Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Winter 2007, Volume 6, Number 1
by Margaret Fortuna and Mark V. Borst, Underwriting Counsels
Question: My office is handling a residential sale transaction involving property that is recorded land. What is the appropriate scope of my title search?
Answer: The Period of Search requirements for recorded land searches is addressed by REBA Title Standard No. 1 (“Standard 1”) which states: “It is sufficient if the title examination covers a period of fifty years and the starting point is a warranty, quitclaim, or duly authorized or empowered fiduciary’s deed which on its face does not suggest any defects.”
Comment I to Standard 1 also states that “If there is a reference in the starting deed to a mortgage, an easement, an agreement, a restriction or another encumbrance which might still be in existence and applicable, a further examination should be made to ascertain the extent and the applicability of such burden and, in the case of a mortgage, whether or not such mortgage has been foreclosed. A starting deed from heirs or devisees should not be considered defective on the ground that the title conveyed derives from the estate of a decedent.”
Keep in mind therefore, that pursuant to Comment I, if your start deed makes reference to an outstanding mortgage, the Examiner should confirm that this mortgage was not foreclosed. If an easement is referenced in the start deed, the Examiner should provide you with a copy of the underlying easement document. If the grantor in your start deed is the fiduciary of an estate or heirs or devisees of an estate, then the Examiner should review the probate file in question to confirm that the proper person or people have executed the start deed.
Question: My office is handling a closing involving property which is registered land. Why did my examiner research the recorded land index?
Answer: The period of the search for registered land titles is also addressed by Standard 1 which states: “In the case of registered land, it is sufficient to start the examination with the present owner’s certificate of title, except for running certificate holders for bankruptcies and Federal and Massachusetts tax liens.”
The Examiner should begin his or her search of a registered land property with the most recent certificate of title that has been accepted and approved by Land Court. In other words the Examiner should begin the registered land portion of his or her search with the most recent signed certificate of title.
However, Federal and Massachusetts tax liens will not be found in the registered land index. They will appear in the recorded land index. Certain Registries of Deeds may have a separate bankruptcy index while others list bankruptcy filings in the recorded land index. The Examiner should also be searching the Probate and Family Court Index as well. The Examiner should be making of list of the owners in the chain of title running these owners for probate matters, bankruptcy filings as well as Federal or Massachusetts.
Finally, keep in mind that even if the current owners’ certificate of title has been accepted and approved by the Land Court, the Examiner should be running out the current owners in the registered land index. It is not sufficient to assume that the encumbrances listed on the Memorandum of Encumbrances are up-to-date. Certain Registered Land Divisions will make a handwritten notation at the bottom of the last page of the Memorandum of Encumbrances of the documents they accept for filing. However, there are a number of Registries that do not follow this practice which is why it is imperative that the Examiner review both the recorded and registered land indices.
Question: How should I list an Order of Conditions on the title policy?
Answer: As you are aware, environmental issues are excluded from coverage. Nevertheless, we would recommend that you list these matters as a Note on the Schedule B of your title policy. An example of this type of listing is as follows:
Note: Although specifically excluded from coverage, title examination reveals the following:
1. Order Conditions issued by the __________ Conservation Commission (DEP File No. ____________) dated __________, recorded with the __________ Registry of Deeds at Book ______, Page _______.
Question: My title examiner has reported an Attachment relative to my borrower which was recorded 9 years ago. Is the Attachment still good?
Answer: The issue of the Dissolution of Attachments is addressed by Title Standard 49 which states that a real estate attachment is discharged or dissolved by:
1) A release of the attachment or of part of the real estate attached signed and acknowledged by the plaintiff or attorney of record at the time of release; or
2) A certificate of an appropriate official of the court setting forth sufficient facts to establish that the attachment has been dissolved by the court, by filing a bond or by operation of law; or
3) The expiration of six years from the date of filing in the Registry of Deeds or from the date of the most recent bringing forward of the attachment; or
4) The deposit with the attaching officer of a sum of money equal to the amount of the attachment authorized by the court; or
5) The death of the debtor, provided,
A) the property was owned by the debtor at the date of death, and
B) administration is granted in Massachusetts upon an application for administration made within one year after the date of death.
Under the hypothetical I have set forth above, the closing attorney would want to make sure that the attachment was not brought forward of record. The closing attorney would also want to make sure that the debtor had not filed mfor bankruptcy protection after the recording of the Attachment. If the debtor filed for bankruptcy protection, then the running of the statute of limitations relative to the Attachment would have been stayed during the course of the bankruptcy proceedings. Once the bankruptcy case was closed, the statute of limitations on the attachment would again begin to run. If the Attachment had not been brought forward, then pursuant to Item 3, the Attachment in our hypothetical would have expired.
Question: How do I find out what happened to a failed or merged bank?
Answer: The National Information Center website, www.ffiec.gov/nicpubweb/nicweb/nichome.aspx, is a good place to start. The website contains a link for an institutional search which allows the user to type in the name or a portion of the name of a bank and to obtain information on what happened to the lender. Access to this website is currently free. The stewartma.com website has a link to the National Information Center website under the online resources section.
Question: I’m reviewing a title and the title examiner has noted that the owner has a child support lien filed against him seven years ago, well before he purchased the current property, should I be concerned?
Answer: Yes, this is a proper issue to be concerned about. Like other liens of the Commonwealth, a child support lien is valid for 10 years. Unlike other liens, child support liens have the additional ability to sit on record for any period of time and will not expire until 10 years from the date that they are first perfected, if not brought forward by the Commonwealth. This means that a notice of child support lien could be filed, hypothetically, on January 1, 1997 against an obligor that had no property in that county for the lien to attach to, but upon the obligor’s purchase of a property in June 2006, the child support lien would attach to that after-acquired property, and the ten year expiration period would begin to run from June 2006. Additionally, if the obligor purchased another property in, again hypothetically, in 2015, if the lien had not been previously satisfied, the lien would run against the new property until June 2016. Note that the statute governing this lien (G.L.c. 119A, §6) extended the expiration period of these liens from 6 to 10 years effective December 8, 2005, so any lien that had not expired prior to December 8, 2005 was extended to 10 years.
Question: I have to open an estate to clear title to a property. More than a year has passed from date of death, am I free from creditor’s claims?
Answer: For the claims of most creditors, if no probate case has been filed and more than a year has passed from date of death, most creditor’s rights have expired. A large exception to this is the right of the Division of Medical Assistance to assert a claim and lien well beyond the ordinary limitations period for creditors. G.L.c. 118E, §32 gives the Division of Medical Assistance four months from the approval of the bond of the executor or administrator to make a claim or within one year from date of death to commence an action under Chapter 197 Section 9.
If you are conducting a transaction involving a newly opened probate estate and are not operating under a power of sale or a license to sell or mortgage, special attention must be paid to the possibility of the Division of Medical Assistance asserting a claim against the estate or a lien against the property. Further, be mindful of the possibility of claims arising for expenses or charges from the administration of the estate. As always, feel free to consult with an underwriter if you believe that you may have a situation like this.
Question: Is it true that we don’t need M-792’s anymore?
Answer: Partially true. As of January 1, 2007 the ten year statute of limitations will have run for non-taxable estates of decedents who died prior to January 1, 1997 and for which an M-792 would have been required, even if the estate was non taxable. For those taxable estates in which the currently used estate tax affidavits under G.L.c, 65C §§14(a) and 6(a) are not applicable, the M-792 can still be used. For more information, see REBA Title Standard 24.
Question: I’m reviewing a title that comes through a foreclosure of a mortgage that only contained a ‘power of sale’ not a ‘statutory power of sale.’ Is there a problem with this mortgage foreclosure?
Answer: If mortgage only references a power of sale and not a statutory power of sale, without any further definition of the power being exercised, you may have a problem. The clause “Statutory Power of Sale” is statutory shorthand permitted under G.L.c. 183 §21. Without a reference to a Statutory Power of Sale or a definition of the power of sale within the body of the mortgage, it is unknown what the power is, what rules are to govern the foreclosure, and it cannot be assured that the power was properly exercised. A foreclosure under this situation may be saved if there was also a foreclosure by entry and that entry has ripened.
Question: Can I issue an owner’s title insurance policy at a refinance if the current owner does not already have title insurance?
Answer: Yes, an owner’s policy can be issued at a refinance, however, it should only be done in consultation with Stewart underwriting personnel and based upon an affidavit by the owner that he/she/they are not aware of claims or assertions having been made or being made by any other persons or entities of any rights, title or other interests in the property or in any improvements to or on the property, nor is he/she/they aware of the existence or encroachment of any improvements or utilities of any abutting owners, governmental agencies or utility companies onto or into the property, whether above or below the surface of the land. Should you receive a request to issue an owner’s policy to an existing owner, please contact us for additional information and authorization as well as the form of affidavit.
Question: If a residuary clause in a will leaves devises to named persons and one of those persons predeceases the testator, isn’t it true that the other named devisees in the residuary clause will take the gift?
Answer: Maybe. The answer to this question is very interesting, because it depends on a consideration of multiple factors. First, if the deceased residuary devisee is a child or other blood relation to the testator, and that person leaves issue surviving the testator, G..L.c. 191, §22 will control the situation. That statute says this:
“If a devise or legacy is made to a child or other relation of the testator, who dies before the testator, but leaves issue surviving the testator, such issue shall, unless a different disposition is made or required by the will, take the same estate which the person whose issue they are would have taken if he had survived the testator.”
This statute will trump all situations and will force the title down to the issue of the deceased person, even if the devisees are considered to be a class. (As to “class gifts,” that’s not the situation in our example anyhow, because the devisees are “named,” and not simply described as a members of a natural group (e.g., “my children.”))
But what if G.L.c. 191, §22 is not applicable? What happens to the gift then? G.L.c. 191, §1A(5) seems to provide the answer. It says:
“Where there is a residuary gift to two or more legatees or devisees and the share of one or more of them totally fails for any reason, such share or shares shall pass to the other residuary legatees or devisees proportionately.”
This statute is in response to court decisions that had held that a devise in the residuary clause to multiple persons that failed because it was not covered by G.L.c. 191, §22 and was not a gift to a class would go by intestacy. (If the failed gift was in another section of the will then it would fall into the residuary clause, but if the gift itself is in the residuary clause it has nowhere to “fall” except into intestacy.) In effect the statute makes all residuary gifts class gifts. The statute was not enacted until the 1970’s and therefore would apply only to wills probated thereafter.