Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Winter 2008, Volume 7, Number 1
by Melanie Kido and Margaret Fortuna, Underwriting Counsels
Question: My title examination discloses an outstanding mortgage from 1970. Can you assist me with locating the successor to the lender, which is no longer in business, so that I may obtain a discharge of mortgage?
Answer: Under the newly enacted Discharge Bill, many of these old problematic missing discharges or improperly discharged mortgages were resolved as of October 1, 2007. G.L.c. 60, §33 has been amended, effective as of October 1, 2007, to provide as follows:
A power of sale in any mortgage of real estate shall not be exercised and an entry shall not be made nor possession taken nor proceeding begun for foreclosure of any such mortgage after the expiration of, in the case of a mortgage in which no term of the mortgage is stated, 35 years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgment or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period. In case an extension of the mortgage or the acknowledgment or affidavit is so recorded, the period shall continue until 5 years shall have elapsed during which there is not recorded any further extension of the mortgage or acknowledgment or affidavit that the mortgage is not satisfied. The period shall not be extended by reason of non-residence or disability of any person interested in the mortgage or the real estate, or by any partial payment, agreement, extension, acknowledgment, affidavit or other action not meeting the requirements of this section and sections 34 and 35. Upon the expiration of the period provided herein, the mortgage shall be considered discharged for all purposes without the necessity of further action by the owner of the equity of redemption or any other persons having an interest in the mortgaged property and, in the case of registered land, upon the payment of the fee for the recording of a discharge, the mortgage shall be marked as discharged on the relevant memorandum of encumbrances in the same manner as for any other mortgage duly discharged.
The first thing you want to do is check the mortgage for a maturity date or payment period (e.g., 120 equal monthly installments). If a maturity date is specified or can be determined from the payment provisions of the mortgage and 5 years from the maturity date have passed, for all intents and purposes, the mortgage will be considered discharged. Similarly, if no maturity is stated or can be determined and 35 years from the recording of the mortgage has passed, the mortgage will be considered discharged. Unless the property is registered land, nothing further need be done. In the event of registered land, one must pay the appropriate filing fee to have the mortgage removed from the Certificate of Title.
Question: My title examination reveals an outstanding mortgage to “Z Bank,” as purportedly discharged by a recorded discharge of mortgage from “X Bank, successor in interest to Y Bank, f/k/a Z Bank.” My title examiner cannot locate any recorded evidence of the mergers or consolidation of these various banks. Is this a problem?
Answer: G.L.c. 183, §55(a)(9)(i), as revised, provides as follows:
When a change in the name or identity of a corporate mortgagee or mortgage note holder is caused by or results from one or more mergers, consolidations, amendments to charter or articles of incorporation, or conversions of articles of incorporation or charter from federal to state, from state to federal, or from one form of entity to another, or from acquisition of assets of a failed institution by or from a government regulatory authority, a mortgage discharge, assignment, partial release or mortgage note that is otherwise recordable and that recites within the body of the instrument the fact of any merger, consolidation, amendment, conversion or acquisition of assets causing the change in name or identity, the mortgage discharge, assignment, partial release or mortgage note shall be accepted for recording in the appropriate registry of deeds or for registration with the appropriate registry district of the land court without further evidence of the corporate merger, consolidation, amendment, conversion or acquisition. The recital in the instrument shall be conclusive in favor of any bona fide purchaser, mortgagee, lienholder or encumbrancer for value relying in good faith thereon. (Emphasis added.)
Furthermore, Section 8 of Chapter 63 of the Acts of 2006 provides, in pertinent part, as follows:
Sections 1 to 7, inclusive, shall apply to all mortgages, whether recorded before, on or after the effective date hereof…
Accordingly, if you have a discharge which recites facts of any merger or consolidation, no further evidence of the corporation merger or consolidation, amendment, conversion or acquisition is necessary. Since the statute is retroactive, any discharges which were recorded prior to the date of enactment without recorded evidence of merger or consolidation should also be treated as effective.
Question: I am reviewing foreclosure documents for an upcoming closing that were executed by an attorney in fact where the Power of Attorney was executed by an Assistant Secretary of the foreclosing lender. What evidence of authority do I need?
Answer: G.L.c. 183, §54B, as revised, provides:
A deed of release or written acknowledgment of payment or satisfaction of the debt thereby secured, or a release, partial release or assignment of mortgage, or an instrument of subordination, non-disturbance, recognition, or attornment by the holder of a mortgage, or a power of attorney for the purpose of foreclosing a mortgage held by any such holder and executing any instrument necessary for that purpose, executed before a notary public, justice of the peace or other officer entitled by law to acknowledge instruments, whether executed within or without the commonwealth, by a person purporting to hold the position of president, vice president, treasurer, clerk, secretary, cashier, loan representative, principal, investment, mortgage or other officer, agent, asset manager, or other similar office or position, including assistant to any such office or position, of the entity holding record title thereto on behalf of such entity acting in its own capacity or as a general partner or co-venturer of the entity holding record title, shall be binding upon such entity and shall be entitled to be recorded or filed, and no vote of the entity affirming such authority shall be required to permit recording of filing. (Emphasis added.)
As the recently revised statute adds “powers of attorney for the purposes of foreclosing mortgages” to its litany of documents which may be executed by a wide variety of “agents” of the holder of the mortgage, including “assistants to any such office or position,” without evidence of authority, nothing further need be recorded.
Question: I have a sale coming out of an estate where the will, which contains a power of sale, was allowed over one year ago. Do I need to require a license to sell?
Answer: As long as the estate remains open (i.e., the first and final account has not been filed and allowed), the executor/trix may still exercise the power of sale and the deed should come from the executor/trix pursuant to the power conferred by the will.
Question: I have a sale coming out of an estate where the will contains a power of sale but the estate is an “Administration with the will annexed.” Do I need to require a license to sell?
Answer: The Administration With the Will Annexed, sometimes referred to as “Administration WWA” or “Administration De Bonis Non” or “Administration DBN” or “Administration CTX,” all simply refer to an estate where the initial named executor has declined to or is unable to serve. Accordingly, the court must appoint a “successor Executor,” known as the “Administrator with the Will Annexed,” “Administrator De Bonis Non,” “Administrator DBN” or “Administrator CTX.” As long as the power of sale is not specific to the originally named Executor/trix (e.g., “I give my Executor, John Doe, the power of sale, because I trust him and only him to make decisions regarding the disposition of my real property…”), and the estate remains open (i.e., the first and final account has not been filed and allowed), the Administrator With the Will Annexed may and should exercise the power of sale.
Question: I have a sale coming out of an open estate where the decedent died intestate and the administrator, who never obtained a license to sell from the Probate Court, was appointed more than one year ago. Can I accept a deed from the administrator?
Answer: No. Title to real estate of a person who dies intestate passes to the heirs of that decedent, subject to the payment of any debts of the decedent, taxes and expenses of administration. Title does not pass to the administrator who has no power to sell real estate without obtaining a license to sell from the probate court. Keep in mind that under G.L.c. 202, §19, the Administrator must petition the court for a license to sell within one year of the approval of his/her appointment, although there are some circumstances in which a license may be granted for up to six years or more after the appointment pursuant to G.L.c. 202, §§20 and 21, to pay properly filed claims, debts and expenses of administration, certain kinds of governmental assessments and taxes and legacies.
Since in this example more than one year has passed from the approval of the administrator’s bond without the administrator petitioning the court for a license to sell, you would need to obtain a deed from the appropriate heirs. When dealing with an intestate estate, property passes to the heirs of the decedent according to the provisions of G.L.c. 190, §1 which states the following:
A surviving husband or wife shall, after the payment of the debts of the deceased and the charges of his last sickness and funeral and of the settlement of his estate, and subject to chapter one hundred and ninety-six, be entitled to the following share in his real and personal property not disposed of by will:
- If the deceased leaves kindred and no issue, and it appears on determination by the probate court, as hereinafter provided, that the whole estate does not exceed two hundred thousand dollars in value, the surviving husband or wife shall take the whole thereof; otherwise such survivor shall take two hundred thousand dollars and one half of the remaining personal and one half of the remaining real property. If the personal property is insufficient to pay said two hundred thousand dollars, the deficiency shall, upon the petition of any party in interest, be paid from the sale or mortgage, in the manner provided for the payment of debts or legacies, of any interest of the deceased in real property which he could have conveyed at the time of his death; and the surviving husband or wife shall be permitted, subject to the approval of the court, to purchase at any such sale, notwithstanding the fact that he or she is the administrator of the estate of the deceased person. A further sale or mortgage of any real estate of the deceased may later be made to provide for any deficiency still remaining. Whenever it shall appear, upon petition to the probate court of any party in interest, and after such notice as the court shall order, and after a hearing thereon, that the whole amount of the estate of the deceased, as found by the inventory and upon such other evidence as the court shall deem necessary, does not exceed the sum of two hundred thousand dollars over and above the amount necessary to pay the debts and charges of administration, the court shall itself by decree determine the value of said estate, which decree shall be binding upon all parties. If additional property is later discovered, the right or title to the estate covered by such decree shall not be affected thereby, but the court may make such further orders and decrees as are necessary to effect the distribution herein provided for.
- If the deceased leaves issue, the survivor shall take one half of the personal and one half of the real property.
- If the deceased leaves no issue and no kindred, the survivor shall take the whole.
However, it is crucial to remember that title to the heirs is passed subject to the payment of any debts of the decedent, taxes and expenses of administration. A thorough review of the probate file and docket sheet must be made to confirm that there are no creditor’s claims that have not been or will not be addressed at closing. Estate Tax Affidavits or releases must be obtained. Since this is an open estate you will also need to address the question of expenses of administration. If you find yourself in this situation, you may wish to contact one of the attorneys in our Legal Department to discuss the fact pattern of your particular situation.
Question: I have property that was transferred out of a trust within my chain of title but no Trustee’s Certificate was recorded. Do I need to go back and obtain a Confirmatory Trustee’s Certificate?
Answer: The first thing that you want to confirm is whether or not the trust requires beneficiary direction. If the trustee’s power is not specifically subject to the direction of the beneficiaries, no Trustee’s Certificate would be required. In the event that the trust requires direction of the beneficiaries (the majority of title holding trusts you will come across will be so-called “nominee trusts” and will require the direction of the beneficiaries), you will want to look for language which allows third parties to rely upon the deed without a Trustee’s Certificate. A sample of the typical language you would be looking for is as follows:
Every agreement, lease, deed, mortgage, note or other instrument or document executed or action taken by the person or persons appearing from the records of the Registry of Deeds to be Trustees, shall be conclusive evidence in favor of every person relying thereon or claiming thereunder that at the time that the delivery thereof or of the taking of such action, this Trust was in full force and effect, and that the Trustee was duly authorized, empowered and directed by the beneficiaries to take said action.
If you do not have language upon which you can rely and the trustee is “powerless” without beneficiary direction, you may have to go back and track down a Trustee’s Certificate. If you find yourself in this situation, you may want to forward the entire trust, along with the deeds in and out of the trust, to one of the attorneys in our Legal Department for further review.
Question: I am handling a sale transaction. Should my title examiner be researching the names of my buyers?
Answer: Yes. It is important to remember that there are liens that “catch” after-acquired property. For example, Federal Tax Liens attach to after-acquired property. Unless they are re-filed by the IRS in a timely fashion and thereby extended, the lien period of Federal Tax Liens is ten years from the date of assessment.
Massachusetts Child Support Liens can also attach to after-acquired property. Effective December 8, 2005, the duration of the lien was extended ten years from six years. Keep in mind as well that a lien may be extended for additional periods of ten years by the recording or registering within one year next before the expiration of the unexpired lien, a further notice of the lien, without affecting the priority of such lien. It is important to remember that, when dealing with Massachusetts Child Support Liens, the duration of the lien starts running from the date the lien is “first perfected,” not the date upon which an assessment occurs nor necessarily the date the lien is recorder. “Perfection” occurs either (1) when the notice of lien is filed if the obligor owns an interest in real estate in that county at that time or (2) in the case of after-acquired property, upon the recording or registration of the deed or other instrument by which the support obligor acquires the property after the notice of lien was filed but within ten (10) years of the fling of the notice.
Question: The deed to my current owner is missing one of the bound references. Do I need to obtain a confirmatory deed?
Answer: Not necessarily. Item Number 3 of REBA Title Standard 27 states, “Missing bounds, errors in direction or distance, and ambiguous descriptions are cured by reference to a specific lot on a recorded plan or by a title reference to a deed containing an adequate description.”
Question: My back chain of title contains a deed from a Trustee to himself/herself individually. Is this problematic?
Answer: Perhaps. REBA Title Standard 23 addresses this situation. The Standard states:
A title based upon a deed from a trustee of record to himself free of trusts is not on that account defective if:
- The instrument establishing the trust expressly authorizes self-dealing on the part of the trustee; or
- A court of competent jurisdiction has rendered a judgment authorizing or ratifying the deed; or
- A period of at least 30 years has elapsed since the recording of the deed and the record does not disclose any adverse claim based thereon; or
- The trust does not contain spendthrift provisions and (i) all beneficiaries are legally competent and assent to or ratify the conveyance by the Trustee; or (ii) barring a prohibition against self-dealing, the recorded declaration recites that third parties may rely without inquiry.
If you find yourself in this situation, you may want to forward a copy of the entire trust document, along with any amendments thereto, as well as the deeds in question to one of the attorneys in our Legal Department for further review.