be received and may be used in evidence, or for any other purpose, in the same manner as if taken before a commissioner of the commonwealth appointed to take depositions in other states.
Question: I am conducting a sale of foreclosed property (i.e., REO or “Real Estate Owned” property). The authority documents for execution of the foreclosure documents are on record in a different county. Must I require that certified copies of the authority documents be recorded in the county of my transaction?
Answer: No. While it is good practice for the convenience of future title examinations, these documents remain a part of the public record and need not necessarily be recorded in the same county as your transaction. Particularly in the current climate, the same lenders are foreclosing properties all over the state so it is not unusual to have a general Power of Attorney apply to several different properties.
Question: I am conducting a closing for a newly created condominium. The Unit Deed that has been presented for closing does not contain a Unit Plan. Isn’t this required?
Answer: No. St.2008, c. 13, §1, which became effective on April 24, 2008, and is applicable for all condominium unit deeds, whether recorded prior to, on or after April 24, 2008, effectively deleted the second paragraph 2 of G.L.c. 183A, §9 which previously required the recording of a Unit Plan together with the first Unit Deed.
Question: My title examination reveals an outstanding Complaint for outstanding Common Area Charges. The Seller is providing a clean 6(d) Certificate at the closing. Do I need to record a Clerk’s Certificate of Dismissal for the Complaint?
Answer: No. REBA Title Standard No. 69. Certificates Pursuant to G.L.c. 183A, §6(d) provides as follows:
Title is not defective by reason of the existence on the record of a complaint to enforce a lien under M.G.L. c. 183A if there is recorded thereafter a later dated certificate of no common expenses in accordance with § 6(d) which asserts that there are no outstanding liens on the Unit.
Section 6(d) provides that a statement from the organization of unit owners setting forth the amount of unpaid common expenses and other amounts which have been assessed against a unit owner “shall operate to discharge the unit from any lien for other sums then unpaid when recorded at the appropriate registry.”
Adopted: November 3, 2003
Copyright, The Real Estate Bar Association for Massachusetts