DiMasi: ‘I will work to make sure House Bill 904 does not ... · The reservation of the practice of law to members of the bar is under constant attack. The Federal Trade Commission

Below are the prepared re-marks of Massachusetts HouseSpeaker Salvatore F. DiMasi of-fered at REBA’s Spring Confer-ence on May 8 in Westborough.Over 650 REBA members andguests attended the keynotepresentation.

Thank you for inviting me tospeak to you this afternoon.There’s a reason why the Real Es-tate Bar Association for Massa-chusetts is New England’s fastestgrowing bar association – Presi-dent Bob Moriarty’s leadershipand commitment to profession-alism and excellence.

As an attorney and a formerchairman of the committees onJudiciary and Banks and Bank-ing, I have first-hand knowledgeabout the issues you care about.When I became Speaker, I pledgedto open up and reform the legisla-tive process.

I wanted to listen to members

and empower them with the re-sponsibilities that go hand-in-hand with leadership. Their con-cerns – and your concerns –have been heard and will con-tinue to be heard so that, to-gether, we can better serve ourcitizens and the Common-wealth. In the last year, severalHouse committees have trav-eled across the state to get in-put from citizens in order to de-velop comprehensive pieces oflegislation.

The listening tours, as we liketo call them, were inspired inpart by a famous Mark Twain

Real Estate Bar Association for Massachusetts

Summer 2006Vol. 3, No. 3

The Newsletter of the

What’s in this issue…

A Supplement to Massachusetts Lawyers Weekly

Protecting privacy atRegistry of Deeds

Page 6

REBA celebrates mortgagedischarge bill signing

Page 12

Defining ‘fair value’of condominiums

Page 15

SAVE THE DATE

REBA’s 2006Annual Meeting

on Nov. 7 inWorcester

The REBA Board of Di-rectors has voted to holdthe 2006 Annual Meetingon Tuesday, Nov. 7 at theDCU Center in Worcester.Members planning on at-tending this meeting shouldmark their calendars now.

The DCU Center includesfour large breakout rooms,each with a capacity of 200or more. In addition, there isa separate ballroom for theAnnual Meeting luncheonthat will comfortably holdover 700 guests. The DCUCenter also boasts amplespace for over 50 exhibitors.

“This location will permitus to expand our education-al offerings with additionalbreak-out sessions,” saidREBA President-Elect SamiBaghdady. “We have out-grown our former venue inWestborough. While theDCU Center is about tenminutes’ drive further west,it will serve our continuedgrowth for the balance of thisyear. Our hope, in 2007, is tohost our Spring Conferencein Worcester and our Annu-al Meeting at a site in themetropolitan Boston area.”

LISA KESSLER

House Speaker Sal DiMasi gave keynote address at Spring Conference

DiMasi: ‘I will work to make sure HouseBill 904 does not advance this year’

REBA completesexpansion ofheadquarters

REBA has recently complet-ed the expansion and remodel-ing of its offices at 50 CongressStreet in the heart of Boston’s fi-nancial district.

The newly configured space in-cludes five conference and break-out rooms to meet the needs ofREBA Dispute Resolution, the As-sociation’s subsidiary. Two addi-tional conference rooms are avail-able elsewhere in the building.This expanded space will permitREBA Dispute Resolution to hostthree mediations at the same time.

There is also a new PresidentsConference Room, will full A/V

By Elizabeth J. Barton and Edward J. Smith The real estate bar at last has

the power to enforce requestsfor a discharge or supportingdocumentation that has notbeen received within 45 days ofthe lender’s receipt of paymentof the mortgage. The entity thathas accepted payment of amortgage, pursuant to its pay-off statement, must record or

provide a proper dischargeand/or supporting documenta-tion (assignments, mergers,and servicing agreements).

If the appropriate party failsto issue the discharge or docu-mentation within 45 days of re-ceiving payment, the mort-gagor is entitled to damages of$2,500 or the actual damagessustained by the mortgagor,whichever is greater, plus at-torney’s fees and costs.

The draftsmen of the legisla-tion recognized that not everyfailure of a mortgagee or ser-vicer to provide or record the

BARTON SMITH

Legislation modernizesmortgage discharge practice

Beth Barton is title counsel for CATIC, a different kind of title in-surer, in the firm’s Wellesley office. She also serves on REBA’sCommercial Real Estate Finance Committee. Beth can be reachedat [email protected]. Ed Smith has served as the Associa-tion’s Legislative Counsel for over 20 years and is a regular speak-er at REBA’s Spring Conference and Annual Meeting. Ed can bereached at [email protected].

Continued on page 24

Continued on page 23 Continued on page 3

By Edward A. Rainen

At the May meet-ing of The Real Es-tate Bar Associationfor Massachusetts,the general mem-bership voted to ap-prove Title StandardNo. 72, entitled,“Mortgage Instru-ments – Identifica-

tion of Nominor (MERS).”The organized bar recognized, in the

varied opinions of respected practition-ers, that there was disagreement on howto deal with the Mortgage Electronic Reg-istration Systems, Inc.’s contractualmethodology for internal transfers of

mortgage related instruments. Could arecorded mortgage running in favor of“MERS as it is Nominee for Bank ofAmerica, N.A.” be properly dischargedby, “MERS as it is Nominee for Wells Far-go Bank, N.A.”?

The comment to the Standard setsforth the factual background: “MERS wascreated by the real estate finance indus-try to manage off-record transfers of in-terests in mortgage obligations amongits members and to eliminate the need toprepare and record assignments whenmembers trade mortgage loans. MERSmembers designate MERS as nomineefor the lender in the mortgage or an as-signment of the mortgage recorded inthe land records and electronically trackchanges in ownership of the mortgageloans over the life of the loans on theMERS® System….”

The standard itself, states: “A record-ed instrument executed only by Mort-gage Electronic Registration Systems,Inc. (MERS) discharging, assigning, par-

tially releasing, subordinating, modifyingor amending a mortgage, which is heldof record by MERS, either as originalmortgagee or as assignee of said mort-gage, is not on that account defective,whether or not a ‘Lender’ is designatedor defined in the instrument wherebyMERS acquires such interest and re-gardless of whether the same lender, ifdesignated in the acquisition instrument,or any lender, is recited in the subsequentinstrument, provided that said subse-quent instrument is otherwise satisfac-tory under G.L. c.183, §54B.”

Since Massachusetts is one of theseveral states following the so-called“Title Theory of Mortgages,” instru-ments that transfer legal title, such asassignments, partial releases and dis-charges, are of great significance. Theoff-record trading and transfer of mort-gage instruments where MERS servesonly as a nominee, is not consistent withPrincipal-Agency law as we know it inMassachusetts.

The MERS contractual system facili-tates the behind-the-scenes change ofidentity of the holder of the mortgage (thePrincipal). In the MERS system, the onlyconstant is the identity of the Agent(MERS).

In a sense, the MERS system is littledifferent than the workings of the NewYork Stock Exchange, where millions ofshares are traded each day by profes-sionals, held in a “street name” by thebrokerage house, which has electronicledgers tracking the ownership rights ofthe actual purchasers.

REBA believes that Title Standard No.72 is consistent with the philosophy ex-pressed in Land Court Guidelines to theRegistry Districts No. 42 which states, inpertinent part:

“[T]he holder of the mortgage on theEncumbrance Sheet will be listed asMortgage Electronic Registration Sys-tem, Inc., without any reference to the in-stitution for which MERS is holding themortgage.”

REBA membership approves Title Standard No. 72

The Real Estate Bar Association for Massachusetts

2 • REBA News Summer 2006

A longstanding member of the REBABoard of Directors, Ed Rainen currentlyserves as co-chair of the Association’sLegislation Committee. He can bereached at [email protected].

MEMBERSHIP APPLICATION___ New Membership

___ Renewal of Current Membership

___ Change of Address/Telephone/Fax/E-Mail Only

NAME: _____________________________________________________________________FIRM: ______________________________________________________________________ADDRESS: ___________________________________________________________________CITY/TOWN: _______________________ COUNTY: _____________ STATE: ____ ZIP: _______E-MAIL: ____________________________ WEB SITE: ________________________________TELEPHONE: __________________ MOBILE: __________________ FAX: _________________

Circle Category:

$ 275 Member (Attorneys admitted to Massachusetts Bar)Year Admitted to the Massachusetts Bar: ______ and BBO Number: _______________

$ 275 Associate: Paralegal, Librarian, Title Examiner, Surveyor,Other: __________________________________________

$ 165 Member (Attorneys admitted to Mass Bar w/in last 3 years)Year Admitted to the Massachusetts Bar: ______ and BBO Number: _______________

$ 165 Member (Attorneys admitted to Mass Bar 40+ years ago)Year Admitted to the Massachusetts Bar: ______ and BBO Number: _______________

$ 165 Member (Government/Legal Services/Non-Profit)Year Admitted to the Massachusetts Bar: ______ and BBO Number: _______________

$ 75 Full-time Law Student (Include photocopy of current student ID card.)

$ ___ Voluntary contribution to support REBA initiatives in combating the practice of law by non-lawyers.

___ Enclosed is my check for $ ________ ___ Please charge my: ___ MasterCard for $ ________ ___ Visa for $ ________Card No: __ __ __ __ - __ __ __ __ - __ __ __ __ - __ __ __ __Expiration Date: __________________ Signature: ________________________________

Please send this completed application with appropriate fee to:The Real Estate Bar Association for Massachusetts

50 Congress Street, Suite 600Boston, Massachusetts 02109-4075

Tel: (617) 854-7555 or (800) 496-6799 Fax: (617) 854-7570www.reba.net

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UNI COMP INCLEADERS IN SYSTEMS AUTOMATION SINCE 1983

By Robert J. Moriarty Jr.

“No individual, other than a memberin good standing of the bar of this Com-monwealth, shall practice law, or byword, sign, letter, advertisement or oth-erwise, hold himself out as authorized,entitled, competent, qualified or able topractice law ....” M.G.L., c.221, §46A.

Wherever we look the role of the lawyerin our society is being marginalized.

The reservation of the practice of lawto members of the bar is under constantattack. The Federal Trade Commission(FTC) equates lawyers with those whowould sell coffins over the Internet. Ourown brothers and sisters at the bar en-dorse, for a fee, Internet companiespreparing legal documents based upononline form questionnaires.

Corporations from across the countrywant to conduct real estate closings in Mass-achusetts. Some of us pretend to be some-thing other than a law firm in the belief thatthat out-of-state lenders or settlement serv-ice providers will use their services.

When I became president of REBA Ipledged to advance the work of those

who came before me fighting the unau-thorized practice of law. REBA has a richheritage as a leader in this area as evi-denced by the Closings, Ltd. (1993) andColonial Title & Escrow, Inc. (2001), tri-al court cases where we were success-ful. Our work in this area is often not vis-ible to our membership.

Let me shine a light on how REBA isfighting this battle.

President-elect Sami Baghdady, PeterWittenborg and I recently met with ourcounterparts at the Massachusetts BarAssociation – President Warren Fitzger-ald, President-Elect Mark Mason and Ex-ecutive Director Marilyn Wellington to in-vite the MBA to reconsider the adoptionof a definition of the practice of law.

This proposal was advanced by REBAbefore, but had not come to fruition. Theyhave agreed to work with us in this areaand stand shoulder-to-shoulder with us onthe practice of law by non-lawyers. Theirpresence at our Spring Conference – alongwith MBA General Counsel Martin Healy– is testimony to their support of REBA.

Recently, a delegation from REBA metwith Commissioner of Banks Steven An-tonakes to relate REBA’s concerns withrespect to continued and ongoing con-sumer harm caused by out-of-statelenders violating the Good Funds Statuteand to express our concerns about howlargely unregulated “Witness Closings”skirt this law.

We at REBA frequently hear instancesof consumer inconvenience, delay andharm from these practices. We havepledged to bring this information to theCommissioner so that he may take ap-propriate action. We invite all lawyers –REBA members and non-members alike– to share in this effort by forwarding in-formation to REBA when you becomeaware of problems in a witness closing.The exclusion of attorneys from theprocess directly harms citizens of theCommonwealth. We will continue to workwith the commissioner and his staff oneducational programs and seek en-forcement actions in this area.

Not a week goes by that REBA doesnot receive reports of a new scheme fornon-lawyers to control the real estateclosing process. Our long-time counselin this area, Doug Salvesen, vigilantlyputs violators on notice explaining in de-tail why the closing process is the prac-tice of law in Massachusetts. These let-ters are often effective, but not in everyinstance. Again, we rely upon our mem-bers and others to report these mattersto REBA so that we can take whateverappropriate action may be available.

Finally, Jon Davis and REBA’s Practiceof Law by Non-Lawyers Committee withthe support of Doug Salvesen, have be-gun a comprehensive strategic review ofthe various future approaches to fight theunauthorized practice of law including:

• Continuing efforts with the MBA andultimately with the Supreme JudicialCourt to seek a comprehensive SJC-sanctioned definition of what is andwhat is not the practice of law. This ap-proach has been an effective vehiclein a number of other jurisdictions.

• New legislative initiatives to clarify thepractice issues as they relate to real es-tate closings.

• Reaching out to the regulators and en-forcement authorities including the At-torney General’s office as well as bank-ing, bar and insurance regulators to becertain that all laws and regulations areappropriately enforced.

• Additional strategic litigation initiatives.

We will not shrink from this task.REBA has been in the forefront of the

fight against House Bill 904 and its allieswho want corporations to conduct com-mercial and residential real estate clos-ings. We will fight these legislative at-tacks, and we will educate our membersand the public that only licensed andtrained professionals should practice law.We can accept no less.

I hope that you all have a wonderful, busysummer; we at REBA will continue to workon your behalf throughout the season.

From the President’s desk

A founding partner of Marsh, Moriarty,Ontell & Golder, P.C., Bob is a long-servingmember of the Association’s Title StandardsCommittee from 1984 through 2003. He con-centrates in commercial and residential titlematters including the review of title ab-stracts, title reports, title insurance commit-ments, title certifications and the resolutionof title issues on behalf of title insurance un-derwriters, law firm clients, developer clientsand institutional lenders. He is a graduateof Boston College and the University of Con-necticut School of Law. Bob can be reachedat [email protected]

REBA News • 3Spring 2006


REBA News is an officialpublication of the Real Estate Bar

Association for Massachusetts, Inc.

50 Congress Street, Suite 600Boston, Massachusetts 02109-4075

Tel: (617) 854-7555(800) 496-6799

Fax: (617) 854-7570

PresidentRobert J. Moriarty Jr., Esq.

President-ElectSami S. Baghdady, Esq.

Immediate Past PresidentDaniel J. Ossoff, Esq.

ClerkPaul F. Alphen, Esq.

TreasurerThomas Bussone II, Esq.

Executive DirectorPeter Wittenborg, Esq.

EditorPeter Wittenborg, Esq.

Managing EditorSusan A. Graham

Mission Statement

To advance the practice of real estate lawby creating and sponsoring professionalstandards, actively participating in thelegislative process, creating educationalprograms and material, and demonstratingand promoting fair dealing and goodfellowship among members of the realestate bar.

Mentoring Statement

To promote the improvement of thepractice of real estate law, the mentoring offellow practitioners is the continuingprofessional responsibility of all REBAmembers. The officers, directors andcommittee members are available to respondto membership inquiries relative to theAssociation’s Title Standards, PracticeStandards, Ethical Standards and Forms withthe understanding that advice to Associationmembers is not, of course, a legal opinion.

Endorsement Statement

While the Real Estate Bar Association forMassachusetts, Inc. accepts advertising inits publications and educational offerings,it endorses no products or services.

www.reba.net

REBA completesexpansion ofheadquarters

functionality, that can accommodateover 30 guests. The conference roomfeatures a display of portraits of priorREBA presidents. REBA 2006 PresidentBob Moriarty will host a reception for allprior REBA presidents on Sept. 13.

The headquarters’ offices, which arefully Wi-Fi enabled, also include fully-equipped private offices available at nofee to any out-of-town REBA memberneeding work space while in Boston.Conference room and meeting roomspace is also available to any REBAmember at no charge. To reserve a con-ference room or an office contact JoeMcBride, member service administra-tor at [email protected].

Continued from page 1

By Richard E. Gentilli, Thomas M. Looney and Ward P. Graham

Chapter 254 of the MassachusettsGeneral Laws governs the creation anddissolution of a mechanic’s lien in Mass-achusetts. Under the statutory scheme,a number of different procedures can cre-ate a mechanic’s lien depending on therelationship of the lienor to the generalcontractor and owner of the property.

Because of the serious consequences amechanic’s lien may have on financing ofa project or on the sale of the affected realestate, Chapter 254 also provides ways toobtain a discharge of a lien. The most fa-miliar of these is “bonding off” the lien.

In addition, Section 15A of the statuteprovides a summary procedure by whichan aggrieved party can obtain a judicialdischarge of a defective mechanic’s lien. Itis this procedure and its strange effect ontitle that will be discussed in this article.

Section 15A provides in part that anowner, contractor, or mortgage holder, whois aggrieved by a defective mechanic’s lien“may apply to the superior court for thecounty where such land lies or in the dis-trict court in the judicial district where suchland lies, for an order . . . summarily dis-charging of record the alleged lien or no-tice as the case may be. . . . Upon grant-

ing or denying the application, the courtshall enter a final judgment on the matterinvolved or expeditiously order such fur-ther proceedings as are just.”

The party seeking the summary dis-charge of a defective mechanic’s lien un-der Section 15A must file a separate ac-tion rather than simply file a motion inthe mechanic’s lien enforcement action.

Summary proceeding should result in death of lien

If a mechanic’s lien appears to be de-fective because the lienor has failed toconform to the stringent requirements ofChapter 254, the aggrieved general con-tractor or owner can invoke the summa-ry procedure to discharge the lien underSection 15A. The party challenging themechanic’s lien typically will file a verifiedcomplaint and obtain an order schedul-ing a hearing on the application to dis-charge the lien on relatively short notice.

The purpose of Section 15A is to pro-vide a swift remedy for parties aggrievedby the wrongful assertion of a lien so asto minimize the adverse consequencescaused by the lien. If the court is con-vinced that the mechanic’s lien is defec-

tive because the lienor did not meet thestatutory requirements to establish a validlien, the court will order the lien dissolved.

The successful challenger should thenduly record the order discharging the lienat the appropriate registry of deeds. Oncethe order is recorded, the defective lienis discharged and the lien should nolonger disturb the title. Does a dischargeunder the summary procedure kill themechanic’s lien, or does the lien live on?

Life after death?Like a zombie from a B-movie, the me-

chanic’s lien can continue to haunt an own-er of property even after the mechanic’slien has been successfully discharged bythe summary procedure of Section 15A. Ifthe putative lienor files a timely appeal ofthe order dissolving the lien, the now-dis-solved lien will continue to operate as acloud on title, even if the order dischargingthe lien has been recorded.

If that is the result, then what has beenaccomplished by the “summary” proce-dure in Section 15A of the statute? Unfor-tunately, the statute itself does not give anyinsight into whether an appeal of a dis-

Mechanic’s lien may live on despite order dissolving it




GENTILLI LOONEY

Richard Gentilliand Thomas Looneyare both principals atBartlett Hackett Fein-berg P.C. where theyrepresent title insur-ers, lenders and cor-porate clients in con-nection with realestate and businesslitigation. Ward Gra-ham is New England

Division Counsel of Stewart Title Guar-anty Company in Boston. He serves onREBA’s legislative committee.

GRAHAM

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REBA News • 5Summer 2006


By William G. Constable

A long time clientcalls, saying thatshe has just beenapproached by a lo-cal land trust to per-manently preserveher land, with thepromise of a greattax deduction andpermanently re-

duced property taxes, while still owningher property.

An agitated home builder client calls.

Someone claims that a portion of his de-velopment site contains habitats forsome turtle, and now two regulatory bod-ies say that he must permanently restricta portion of the site.

An enlightened developer client hasjust received approval for a cluster sub-division, and now must permanently re-strict the open space within its project.

The astute attorney receiving thesecalls has mentally reached into M.G.L.c.184, §§31-33, which describes thesubstance and procedures for grantingconservation restrictions within Mass-achusetts. A conservation restriction(CR) is a conveyance by the owner ofland to: (a) a charitable organizationwhose purposes include conservationof land or water or (b) any governmen-tal body, for the purpose of natural, sce-nic, agricultural, forest or public recre-ation use, limiting construction ofimprovements and land alterationswhich adversely affect the conservationpurposes of the CR.

CRs are an increasingly important toolfor conservationists, municipalities, andregulators to permanently conserve nat-

ural resources, important landscapes andcommunity character.

CRs in MassachusettsTitle to the property remains with the

owner and, unless specifically providedotherwise, no public access or other pos-sessory interest is transferred except asnecessary for the grantee (the “holder”of the CR) to monitor and enforce the re-striction. The Executive Office of Envi-ronmental Affairs (EOEA) estimates thatapproximately 3,500 CRs have beengranted in Massachusetts, protectingabout 85,000 acres of land. While mostCRs are held by local, regional orstatewide charitable land trusts, manyare also held by municipal conservationcommissions and EOEA.

Section 32 of Chapter 84 of the Mass-achusetts statutes describes the approvalprocess by which CRs are able to remainenforceable despite the passage of timeor the failure of the holder to have thebenefit of privity or any appurtenantrights. All CRs must be approved byEOEA prior to execution, and all CRs(except those to be granted to state

agencies) must have approval of thechief executive officers of the munici-pality in which the land sits.

Note that most other states authorizesimilar restrictions (usually called “con-servation easements”). However, Massa-chusetts is the only state that requires gov-ernment agencies to approve therestrictions. The same statute also pro-vides for slightly different approvals forsimilar, but less frequently used, preser-vation restrictions, agricultural preserva-tions, watershed preservation restrictions,and affordable housing restrictions.

EOEA’s review of CRs has traditional-ly focused on verifying that the CR con-tains significant public benefit and is welldrafted. Local officials tend to address lo-cal natural resource and land use needsas well as the local municipal impact ofthe CR. Although CRs must be consid-ered by local assessors and by their na-ture usually reduce the property tax as-sessments, open space requires minimalpublic services, and surrounding prop-erties frequently increase in value due tothe nearby protected open space.

Conservation restrictions – A primary land use tool


A long-time member of the Real EstateBar Assocation, Buzz Constable is exec-utive vice president of A. W. Perry, Inc.,a commercial real estate investment, de-velopment and management firm found-ed in 1884, where he has worked forover 20 years. He also serves as presi-dent of the Lincoln Land ConservationTrust and on the Steering Committee ofthe Massachusetts Land Trust Coalition.He can be reached at [email protected].

By Richard P. Howe Jr.

A front page storyin the May 30 editionof the New YorkTimes (“Technologyand Easy CreditGive Identity Thievesan Edge”) taggedPhoenix as the iden-tity theft capital ofthe nation, suggest-

ing that the easy availability on the Mari-copa County Recorder’s website of mil-lions of pages of official documents, somecontaining social security numbers, wasa contributing factor.

Although I have long been a staunch ad-vocate of making all land records freelyavailable online, I also feel a compellingobligation to protect personal privacy. Toassess the extent of the risk posed by therecords of the Middlesex North Registryof Deeds, I decided to measure how manysocial security numbers were embeddedin our documents, all of which are avail-able online at www.lowelldeeds.com.

To obtain this information, we exam-ined two groups of record books page bypage looking for social security numbers.The first sample was from Jan. 1, 1995to June 30, 1995. Each of the 186 booksin this group contained approximately160 documents in 350 pages.

Social security numbers appeared in 911of the 29,760 documents in these books.Of the 911 documents with social securitynumbers, 323 involved federal tax liens, 192involved Massachusetts tax liens, 199 weredeath certificates and 197 were mortgages.

The second group we examined was fromJan. 1, 2000 to March 31, 2000. Each ofthe 138 books in this group contained ap-proximately 125 documents in 300 pages(we had switched to a smaller format book).

The 17,250 documents in this sampleincluded 316 with social security numbers.Of the 316 documents, 30 involved feder-al tax liens, 145 Massachusetts tax liens,108 death certificates and 33 mortgages.

Together, these samples indicate that2.6 percent of our documents contain so-cial security numbers. While that per-centage may seem small, when appliedto the 1.8 million documents recordedsince 1980, it means that 47,000 socialsecurity numbers have been recorded injust the past 25 years.

The good news is that we have elimi-

nated the flow of new social securitynumbers into our records by refusing torecord documents (other than tax liens)that contain social security numbers. Andthe IRS and the Department of Revenueare doing their part. The documents sentto us by both agencies since the begin-ning of 2006 use only the last four digitsof the taxpayer’s social security number.

But that still leaves all the social securitynumbers that have already been recorded.Thus far, we have taken a passive approachto this problem, waiting for the customer tonotify us of the presence of a social securi-ty number in a particular document beforedoing anything about it. (Out of deferenceto the IRS and the Department of Revenue,we have avoided removing social securitynumbers from tax liens).

Once notified by a customer, however,we have immediately redacted the socialsecurity number using rather low-techmethods. Two copies of the document areprinted. On one, the social security num-ber is crossed out with a black marker andthe document is rescanned, replacing theoriginal version on our website. The unal-tered copy is placed in a traditional filingcabinet to be held in perpetuity in case thefull social security number is ever needed.

While this process has been effective – ofthe mortgages in our sample, 16 percent

already had the social security numbersblacked out due to customer notifications –we must get even more aggressive abouteliminating the thousands of social securi-ty numbers lurking in our system. Hopeful-ly we will discover some computer software(and the funding to purchase it) that will al-low us to automate this process.

In the meantime, we have ordered acase of black magic markers and will at-tack this problem manually by eliminat-ing all but the last four digits of social se-curity numbers found in our records, taxliens included, by going through our doc-uments page by page.

Identity theft is nothing new. Twelve yearsago someone stole my credit card from agym locker and used it to buy $3,000 worthof golf clubs before I discovered the loss. Butour digital era allows all of us – law abidingcitizens and criminals alike – to work moreefficiently, making it essential that everyonestrive to reduce the risk of cyber crime. Sincethe financial services industry is now thedominant sector in our economy and pos-sesses all the associated political influence,it is unlikely that any comprehensive, con-sumer friendly legislation that will safeguardour electronic identities will be enacted any-time soon. For now, the Middlesex NorthRegistry of Deeds, at least, will do what itcan to reduce the risk of identity theft.

Protecting privacy at the Middlesex North Registry of Deeds



Dick Howe is register of deeds inthe Middlesex North District Reg-istry in Lowell. He can be reachedat [email protected].

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H6Z327


By Joel A. Stein

An “affiliated busi-ness arrangement”(AfBA) – defined inSection 3 (7) ofRESPA (12 U.S.C§2602) – does notviolate Section 8 ofRESPA if it meetscertain statutoryconditions.

RESPA defines an affiliated relation-ship as one existing among business en-tities where (i) one entity has effectivecontrol over the other by virtue of a part-nership or other agreement; or (ii) is un-der common control with the other by athird entity; or (iii) where an entity is acorporation related to another corpora-tion as parent to subsidiary by an iden-tity of stock ownership.

RESPA generally prohibits payment ofreferral fees, unearned fees or kickbacks,as well as the splitting or sharing of feesor charges made or received providing“real estate settlement services”. How-ever, Section 8 (c) (4) of RESPA statesthat an affiliated business doesn’t violatethe statute as long as the three followingrequirements are met:• The AfBA owner that refers business

to the AfBA must provide a written dis-closure on a separate sheet of paper toeach consumer who is referred to theAfBA no later than the time of the re-ferral.

• The customer being referred to anAfBA must not be required to use theAfBA, i.e., the consumer’s use of anAfBA may not be required as a condi-tion to the availability of any other set-tlement service for which the consumerwill pay.

• No payments, other than a return onownership interest or payments other-wise permitted under the statute, maybe received under the AfBA. Any pay-ments made must be for services ren-dered or must constitute a return onownership interest.

What is a bona fide settlementservice provider?

In 1996, HUD issued a statement en-titled “Policy Statement on Sham Con-trolled Business Arrangements” to de-termine whether entities are bona fideproviders of settlement services or shambusiness arrangements that do not qual-ify for AfBA exception to Section 8 ofRESPA.

In order to satisfy HUD’s criteria, theAfBA must consider the following:

1. Does the new entity have sufficientinitial capital and net worth, typical in theindustry, to conduct the settlement serv-ice business for which it was created? Oris it undercapitalized to do the work it pur-ports to provide.

2. Is the new entity staffed with its ownemployees to perform the services it pro-vides? Or does the new entity have“loaned” employees of one of the parentproviders?

3. Does the new entity manage its ownbusiness affairs? Or is an entity thathelped create the new entity running thenew entity for the parent provider mak-ing the referrals?

4. Does the new entity have an officefor business separate from one of the par-ent providers? If the new entity is locat-ed at the same business address as oneof the parent providers, does the new en-tity pay a general market value rent forthe facilities actually furnished?

5. Is the new entity providing substan-tial services, i.e., the essential functionsof the real estate settlement service, forwhich the entity received a fee? Does itincur the risks and receive the rewardsof any comparable enterprise operatingin the market place?

6. Does the new entity perform all ofthe substantial services itself? Or does itcontract out part of the work? If so, howmuch of the work is contracted out?

7. If the new entity contracts out someof its essential functions, does it contractservices from an independent third par-ty? Or are the services contracted froma parent, affiliated provider or an entitythat helped create the controlled entity?If the new entity contracts out work to aparent, affiliated provider or an entity thathelped create it, does the new entity pro-vide any functions that are of value to thesettlement process?

8. If the new entity contracts out workto another party, is the party performing

‘Affiliated business arrangements’ permitted

in limited situationsHUD clamps down on ‘sham’ kickbacks

Joel Stein served as REBA presidentin 1994 and has chaired the REBA TitleInsurance and National Affairs Commit-tee for over 10 years. He practices withFriedman & Stein, P.C. in Braintree. Heis a serious pianist and classical musicaficionado. He can be reached [email protected]. Continued on page 20

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By Phillip B. Posner

The ‘Memoran-dum of Lis Pendens’is a statutory devicefor providing recordnotice of litigationthat involves a claimof right of the ‘title to’or ‘the use or occu-pation of’ real estate.

Recent amend-ments to the statute (M.G.L. c.184, §15)and several recent trial court decisions raisequestions and pose challenges for con-veyancers and real estate litigators alike.

Although not technically a ‘lien’, therecording of a Memorandum of Lis Pen-dens has a practical impact similar to a

real estate attachment: It may ‘chill’ anowner’s ability to sell, mortgage or leaseher real property at its full value.

The mechanicsA plaintiff who seeks a Lis Pendens is

required to file a verified complaint orother complaint containing a unique ‘cer-tification.’ The plaintiff must certify thatshe (1) has read the complaint, (2) thefacts stated in the complaint are true, and(3) no material facts have been omittedfrom the complaint. The complaint itselfmust name as defendants all owners ofrecord and any party in occupation un-der a written lease.

Prior to 1985, a Lis Pendens could sim-ply be drafted and recorded by the plain-tiff’s attorney. This may be one of the ori-gins of some clients’ requests to simply“throw a lien on record” in connectionwith real estate disputes. In order to stemabuse of the statute, a 1985 amendmentto the statute required – as a prerequisiteto recording – the endorsement of the LisPendens by a trial court judge.

Prior to the 2002 amendments, a ver-

ification of the allegations in a complaintthat a challenge to “title” or “occupan-cy” of real estate was at issue was a suf-ficient factual basis for endorsement ofthe Lis Pendens by the judge.

The 2002 amendments provided fourimportant changes to the statute: (i) analternate remedy of ‘temporary equitablerelief’ in lieu of an endorsement of the LisPendens; (ii) specific rules regarding theendorsement of the Lis Pendens pursuantto an ex parte motion; (iii) the provisionfor a ‘special motion to dismiss’ the en-tire action if the action was determinedto be ‘frivolous’ by the trial court; and (iv)a provision that a court may not endorsea Lis Pendens in connection with some‘land use litigation’ matters, includingzoning appeals and wetlands regulationsdisputes.

The statute now requires a specificfinding by the trial court judge, upon anex parte motion for approval of a Lis Pen-dens, that (1) the defendant is not thensubject to the jurisdiction of the court, or(2) there is a clear danger that the de-fendant, if notified in advance of the en-

dorsement of the Lis Pendens, will con-vey, encumber, damage or destroy theproperty or the improvements thereon.

To be recorded, the Lis Pendens mustbe accompanied by affidavit stating thatthe plaintiff’s attorney has served noticeof the allowance of the motion by certi-fied mail addressed to all parties to theaction (M.G.L., c.184, §15(b)).

Prior to the 2002 amendment, uponmotion a court would make a finding thatthe subject matter of the action consti-tuted a “claim of title” or “occupancy.”Upon making such a finding the courtwas obliged to endorse the Lis Pendens.

At this stage of the litigation, the courtdid not make any judgment or determi-nation of the merits of the claims. SeeSutherland v. Aolean Development Corp.,399 Mass. 36 (1987).

Special motion to dismissHowever, the 2002 amendment per-

mits a defendant to challenge the meritsof the plaintiff’s case through the mech-anism of the special motion to dismiss.



Phil Posner is associated with theBeverly firm of Metaxas, Norman & Pid-geon, LLP practicing in the areas of realestate, environmental and land usetransactions, permitting and litigation.He can be reached at [email protected]. Continued on page 21

LIS PENDENS UPDATE

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One of the true rewards of the real estatebusiness is long-lasting and successful rela-tionships. All too often, important workplacerelationships today are defined by confusingterms such as “authorizing agent” and “out-side vendor” and “dotted line reports”

The all-time worst is “FTE” – the Full-Time Equivalent. Who sees themselves

as simply a full-time equivalent?These impersonal words and terms un-

derscore differences instead of shared in-terests – revealing a business environmentthat is marred by too many less-than-ide-al relationships. One of these three-wordtitles we have noticed lately in our indus-try is “settlement service provider.”

It’s hard to believe these euphemisticwords describe folkswho are supposed towork together and col-laborate to succeed.

Where we work weuse one simple wordthat matters most –“partner.” We have part-ners at work, and it’s animportant distinction.They are the people withwhom we work, the people to whom wefeel accountable, and most importantly,the people with whom we want to grow.

For lawyers, the word “partner” de-scribes an ideal working relationship. Andthat’s how we feel about our relationshipswith many lenders and brokers. We arepartners in an industry that needs part-ners, but doesn’t always recognize this.

Real estate transactions are complicat-ed, even for seasoned experts. And Mass-achusetts state law is designed to protectthe broker’s customers, both buyers andrefinancing homeowners, in these transac-tions. Our job is to protect your customersbefore, during and even after the closing.

Protecting your customer is our prevail-ing interest. And as such, we are licensed

and regulated, and ourlaw practices are evendesigned to protect youas well – with the Client’sSecurity Board reim-bursement funds as wellas the requirement thatevery lawyer carry mal-practice insurance.

These additional lay-ers of protection are not

offered by settlement service providers.Also, the personal liability that everylawyer assumes, directly certifying title un-der M.G. L., c.93, §70, is a strong andcompelling incentive to insure that themortgage is properly recorded and thatprior liens have been properly released.

Unlike lawyers, closing companies haveno personal or direct liability for title mis-

takes. They simply move this risk to theirtitle insurance underwriter. Consequently,they have far less motive to achieve an er-ror-free product for the lender. The bottomline is that out-of-state closing companiesare unregulated, and have no fiduciary dutyto you. The result: mortgages and titles thatare not perfected for the mortgage lender.

Compliance, compliance,compliance

Lawyers keep brokers’ deals in com-pliance, protecting their investors andfirms from penalties and deals that fail toclose. When closing documents are notproperly recorded, fees are not properlydisclosed or fees change at the closingtable without notifying lender – lendersand brokers could pay a price.

Recording your mortgagesMassachusetts is a “first in line” record-

ing system. When a deed or mortgagedoes not get recorded correctly and in atimely manner, a Pandora’s Box could beopened. We don’t need to tell you howthis will affect the now fast-expandingforeclosure market when a lender dis-covers that an equity line is in first posi-

Brokers and lawyers: Partners in closing the deal

Thomas Bussone II is the treasurer ofREBA and a founding partner of Segal,Edelstein, Bussone & Fallon, a Beverly-based firm. Michelle T. Simons is co-chairof REBA’s Residential ConveyancingCommittee. Simons is a founding part-ner of the Newton-based firm of Brech-er, Wyner, Simons, Fox & Bolan LLPwhere she chairs the firm’s residentialconveyancing department. Continued on page 19

(Editor’s note:These remarkswere delivered by REBA’s TomBussone and Michelle Simonsat New England MortgageShowcase 2006, the annualmeeting of the MassachusettsMortgage Association on May23 at Boston’s Seaport Hotel.)

SIMONSBUSSONE

By Lisa J. Delaney

A homestead maybe declared either bya single person or byone spouse for themarriage. The sec-ond spouse needn’tsign the declaration,and case law holds asecond signature isignored as superflu-

ous. The one signature protects and vestsa homestead estate in both spouses.

A homestead is subordinated to a lat-er recorded mortgage by a single subor-dination document signed by all vestedwith the homestead estate. The singledocument could be the mortgage or aseparate subordination document.

The controlling statute (M.G.L. c.188,§1) does not require or prefer one overthe other. The statute also does not re-quire specific subordination language,and, therefore, the generic homesteadwaiver language in a FNMA mortgagecreates a subordination of homestead.

There are no subordination issueswhen title is owned by a single person orwhen both spouses are in title, as theirexecution of the FNMA-style mortgagecreates a subordination of the full home-stead estate.

However, if only one spouse holds ti-tle, the non-title spouse must execute thesame subordination document as the in-title spouse. This could be either a coun-tersignature on the mortgage or bothspouses together signing a separate sub-ordination document.

Although there is no case law onpoint, the industry consensus is the sub-ordination will fail if the two spousessign two different subordination docu-ments, even if the two documents aresigned simultaneously and together ev-

idence an intent to subordinate thehomestead. This follows a literal inter-pretation of §§ 6-7 of the statute, whichdefine subordinations and releases in “amortgage”, “a deed” or “a release” butnot in separate documents by each par-ty vested with a homestead estate. Dif-ferent subordination rules apply for a§1A Elderly or Disabled Homestead inthe statute, which are not discussed inthis article.

Potential subordination problemsSubordination problems also occur if ti-

tle is vested in only one person whose mar-ital status is not stated. Foreclosure coun-sel must determine if that person wasmarried at the time of mortgage executionby either consulting with initial closingcounsel, or requesting a copy of the origi-nal mortgage application which will includethe borrower’s marital status. There is nosubordination problem if a sole title ownersubsequently married, as the later mar-riage is junior in time to the mortgage.

The only practice point for a foreclo-

sure involving an in-title and non-titlespouse who have properly subordinatedthe homestead, is that the non-titlespouse must be maintained on the fore-closure notice list since that individual isvested with a junior homestead estate.This also applies if the mortgage was ex-ecuted by a single person who subse-quently married, provided the newspouse is known to foreclosure counseleither from the records at the registry ofdeeds or listed in the lender’s records.(See M.G.L., c.244, §14.)

Not all mortgages use the FNMA formor otherwise contain homestead subordi-nation or waiver language. This issue isgoverned by the combined effects ofChapter 188, §§ 6-7 discussed in AtlanticSavings Bank v. Metropolitan Bank andTrust Company, 9 Mass.App.Ct. 286, 400N.E.2d 1290 (1980), and In Re Melber,315 B.R. 181 (2004).

Section 6 of the statute requires themortgage to “contain[e] a release” ofhomestead. Section 7 provides a home-

Effect of senior recorded homestead on foreclosure of junior mortgage: A primer



Lisa J. Delaney is a partner at Carvin& Delaney LLP in Braintree. She is anactive member of REBA, serving as amentor, and also on the Registries Com-mittee. Lisa may be reached at [email protected]. Continued on page 19

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By Michelle T. Simons and Marvin W. Kushner

The Residential Conveyancing Com-mittee was created two years ago bythen-REBA President Chris Kehoe, whobelieved this segment of the REBA mem-bership had been underserved by the As-sociation. The committee was created toreach out to traditional conveyancers,while supporting other initiatives withinREBA and broadening membershipthroughout the Commonwealth.

Another goal was to increase rank-and-file member involvement on sever-al important issues, to support our pro-fession and to protect the practice of thetraditional real estate conveyancer.

The Residential Conveyancing Com-mittee has and will be involved in the fightagainst House Bill 904 and any similarlegislation. Our committee effectively ral-lied the conveyancing bar to raise fundsfor this fight. With our group’s help,REBA engaged a special legislativecounsel and crafted a long-term plan toestablish a stronger voice and more in-fluential role on Beacon Hill to opposenon-lawyer settlement providers.

The Committee took this message onthe road in 2005, speaking at meetingsof local and regional bar associationsacross the Commonwealth. The Com-mittee knew that this message was tooimportant for an e-mail or mailing. In-stead we created a PowerPoint-support-ed program and undertook speaking en-gagements across the state.

As a result of this outreach to local bargroups across the state, REBA hasgained several hundred new members.

In response to this growth we havelaunched four new subcommittees: (1)Practice Standards/Forms; (2) Practiceof Law; (3) Member Relations; and (4)Government Relations.

The Practice Standards /Forms sub-committee, chaired by Brookline-basedconveyancer, Alan B. Sharaf, was creat-ed with the primary task of maintainingand updating the Association’s long-standing and well-regarded practicestandards and forms. Currently thisgroup is drafting a book of over 20 formsto help real estate lawyers and others un-derstand and use the new mortgage dis-charge law in their day-to-day practice.

Ward Graham, New England RegionCounsel at Stewart Title Guaranty Com-pany, is a key member of this subcom-mittee and has taken the lead in draftingthese much-needed forms.

REBA, with the generous sponsorshipfrom several title insurance underwritersas well as the Southern New EnglandSchool of Law, has scheduled 10 two-hour workshop programs in locationsacross the state, entitled A User’s Guideto the New Mortgage Discharge Law.These workshop programs are free to allREBA members. For more information,go to www.reba.net.

Our new Government Relations Sub-committee is chaired by Conrad BletzerJr., who practices in Brighton This sub-committee will also support REBA’s nowstrong voice on Beacon Hill with politi-cal fundraising and contributions toREBA’s political Action committee.

With generous contributions from mem-bers and donations from title insurance un-derwriters, REBA has engaged The Bren-nan Group, a premier Beacon Hill lobbyist,to supplement the work of long-time Leg-islative Counsel Edward J. Smith. In ad-dition, REBA has engaged Holland &Knight to help us to reach out to the ex-ecutive branch. Both lobbyists will assistus with the many issues affecting our day-to-day conveyancing practices.

The Practice of Law subcommittee, co-chaired by Steven Kellem and StefanNathanson, was created to support the As-sociation’s long-established Practice of Lawby Non-Lawyers Committee, chaired forover 15 years by Marshfield real estatelawyer and former REBA President, Jon S.Davis. This group will be a resource andconduit for conveyancers to report ques-tionable actions that they may encounterin their daily practices. Kellem andNathanson’s subcommittee will gather in-formation and direct it to the Practice of Lawby Non-Lawyers Committee and the Com-mittee’s long-time counsel, Doug Salvesen.

Michelle Simons and Marvin Kushner co-chair REBA’s Residential ConveyancingCommittee. Simons is a founding partner ofthe Newton-based firm of Brecher, Wyner,Simons, Fox & Bolan LLP where she chairsthe firm’s residential conveyancing depart-ment. Michelle can be contacted at [email protected]. Kushner, a memberof the Massachusetts bar for nearly 50 years,is a partner in the Wellesley-based firm ofKushner, Sanders Ravinal LLP. He can bereached at mkushner@ ksrlawfirm.com. Continued on page 21

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Gov. Mitt Romney recently signed Chapter 63 of the Acts of 2006, which modernizes mortgagedischarge practice, surrounded by REBA leaders, legislators and legislation supporters. Picturedabove (from left) are REBA Legislative Counsel Edward J. Smith; REBA President-Elect SamiS. Baghdady; Joint Financial Services Committee Co-Chair and the law's sponsor, Sen. AndreaF. Nuciforo Jr.; REBA member and legislation advocate Rep. Barry F. Finegold; REBA LegislationCommittee Co-Chair E. Christopher Kehoe; REBA President Robert J. Moriarty Jr.; legislationsupporter Rep. Christopher G. Fallon; Gov. Mitt Romney; Massachusetts Mortgage BankersAssociation Executive Director Kevin M. Cuff; Massachusetts Credit Union League GeneralCounsel Mary Ann B. Clancy; REBA Legislation Committee member and new law's draftspersonWard P. Graham; Massachusetts Bankers Association Director of Legislative Policy Jon K.Skarin; Massachusetts Registers of Deeds Association President John R. Buckley; andMassachusetts Mortgage Bankers Association's Board Chair John Battaglia.

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Through REBA’s Legislation Commit-tee and REBA’s Board of Directors, a sig-nificant number of pending bills are re-viewed and positions taken on behalf ofREBA. Technical advice is also madeavailable to the Massachusetts Houseand Senate from time to time.

For copies of legislation visit the Legis-lature’s website at www.state.ma.us/legis.

Below is a list of bills pertinent to REBAmembers. This list was prepared by Ed-ward J. Smith, REBA’s legislative coun-sel. The Legislation Committee is co-chaired by Ed Rainen and Chris Kehoe.

Priority ListS. 577 Makes execution authority re-

quirements for subordination of mortgageand certain powers of attorney consistentwith those for assignment or discharge ofmortgage (i.e. no recorded vote neces-sary for signatory’s authority.) Status: In-corporated by amendment to S. 2278,infra (REBA position: support)

S. 2278 REBA’s omnibus mortgagedischarge reform bill. Status: Passed bythe Senate and House, as amended; St.2006, c. 63. (REBA position: support)

S. 894 Facilitates registration at the

Land Court of instruments executed onbehalf of a corporation. See also H. 793.Status: Committee on the Judiciary(REBA position: support)

S. 921 Enacts a good and clear recordand marketable title act. See also H.762.(Landowners Title Protection Act). Sta-tus: Committee on the Judiciary (REBAposition: support)

S. 1891 Proposes 50-year statute oflimitations under MGL c.40, §54A rela-tive to statutory restriction on land in orappurtenant to old railroad rights-of-way.Status: Joint Committee on Transporta-tion (REBA position: support)

S. 2104 Authorizes the recovery of at-torneys fees in the enforcement of cer-tain conservation-related and affordablehousing restrictions by municipalities andcertain other holders of restrictions. Seealso H. 4143. Status: Joint Committeeon the Judiciary; text incorporated intoSenate amendment to H. 4968 andpassed by the Senate; see H. 4968 in-fra. (REBA position: support)

H. 795 Establishes a 50-year limita-tion on sand rights and other profits àprendre, subject to extension, except thatin no case shall any such interest in land

expire any earlier than three years fromthe legislation’s effective date. Status:Joint Committee on the Judiciary (REBAposition: support)

H. 904 Permits certain corporations toperform real estate closings, notwith-standing statutory prohibition on thepractice of law by non-attorneys. Status:Joint Committee on the Judiciary (REBAposition: oppose)

H. 2606 DOR “tax loopholes bill” bill. Seealso H.21. Includes provisions to apply thedeeds transfer excise tax to transfers of lessthan fee title interests in real estate and trans-fers of controlling interests in any entity thatholds real estate. Status: Not included in fi-nal bill. REBA position: opposed to ex-panded deeds excise. It also includes a pro-vision to establish a lien on other taxpayerreal property in the case of grantor trustsand “disregarded” entities. Status: Passedwith REBA amendment to require identifi-cation of the particular record title holder onsuch state tax liens (St. 2005, c. 163, §18). It also includes a measure to extend asix-year duration of recorded liens for childsupport to 10 years, subject to extension,consistent with the duration of state tax liens.Status: St. 2005, c. 163, §45

Other LegislationS. 149 Requires the Commonwealth to

reimburse cities and towns that adopt“smart growth” districts under M.G.L. c.40R, for the added education costs to schooldistricts that result from increased housingproduction. Status: St. 2005, c. 141.

S. 166Livable Communities Act. Status:Joint Committee on Community Develop-ment & Small Business

S. 168 Proposes a MassachusettsLand Use Reform Act. See also H. 3544.Status: Joint Committee on Municipali-ties & Regional Government jointly withthe Joint Committee on Community De-velopment & Small Business.

S. 859 Establishes a Western Divisionof the Land Court, sitting in Worcester. Sta-tus: Joint Committee on the Judiciary

S. 917 Creates an estate of homesteadby operation of law and without the needfor a recorded instrument. See also S. 856.Status: Joint Committee on the Judiciary

S. 922 Requires a recital of the namesand addresses of owners of land takenby eminent domain to be included in theinstrument of taking. See also H.763.Status: Joint Committee on the Judicia-ry (REBA position: support)

S. 923 Legislation relative to notice ofcontract under M.G.L. c.254 and dissolu-tion of mechanics liens. See also H. 764.Status: Joint Committee on the Judiciary

S. 1078 Establishes new proceduralrequirements in foreclosing residentialmortgages, including expanded noticeof debtor’s rights; right to cure up to oneday prior to the conduct of the foreclo-sure sale; non-responsibility of debtor formortgagee’s legal fees if default is curedwithin 60 days of mortgagee’s notice ofintent to foreclose; requirement of courtapproval for foreclosure sale conductedearlier than 180 days after notice of in-tent to foreclose; requirement of a courtdetermination of fair market value of theproperty foreclosed in any suit for defi-ciency; and post-foreclosure accountingrequirements, including relative to priceupon any resale by foreclosing mortgageholder within 18 months. Status: JointCommittee on the Judiciary

S. 1169 Expands zoning protection forlawful, non-conforming single-family andtwo-family dwellings. Status: Joint Com-mittee on Municipalities and RegionalGovernment

S. 1171 Legislation to relax the statuteof limitations for use violations underMG.L. c.40A, §7 Status: Joint Commit-tee on the Judiciary

S. 1245 Sustainable Development Act.Status: Joint Committee on Environment,Natural Resources & Agriculture

S. 2152 Requires installation of ap-

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By Peter B. Farrow

When Massachusetts General LawsChapter 183A, enabling condominiums,was enacted in 1963, rental affordablehousing was an emerging market buthomeowner affordable housing re-mained in the future.

That it was not envisioned by Chapter183A is reflected in the elegantly simple(indeed, rather vague) statutory stan-dard of “fair value” for establishing unitpercentage interests. Today, affordablehomeownership is a growing and signif-icant part of the condominium market,and developers and their counsel haveimplemented variations in determiningpercentage interest that test the limits ofthe “fair value” criteria, on occasion re-quiring litigation to validate the condo-minium. It is time for Chapter 183A tocatch up with and address these market-driven issues.

A proposal to tailor the “fair value”standard to today’s condominium mar-ket has been prepared by Citizens Hous-ing and Planning Association that will:(i) provide flexibility in establishing sen-sible and equitable percentage interestsin condominiums, particularly those withdeed-restricted affordable units; ( ii) buildon the Appeals Court’s decision in Podell

v Lahn (1995 Mass. App. Ct. LEXIS496) regarding use of “equivalents” toestablish fair value; and (iii) provide, ifthe master deed fails to, the means toreadjust percentage interests when adeed restriction that was used to deter-mine the percentage interest of a unitexpires.

Proposal seeks flexibilityThe proposal seeks to support cre-

ation of condominiums in an increas-ingly diverse market, and avoid chal-lenges to those that were founded onuseful, but different or innovative, read-ings of “fair value”, as the Appeals Courtdid in Podell.

The proposal does not change how theexisting “fair value” standard has beenused in the ordinary case, and the re-quirement that the relationship between“fair value” and percentage interest be“approximate” is not disturbed. The pro-posal only seeks to enable increasedflexibility, in response to evolving mar-kets, in the ways in which percentage in-terest can be determined in new or un-usual circumstances under the umbrellaof “fair value”.

In Podell, presented with testimonythat percentage interests had been basedon unit areas rather than unit values, theAppeals Court recognized unit area asan equivalent to “fair value” and held thatdetermining percentage interest by unitarea fell within the statutory “fair value”umbrella.

The proposal expands on this by al-lowing the master deed to “take into ac-count equivalents such as approximateunit area or construction cost, includingfactors among units such as unit location,

Defining ‘fair value’ of condominiums

With an office in Concord, Peter Farrowprovides real estate and related legalservices to municipal and state govern-ment agencies, nonprofit organizations,commercial developers, corporations andindividuals. A longstanding member ofREBA, he is also active in the Real EstateSection of the Boston Bar Association. Hecan be reached at [email protected]. Continued on page 18

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The Citizens Hous-ing and Planning As-sociation’s proposalto use alternative cri-teria for calculatingcondominium per-centage interests haswide-ranging impli-cations for condo-minium law and af-

fordable housing.The Association’s initiative purports to

balance monthly maintenance expens-es so similar units – whether designated“affordable”, or “market-rate” – pay thesame. This burden-shifting creates prob-lems where a project’s ratio of affordableunits exceeds 25 percent.

On its face, the proposal sounds fairand reasonable by making affordableowners pay their “fair share” and elimi-nating subsidies by market-rate owners.

Since affordable owners’ monthlyhousing expenses (debt service, taxes,insurance and maintenance) arecapped, isn’t CHAPA’s proposal “win-win”? There is no free lunch.

Condominium unit owners are assigneda percentage interest in the common ar-eas, based upon “fair value”, which be-come the mathematical basis for mainte-nance charges. This system is similar tothe progressive income tax where thewealthy subsidize the less affluent.

In the condominium context, “wealth”is defined by the relative fair values of

the units. Clearly, the actual cost to lightand heat hallways, power elevators, ormaintain lawns and parking areas isroughly equal for all similarly sized unitsin the building. Certain condominiumswere permitted an “unbalanced” mix of50 percent affordable units, increasingthe maintenance subsidy, so that savvybrokers steered market-rate buyers fromprojects with excessive expenses.

Affordable housing isn’t philanthropyThere is no philanthropy involved in

affordable housing because a develop-er is permitted to bypass existing zoningrestrictions on density, and build addi-tional market-rate units while selling af-fordable units at discount as a quid proquo. When an affordable unit owner re-sells his unit, restrictions limit the profitrealized such that the “fair value” of theaffordable unit is in relation to its origi-nal purchase price.

Ultimately, market-rate units, whoseinitial prices aren’t discounted and whoseresale prices aren’t restricted, subsidizemaintenance – with little pain where thepercent of affordable units is small.

In “unbalanced” condominiums, the ex-pense disparity is severe between unitsthat are otherwise comparable. One wayto equalize maintenance charges betweensimilar units, yet remain within the af-fordable unit’s monthly expense cap is tomathematically back in to a deeper dis-count on the purchase price. To be fair toa developer, and permit a reasonableprofit, more market-rate units would bepermitted. At some point, a communitywill suffer from increased density.

“Fair value” isn’t defined in M.G. L.c.183A, but is an ephemeral conceptthat, at its heart, can only be measuredby acquisition price. Podell vs. Lahn, 38

A longstanding member of the REBABoard of Directors, Ed Rainen currentlyserves as co-chair of the Association’sLegislation Committee. He can bereached at [email protected]. Continued on page 18

POINT: Flexible proposal would update standards COUNTERPOINT: Proposal is ambiguous



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By Gregor I. McGregor

Regulations prom-ulgated by the statein 2005 are fully ineffect and are trans-forming how the De-partment of Fisheriesand Wildlife (DFW)and its Natural Her-itage and Endan-gered Species Pro-

gram (NHESP) log, map, review, andpermit work affecting endangered speciesand their “priority habitat.”

These rules go far beyond the prior andstill operative DFW rules about “fish andgame” and DEP rules about HNESP re-view and comment on some notices ofintent pending before Conservation Com-missions affecting “estimated habitat.”

These new rules implement powers un-der the Massachusetts EndangeredSpecies Act, flesh out procedures, andclose some loopholes recognized in a fewcourt cases since 2002.

Here is a bare summary of these re-vised regulations. They are so significantthat there are now three (not two) com-ponents of a proper real estate “due dili-gence” for a development project and itspermitting: (i) oil and hazardous materi-

al (OHM), (ii) wetlands resource areas,and now (iii) priority habitat.

Worse case, these can be “deal killers.”At least they trigger critical governmentapprovals and public participation in per-mitting.

2005 Revised Regulations

1. Definition of “take” has been revisedto read: “Take, in reference to animals,means to harass, harm, pursue, hunt,shoot, hound, kill, trap, capture, collect,process, disrupt the nesting, breeding,feeding or migratory activity or attemptto engage in any such conduct, or to as-sist such conduct, and in reference toplants, means to collect, pick, kill, trans-plant, cut or process or attempt to en-gage or to assist in any such conduct.Disruption of nesting, breeding, feedingor migratory activity may result from,but is not limited to the modification,degradation, or destruction of Habitat.”(Newly added language in bold).

2. Definition of “project or activity” hasbeen included, and encompasses (but isnot limited to): “grading, excavating, fill-ing, demolition, draining, dumping,dredging or discharging; the erection, re-construction or expansion of any build-ings or structures; the construction, re-construction, improvement or expansionof roads and other ways; the installationof drainage, sewage and water systems,or; the destruction of plant life.”

3. Definition of “Priority Habitat” hasbeen included, and provides that: “Pri-ority Habitat means the approximate ge-ographic extent of Habitat for state list-ed species as delineated by the Divisionpursuant to 321 CMR 10.12.” The delin-eation of Priority Habitat by Division is

based on records of listed species with-in the last 25 years and contained in theDivision’s Natural Heritage and Endan-gered Species Program database.

4. The performance standard referredto as “Net Benefit” is defined as follows:“Net Benefit means an action, or set ofactions, that contributes, on its own or inthe context of other actions, significantlyto the long-term conservation of a State-listed Species and that the conservationcontribution to the impacted State-listedSpecies exceeds the harm caused by aproposed Project or Activity.”

5. The term “record owner” is definedas: “any person or entity holding a legalor equitable interest, right, or title to realproperty, as reflected in a written instru-ment or recorded deed, or any person au-thorized in writing by any such person.”

Practice tips1. New and revised definitions should

help to clarify some previously gray ar-eas that had been illustrated by case law,such as:

A. Revised definition of “take” in reg-ulations should more effectively fore-close an applicant’s argument that“mere alteration of a habitat is not atake.” Clearly, the revised definition in-dicates that a “Take” may result from“modification, degradation or destruc-tion of Habitat.” This revision codifies theSuperior Court holdings in the WRT andCapolupo decisions.

B. The new definition for “Priority Habi-tat” encompasses “the approximate ge-ographic extent of Habitat for state list-ed species.” It does not distinguishbetween species categorized as “endan-gered,” “threatened,” or of “special con-

cern.” This appears to close the loopholenoted in WRT, where the regulations for-merly allowed regulation of significanthabitats only when “endangered” or“threatened” species were present.

C. The broad definition of “Project orActivity” should clarify the types of workand conduct subject to regulation, whichis a key to understanding jurisdiction.

D. Definition of “Priority Habitat” clar-ifies the scope of the revised regulations.The Natural Heritage Atlas illustratesboth Priority and Estimated Habitat forthe entire Commonwealth.

2. The new filing requirements and pro-cedures clarify the filing process, but youneed to be alert to an overlap with the Mass-achusetts DEP’s Wetlands Regulations.

A. Under MESA, project proponentsmust file directly with NHESP for allnonexempt projects or activities (see 321CMR 10.14) proposed within a PriorityHabitat. This is independent of the re-quirement to submit a copy of a requiredNotice of Intent for a project located inan Estimated Habitat for Rare Wildlife(required under the Massachusetts DEP’sWetlands Regulations).

B. Although the revisions to the MESARegulations do not directly impact theDEP Wetland Regulations (which prohibitsshort or long-term adverse impacts on thehabitat of rare or endangered species), itis important to be cognizant of the differ-ent performance standards in these setsof regulations, and to understand what cir-cumstances trigger them.

3. The process for designation of Pri-ority Habitat has been more clearly de-fined, and allows procedures for appeal-ing delineation.

New regs transforming application of Massachusetts Endangered Species Act

Greg McGregor co-chairs with MaryRyan REBA’s Environmental Law Com-mittee. A frequent contributor to REBANews, he is a founding partner of Mc-Gregor & Associates, P.C., a Boston-Boston based law firm specializing in en-vironmental law. Greg can be reachedat [email protected]. The authorthanks his associate, Luke Legere, forhis research and biologist David Klinchof ENSR for his insights. Continued on page 17



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A. Mapping of Priority Habitat will bebased upon the totality of the circum-stances, as reflected by records in theNHESP database, scientific evidence,sightings, environment conducive to sup-port of habitat, etc. The Natural HeritageAtlas will be the authority for the existenceand location of Priority Habitats.

B. DFW will review its designations ofPriority Habitat every two years.

C. “Record Owner” of property, as de-fined in the regulations, may seek tohave a voluntary assessment to delin-eate Priority Habitat on her property (321CMR 10.13). A “Record Owner” alsomay seek reconsideration of designationof priority habitat (321 CMR 10.12), aswell as denial of a project due to a de-termination that it will constitute a“Take,” (321 CMR 10.18), or denial of aConservation and Management Permit(321 CMR 10.23)).

The DFW has 30 days from receipt ofa Request for Reconsideration of Priori-

ty Habitat delineation to make availableto the Record Owner its records sup-porting the designation. The DFW has45 days following receipt of a complet-ed application for a Request for Recon-sideration to issue a decision in response.And the DFW’s decision is subject toadministrative and judicial review (321CMR 10.25).

D. The NHESP is responsible for de-veloping the Massachusetts BioMap Pro-ject, which is intended for use as an as-sessment tool to identify the areas mostin need of protection to conserve theCommonwealth’s biodiversity. Started in2000, the goal of creating the BioMap isthe promotion of strategic land protec-tion by mapping the areas that providesuitable long-term habitat for plants andanimals. According to NHESP, the Bio-Map project has not been updated since2002. It may be used as a resource inmapping, but will not likely be definitive.

4. Constructive Approval is now a fact

of life in DFW project reviews.A. DFW has a 30-day review period, fol-

lowing receipt of a completed application,to issue a File Number to the project.

B. Within 60 days after a file numberis issued, the DFW must issue a decisionin writing. Two 20-day extensions arepossible. The decision will state whetherthe project will constitute a Take, or willnot constitute a Take provided conditionsare met.

C. If no decision is issued within thistotal 100-day period, the project receivesConstructive Approval.

D. For conservation and managementpermits (which essentially allow for a“Take” to occur so long as the project isperformed pursuant to an approvedConservation and Management Plan),the DFW must issue a decision within 30days of receiving an application, with two30-day extensions possible.

E. If no decision on the conservationand management permit application isrendered within that 90-day period, the

permit is constructively approved.F. You should be familiar with those

types of projects or activities in PriorityHabitats that are exempt from review un-der the new regulations (321 CMR10.14), as well as those types of projectsthat are not exempt from review.

G. The regulations provide for finan-cial or in-kind contributions toward thedevelopment and/or implementation ofan off-site conservation recovery andprotection plan for impacted species, de-signed to meet the long-term Net Bene-fit performance standard in lieu of miti-gation at site. (321 CMR 10.23(3)).Practically speaking, this means that aproposed project that substantially altersor destroys Priority Habitat may be al-lowed to proceed in exchange for fundsto be used for off-site mitigation.

It’s a new world of wildlife protectionout there. There are new rules, proce-dures, standards, fees, and property re-strictions with important implications forpublic and private property and projects.

Mass. Endangered Species Actcontinued from page 16

proved carbon monoxide detectors in res-idential property. Status: St. 2005, c. 123.

S. 2200 Purports to reverse recentholding by the Land Court re: M.G.L.c.260, §31, so as to prevent the acqui-sition of title by adverse possession ofland or interests in land taken or acquiredby the Commonwealth or any politicalsubdivision by “purchase, gift, grant, em-inent domain, tax taking or otherwise”and held for “any public purpose.”(pur-ports to be retroactive to December1987) Status: Joint Committee on theJudiciary

H. 648 Omnibus revision of the Mass-achusetts Homestead Act. Status: JointCommittee on the Judiciary

H. 737 Relative to the Uniform DurablePower of Attorney Act. Status: JointCommittee on the Judiciary

H. 739 Relative to the spousal electiveshare. Status: Joint Committee on theJudiciary

H. 808 Filed by the Secretary of State,this bill would authorize the use of elec-tronic notarization of instruments. Sta-tus: Joint Committee on the Judiciary

H. 853 Establishes a recitation ofstatutory powers for fiduciaries havinglegal title to or control over real or per-sonal property for which there are envi-ronmental issues requiring action by thefiduciary. Status: Joint Committee on theJudiciary

H. 956 Provides that the acquisition ofa new homestead estate shall not “de-feat” or “discharge” a previous home-stead of record. Status: Joint Commit-tee on the Judiciary (REBA position:opposed as drafted)

H.1823 Provides for a stay of mort-

gage foreclosure proceedings in any ac-tion filed during, or within 90 days after,a service member’s active duty in thearmed forces when the service member’sability to comply with the obligation ismaterially affected by active duty in thearmed forces. Status: Joint Committeeon the Judiciary

H.1838 Provides for a $100 fine for amortgagee to fail to record a dischargeupon receipt of the mortgage payoff.Status: Joint Committee on the Judi-ciary

H. 3553 Legislation to relax the statuteof limitations for use violations underM.G.L. c.40A, §7. Joint Committee onthe Judiciary

H. 3748 Proposes adoption of the Uni-form Real Property Electronic Record-ing Act. Status: Joint Committee on theJudiciary

H. 4968 Bill to expedite the land usepermitting process and the resolution ofrelated disputes. The bill includes a newPermit Session of the Land Court to de-cide certain permitting-related appeals; italso restricts 10-citizen interventions inChapter 91 licensing and municipal har-bor plan approvals; it allows local zoningapprovals to take effect and owners toproceed at risk pending any appeal; and,subject to local acceptance, makeschanges to M.G.L. c.43D for “priority de-velopment sites.” Status: Passed by theHouse; amended by the Senate to elimi-nate provisions for the Land Court PermitSession and for permit issuance notwith-standing a pending appeal, and to incor-porate provisions of S. 2104, REBA billon restrictions, supra; pending before thejoint House-Senate conference commit-tee. Senate bill is S. 2571.


Legislative Update



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amenities, and access to common areasof value to a limited number of unit own-ers” in determining percentage interestunder the “fair value” standard (which, itseems, some have already done).

As to affordable units, the proposal al-lows choice, in determining percentageinterest, “of whether and how to weigh arestriction imposed on one or more, butfewer than all, units by covenant, agree-ment or otherwise.” Whether and how toaddress a mix of market and affordableunits in a sensible and equitable way canvary among projects, and choice the keyto a good result for any particular project.

Allow choices to suit specificcircumstances

In each case, the proposal seeks to al-low choices that best suit the circum-stances at hand by saying that makingthese choices does not risk invalidatingthe condominium.

One can readily see that some disclo-sure is in order. It has been standardpractice (although perhaps not requiredby Chapter 183A) to state in the masterdeed that percentage interests are basedon fair value. Consistent with this, theproposal requires master deeds filed af-ter Jan. 1, 2007 to “state generally suchequivalents, factors or determinations”as were used in determining fair value.

This phrasing puts people on notice,

but without setting a standard of disclo-sure so specific that validity of the con-dominium might hang by the thread ofhow the disclosure is phrased. Use ofthose equivalents, factors or determina-tions in existing condominiums would bevalidated regardless of disclosure, andno disclosure (other than what presentlaw might mandate) would be requiredin plain vanilla situations where per-centage interest reflects nothing morethan fair market value.

Finally, some deed restrictions mak-ing units affordable expire at the end ofa stated term, and many are at risk oftermination due to mortgage foreclosure,in either case returning the unit to mar-ket rate status. In these situations, equi-ty suggests readjusting percentage in-terests to reflect that change, a matternow left entirely to the master deed andinfrequently (perhaps rarely) addressed.

The proposal creates a statutorymechanism for re-adjustment by 75 per-cent vote of unit owners and 51 percentof first mortgagees, using on the “silenceis consent” procedure already existing,if the master deed fails to provide ameans of readjustment.

This proposal seeks to facilitate Chap-ter 183A in its task of enabling creationof residential condominiums in an in-creasingly diverse and expanding sec-tor of the Commonwealth’s housingmarket.

Defining ‘fair value’ of condominiums

Mass. App. Ct. 688 (1995), speaks elo-quently to this proposition. Clearly,square footage must be an element ofthe “fair value” equation.

The court explained that a Floridastatute determines percentage intereststrictly on square footage, yet held:

“The approximate relation of the fairvalue of a unit to the aggregate fair valueof all the units often reduces itself to aprocess of dividing a unit’s floor area bythe aggregate floor areas of all the unitsin the condominium. … The computationprocess does not exclude the possibility,however, that in setting the percentageinterests, units of the same size but withbetter locations in the condominium de-velopment, may be ascribed a higher ‘fairvalue.’ Units possessed of ‘facilities which,although common [are] of value only toa limited number of unit owners . . .’ mayhave a higher market value and, there-fore, warrant a higher percentage inter-est in the common areas. It is also possi-ble … that units which have amenitiessuperior to those in the original buildingsmay be assigned a higher percentage in-terest.” (citations eliminated)

Bill is ambiguousCHAPA’s bill is ambiguous, at best,

and at worst is intentionally misleading.Section 1 states: “Determinations of fairvalue that are based on or take into ac-count equivalents such as approximateunit area or construction cost, or factorsamong units such as unit location,amenities, and access to common areasof value to a limited number of unit own-ers, and determinations of whether andhow to weigh a restriction imposed onone or more, but fewer than all, units …,shall not thereby be invalid; but such …determinations made on or after Janu-ary 1, 2008, shall be generally stated inthe master deed.” (emphasis added).

Should not “or” be “and?” As drafted, a

developer chooses criteria to establish val-ue, and then hides behind a general state-ment as to how that decision was reached.The burden on potential affordable unitplaintiffs to identify a developer’s reasoningfor selecting one element over another wouldbe extraordinarily difficult to overcome.

Peter Farrow’s article boldly speaks tothe deception. He writes: “One can readi-ly see that some disclosure is in order. Ithas been standard practice (although per-haps not required by Chapter 183A) tostate in the master deed that percentageinterests are based on fair value. Consis-tent with this, the proposal requires mas-ter deeds filed after January 1, 2007 to‘state generally such equivalents, factorsor determinations’ as were used in deter-mining fair value. This phrasing puts peo-ple on notice, but without setting a stan-dard of disclosure so specific that validityof the condominium might hang by thethread of how the disclosure is phrased.Use of those equivalents, factors or deter-minations in existing condominiumswould be validated regardless of disclo-sure, and no disclosure (other than whatpresent law might mandate) would be re-quired in plain vanilla situations where per-centage interest reflects nothing more thanfair market value.” (emphasis added).

I disagree. We need a standard of prac-tice that puts all on notice and sets astandard of disclosure that is specific.

When developers build affordablehousing, they make economic choices,both for themselves and those who ulti-mately purchase their product. Devel-oper’s choices should not result ingreater expense, or diminished usage bythe very people affordable housing pro-grams were designed to assist, norshould it pervert zoning into whateverthe bureaucrat wants it to be today.

The creation of affordable housing byproviding bunches of carrots to devel-opers, can result in piles of sticks for therest of the neighborhood.

POINT: Flexible proposal would update standards COUNTERPOINT: Proposal is ambiguous

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Continued from page 15 Continued from page 15



stead may be terminated by a deedsigned by the homestead declarant andspouse, if any, which does not reservethe homestead estate.

A Massachusetts mortgage is a deed,subject to the rights of redemption. There-fore, a mortgage that does not contain ahomestead waiver or subordination exe-cuted by either a single person or by bothspouses vested in homestead will effec-tively terminate the homestead estate.

However, most title insurance under-writers prefer treating these facts as cre-ating a subordination. This does not al-ter the foreclosure procedure, other thanmaintaining the non-title spouse on thenotice list. However, this will create an is-

sue if the sale generates a proceeds over-age and there are other junior creditors,as the order of payment priorities differif the homestead was subordinated or ter-minated.

It is therefore recommended foreclos-ing counsel not decide between subordi-nation or termination and either pay allproceeds into court and file an inter-pleader action, or otherwise obtain acourt order as to priorities before payingthe proceeds overage.

Homestead can retain senior priority

The only fact pattern where the home-stead retains senior priority is a mortgagesigned only by an in-title spouse without

a separate recorded document of subor-dination signed by both the in-title andnon-title spouses. Foreclosing counselshould file a claim both on the title in-surer of the mortgage to be foreclosedand/or on initial closing counsel.

The policy should be reviewed as towhether the homestead is listed as sen-ior title encumbrance. The title compa-ny may deny the claim if the homesteadis so listed. But the denial should not beaccepted, as the title company wouldhave issued a closing insurance protec-tion letter indemnifying the lender in theevent the closing attorney does not fol-low all closing instructions, which usual-ly includes closing the mortgage in firstpriority position.

The unsubordinated homestead auto-matically dissolves without the need fora recorded termination if the in-title andnon-title spouses and their minor chil-dren move from the premises, as home-stead remains valid only for so long asthe property is the primary familydwelling. See §§ 3-4 of the statute, whichprovide the homestead remains in effectif the parents have moved or are de-ceased providing their minor childrenotherwise remain in the home.

An unsubordinated prior senior home-stead followed by a completed mortgageforeclosure and a family remaining inpossession would be a case of first im-pression and undoubtedly spark litiga-tion, study and debate for years.

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Brokers and lawyers: Partners in closing the dealContinued from page 9



‘Affiliated business arrangements’ permitted in limited situations

REBA’s Continuing Education Committeehas announced the final schedule for a seriesof 12 two-hour workshops on the recently-en-acted real estate mortgage discharge law,Chapter 63 of the Acts of 2006.

The new law – which takes effect Oct. 1 –overhauls every aspect of the real estate mort-gage discharge process. The programs will in-clude over 25 practice forms for use with thenew law. A title insurance underwriter willsponsor each workshop.

Below are the workshop dates, locations,and sponsors:

• Aug. 16, North Dartmouth (sponsored bySouthern New England School of Law);

• Sept. 7, Peabody (Old Republic);

• Sept. 12, Natick (Stewart Title);

• Sept. 14, Newton (First American);

• Sept. 19, Boston (Chicago Title);

• Oct. 3, Lenox (CATIC);

• Oct. 4, Holyoke (CATIC);

• Oct. 12, Andover (First American);

• Oct. 18, Braintree (Fidelity Title);

• Oct. 24, Worcester (Land America);

• Oct. 25, Hyannis (Land America); and

• t/b/a, Plymouth (Stewart Title).

Additional workshop programs have beenplanned but not yet scheduled for Andover,Mansfield and Plymouth. For a complete sched-ule of dates, times, sponsors, faculty and loca-tions of each workshop go to www.reba.net.

These free programs are open to all REBAmembers, as well as agents of each workshop’stitle insurance underwriter sponsor. Members ofthe Massachusetts Mortgage Bankers Associa-tion, the Massachusetts Bankers Association, andthe Massachusetts Credit Union League are alsoinvited to these programs. These lender trade as-sociations collaborated with REBA in the three-year legislative effort to enact the landmark bill.

Registration for each free program will openfour weeks prior to the scheduled workshop.

any contracted services receiving a pay-ment for services or facilities providedthat bears a reasonable relationship tothe value of the services or goods re-ceived? Or is the contractor providingservices or goods at a charge such thatthe new entity is receiving a “thing of val-ue” for referring settlement service busi-ness to the party performing the service?

9. Is the new entity actively competingin the market place for business? Doesthe new entity receive or attempt to ob-tain business from settlement serviceproviders other than one of the settle-ment service providers that created thenew entity?

10. Is the new entity sending businessexclusively to one of the settlement serv-ice providers that created it (such as thetitle application for a title policy to a titleinsurance underwriter or a loan packageto a lender?)? Or does the new entitysend business to a number of entities,which may include on of the providersthat created it?

Conditions to qualify as an affiliated business

Even if an entity is a bona fide providerof settlement services, it still must meetthree conditions of the RESPA controlledbusiness arrangement exception in or-der for the AfBA to pass statutory muster.

There must be:

• a written disclosure of the existence ofthe AfBA, including a written estimateof the settlement services provider’scharges and a signature line for the

consumer to acknowledge receipt ofthe disclosure;

• no requirement that the consumer usethe settlement service to which he/sheis being referred; and

• no payment or any other thing of val-ue received by the referral partner ex-cept for fees for work actually per-formed or a return upon the ownershipinterest in the AfBA.

Section 3500.15 of Regulation X pro-vides further understanding of the AfBAconcept, as do the policy statements is-sued with the 1996 Final Rule.

When assessing if a payment is a re-turn on ownership interest or a paymentfor referrals or settlement service busi-ness, HUD will consider the followingquestions:

1. Has each owner or participant in thenew entity made an investment of its owncapital, as compared to a “loan” from anentity that receives the benefits of refer-rals?

2. Have the owners or participants ofthe new entity received an ownership orparticipant’s interest based on a fair val-ue contribution? Or is it based on the ex-pected referrals to be provided by the re-ferring owner or participant to a particularcell or division within the entity?

3. Are the dividends, partnership distri-butions, or other payments made in pro-portion to the ownership interest (propor-tional to the investment in the entity as awhole)? Or does the payment vary to re-flect the amount of business referred to thenew entity or a unit of the new entity?

4. Are the ownership interests in thenew entity free from tie-ins to referrals ofbusiness? Or have there been any ad-justments to the ownership interest in thenew entity based on the amount of busi-ness referred? Responses to these ques-tions may determine whether an entitymeets the conditions of the CBA excep-tion. If an entity does not meet the con-ditions of the CBA exception, then anypayments given or accepted in thearrangement may be subject to furtheranalysis under Section 8 (a) and (b) (12U.S.C. §§2607 (a) and (b).

A number of affiliated business oper-ations have appeared in Massachusettsand there appears to be increasing pres-sure from lenders and brokers on attor-neys to get a “piece” of the title insurancepremium. The lender or broker may sug-gest to the attorney that an entity be cre-ated to handle certain settlement servic-es and in return receive payment forproviding those services.

The entity may order title, scheduleclosings, and obtain payoffs and be paida portion of the closing fee for such serv-ices. In other situations, a newly createdentity will prepare the title insurancecommitment and write the policy and willcollect the full premium.

Before you allow yourself to be forcedinto an affiliated business operation youshould be certain that the operation meetsall of the above requirements. Note in par-ticular that the Colonial Title decisiondeemed the following activities to be the“practice of law” in Massachusetts:

1. Evaluating title to real estate to de-

termine the interest created, transferredor terminated and communicating thatevaluation to any interested party to aresidential real estate transaction.

2. Evaluating and ensuring that partiesto a real estate transaction have com-plied with their agreements.

3. Preparing, drafting or reviewing le-gal documents that affect title to real es-tate or affect the obligation of the partiesto the real estate transactions.

4. Explaining at the closing any docu-ments relating to the interest in the realestate being created, transferred or ter-minated and relating to the agreement ofthe parties.

5. Issuing title certification or policy oftitle insurance premised on Colonial’sevaluation of title to real estate.

6. Holding oneself out to lenders, titleinsurance companies or members of thepublic as willing and able to perform thefunctions listed in paragraphs 1-5 im-mediately above.

7. Representing lenders as their clos-ing agents.

Finally, note that HUD’s positions onAfBAs are less than clear. While they arenot prohibited generally, sham arrange-ments, which will foster the payment ofkickbacks, will be prohibited. Part-timeemployees always are a signal that theaffiliated business may not be legitimate.

In addition, if the newly created entityis not providing substantial services andthe fee is out of line with the services pro-vided, you may not violate RESPA, butyou may be leaving yourself open to aclass action.

WORKSHOPS

Series of real estate mortgage discharge workshops scheduled


If the case is deemed to be ‘devoid of anyarguable basis in law,’ or if the case issubject to dismissal based on a valid le-gal defense such as the statute of frauds,the special motion to dismiss should begranted and the moving party awardedits costs and reasonable attorneys’ fees(M.G.L., c.184, §15 (c)).

The motion is directed to the claim oraction and not to the Lis Pendens itself.See Fafard Real Estate Development v.Metro-Boston Broadcasting, Inc. 345 F.Supp 147 (D. Mass. 2004). In the absenceof a clear emergency, it may be prudentto avoid the use of ex parte motions forapproval and instead pursue motions tobe heard upon notice to all parties.

In Waters v. Cook, Land Court No.

312953 (2005 WL 2864806), the courtanalyzed the split of opinion in the trialcourts on the appropriate standard of re-view of a special motion to dismiss. In Mil-lennium Real Estate, LLC v. Giambro,2005 WL 1009798 (Mass. Supr. March11, 2005), a special motion to dismisswas granted using “the same standardsas preliminary injunctive relief becauseboth sanctions would impose the samepractical effect on real property.” Id. at 5.

Other courts have used another, ar-guably lower, “summary judgment stan-dard” (i.e., a dispute of material factswould prevent granting the special mo-tion) as the benchmark for review. Seee.g. Trolio v. Friedman, 2005 WL1683601 (Mass. Supr. May 3, 2005).

The statute’s lack of clear guidance re-

garding the award of ‘temporary equitablerelief’ versus the endorsement of a Lis Pen-dens may produce similar divergent re-sults until the Supreme Judicial Court orthe Legislature clarifies the meaning or thelanguage of the statute, which contains noclear standard as to when a Lis Pendensor equitable relief should be granted.

In Millennium, the Superior Court rea-soned that the statute “require[s] thecourt to decline Lis Pendens relief if it de-termines that preliminary injunctive re-lief would furnish an adequate remedy.”However, this analysis appears unsup-ported by the text of the statute.

Until clarification is provided, in addi-tion to filing a verified complaint, affi-davits and a memorandum of law thataddress the standards for granting pre-

liminary injunctive relief should be filedtogether with a motion for endorsementof a memorandum of Lis Pendens.

The motion, affidavits, legal memo-randum and related exhibits must detailthe irreparable harm to be suffered bythe moving party, the risk of such harmin light of the moving party’s reasonablelikelihood of success on the merits of thecase, and how the requested relief willeither preserve the status quo among theparties or otherwise provide appropriateequitable relief.

It is well to remember the maxim that‘real estate property rights are unique’and that money damages are oftendeemed insufficient to compensate aparty who is deprived of the title or useof her land.




Uncertainties accompany opening salvo of real estate litigation

The Member Relations Subcommittee,chaired by Susan B. Larose, was set up toassist and support the Association’s well-established Membership & Public RelationsCommittee, chaired by REBA’s President-Elect, Sami S. Baghdady, and the Contin-uing Education Committee, co-chaired by

Stephen M. Edwards and Sophie Stein.This subcommittee will help identify areasof need for educational programs and pro-vide educational resources to the con-veyancing community including lawyers,paralegals and title examiners. This Sub-committee will assist in creating more ed-ucational seminars throughout the year for

the conveyancing bar with plans to takethese programs on the road throughout theCommonwealth.

We hope the Residential Conveyanc-ing Committee will soon be designatedthe Residential Conveyancing Sectionto give a strong and consistent voice tothe conveyancing bar. This would be

REBA’s first ‘Section.’ These subcommittees are open to all

REBA members. If you are interested injoining any of these subcommittees and be-come a part of the solution, please contactthe subcommittee chairs directly. For theircontact information please e-mail REBAstaffer Nicole Cohen at [email protected].

Four new subcommittees launchedContinued from page 11

PUBLICATIONS NOW AVAILABLE

• Stress Management for Real Estate Lawyers• Title Insurance Claims – Myths, Methods and

Mistakes

2004 Spring Seminar Syllabus $50Includes all recent and pending legislation, recentcase law developments and the popular morningbreakout sessions:• Bankruptcy Sales “Free and Clear”• Bankruptcy Issues in Commercial Leasing• New Notary Public Requirements• Real Estate Holding Entities• Surveying for Attorneys• Federal Compliance Issues

2003 Annual Meeting Syllabus $40Includes all recent and pending legislation, recentcase law developments and the popular morning

2005 Spring Seminar Syllabus $50Includes all recent and pending legislation, recentcase law developments and the popular morningbreakout sessions:• Homesteads• Litigating Title Problems and Disputes• “Sticks and Carrots”: An update on Ch. 40B and a

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2004 Annual Meeting Syllabus $50Includes all recent and pending legislation, recentcase law developments and the popular morningbreakout sessions:• Employment Law for Lawyers• Estate and Medicaid Planning Impacting Real Estate• Handling Commercial Real Estate Financings

REBA Handbook of Standards and Forms on CD-ROM $50(This publication is available to REBA Membersand Associates only)

REBA Handbook of Standards and Formshardcopy (includes three-ring binder) $50(This publication is available to REBA Membersand Associates only)

Binder for hardcopy of REBA Handbook ofStandards and Forms $10(This publication is available to REBA Membersand Associates only)

2006 Spring Seminar Syllabus $130Includes all recent and pending legislation, recentcase law developments and the popular morningbreakout sessions:• Bankruptcy Code Amendments Affecting Real

Estate• The Shifting Sands of Massachusetts Beach

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Discharge Legislation• Reverse Mortgages

2005 Annual Meeting Syllabus $120Includes all recent and pending legislation, recentcase law developments and the popular morningbreakout sessions:• Relocating Easements After M.P.M. Builders v.

Dwyer• Recent Changes in the State Wetlands

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Ordering Options: 1. Complete this form, and FAX to 617-854-7570with credit card information 2. Complete this form and mail withcheck to: REBA, 50 Congress St., Suite 600, Boston, MA 02109-4075

While supplies last…We will include in every publication order a free copy of the 100page Land Court Guidelines on Registered Land as well as Start Up Right: Real EstateConveyancing Essentials.

Item Amount Quantity TotalStandards & Forms on CD-ROM $50.00Standards & Forms hardcopy with binder $50.00Binder for hardcopy of Standards & Forms $10.002006 Spring Seminar Syllabus $130.002005 Annual Meeting Syllabus $120.002005 Spring Seminar Syllabus $50.002004 Annual Meeting Syllabus $50.002004 Spring Seminar Syllabus $50.002003 Annual Meeting Syllabus $40.002003 Spring Seminar Syllabus $40.00

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breakout sessions:• GBREB Commercial Lease Forms• New Frontier in Tax Titles• Title Standards to the Rescue• Conservation Real Estate• Compliance Issues for Conveyancers

2003 Spring Seminar Syllabus $40Includes all recent and pending legislation, re-cent case law developments and the popularmorning breakout sessions:• Commercial Lease Issues for the Unwary• Representing a Client Before the ZoningBoard• Changes in the Lis Pendens Statute • Life After Bishops Forest• New Dam Safety Legislation



charge under Section 15A should contin-ue to cloud the title. Should conveyancersbe concerned about a mechanic’s lien thathas been discharged but which is the sub-ject of an appeal? If the appeal is suc-cessful, should the mechanic’s lien thenbe resurrected and given retroactive ap-plication? There are a number of points ofview to consider in this issue.

On the one hand, the lien is a creationof statute and the statute provides howand when it can be dissolved. Once dis-solved, the lien should cease to have anyeffect whatsoever. This would be simi-lar to a real estate attachment that hasbeen discharged by a court.

Under this scenario, the lien would nolonger be in the chain of title and a pur-chaser of the real estate would take theproperty free and clear of the dissolvedlien. If an appellate court later determinesthat the dissolution was erroneously is-sued, the claimant would theoreticallyhave to establish a new lien on the prop-erty, effective as of that date, but with noretroactive application. If the real estate

was conveyed in the interim, they are“out of luck.”

This approach may at first seem harshas it appears to effectively eliminate aclaimant’s rights of appeal. But a puta-tive lienor is not without a remedy.

A claimant could seek to have the dis-solution order stayed pending appeal, orseek to obtain and record a lis pendenson the property to protect their perceivedrights on appeal. If these measures arerequested quickly, the claimant can pro-tect itself, but must make at least someshowing that its appeal has merit.

A different way to view the appeal of anorder discharging a mechanic’s lien is toview it as a notice, which suspends or, ineffect, stays the effect of the discharge(despite the court’s order) until all appealrights have been exhausted or abandoned.Rather than looking at the mechanic’s lienlike a real estate attachment, this “notice-of-pending-appeal-of-discharge-of-lien”approach (which seems to be followed bysome conveyancers) treats the appeal ofthe mechanics lien discharge order asmore like a lis pendens.

Seen in that light, the lien continues toconstitute a cloud on title until the appealis over, on the theory that if the dischargeorder were to be reversed on appeal, themechanics lien would be resurrectednunc pro tunc into the chain of title andencumber the property as of its originalrecording date. Under this analysis, aconveyance during the pendency of theappeal would be potentially subject tothe reinstated mechanic’s lien, whichwould continue to encumber the landeven as against a purchaser or mort-gagee for value.

Presumably, therefore, a title examin-er would always have to check the courtdocket to review the status of case wherea judicially discharged lien appears in thechain of title. Under this view, even witha favorable trial court ruling, a bond mayneed to be posted to permit the sale ofthe real property at issue. That resultwould render the “summary” dischargeprocedure under Section 15A “summa-ry” only with respect to the first step insuch a process, as the lien would con-tinue to encumber the title for years un-

til a final ruling is entered on appeal.

Unsettled area of lawNo case law or title standard specifi-

cally addresses this dilemma. CompareREBA Title Standards No. 63, 64 and 65.Chapter 254 does not give any clearguidance on this issue. Nor does Rule62 of Mass.R.Civ.Proc. or Rule 6 ofMass.R.App.Proc., although a success-ful motion under either of these rules bythe appellant to stay the order would clar-ify the issue in that instance.

However, there is nothing clearly in ei-ther rule that would compel the appel-lant to file such a motion in order to getthe benefit of a stay pending appeal, orthat would clarify that, failing to do so,the appellant does not get the benefit ofa stay or a nunc pro tunc reinstatementof the lien if the appeal is successful.

It will be left to future court decisions orlegislation to decide whether a mechan-ic’s lien discharged under Section 15A isdead, alive, or floating along the River Styxsomewhere in between because of an ap-peal of the discharge order.

Mechanic’s lien may live on despite order dissolving itContinued from page 4

CRs have many usesAs noted above, CRs have many uses.

While originally used primarily as ameans by which land owners could ex-tinguish development rights as a contri-bution to open space protection, CRs areincreasingly purchased (using public orprivate funds, or both), and may begranted as part of regulatory approvalsfor development.

Zoning boards, conservation com-missions, the Massachusetts NaturalHistory and Endangered Species Pro-gram, and the Department of Environ-mental Protection now use CRs to en-sure compliance with regulatoryapprovals or enforcement actions. TheCommunity Preservation Act (M.G.L. c.44B) requires that land acquired withCPA funds be encumbered with a CR or

one of the other types of restrictions de-scribed in M.G.L. c.184, §31.

Charitable contributions of CRs mustalso meet the Internal Revenue Service’srequirements that the restriction be a per-manent “qualified conservation interest”described in §170(h) of the Internal Rev-enue Code and related regulations. TheIRS has specific requirements not onlyfor the nature of the real estate interestconveyed, but also for the qualificationsof the donee organization and the valu-ation of the charitable contribution.

The requirements for valuing the char-itable contribution state in part that thevaluation must be undertaken by a qual-ified appraiser, and that the value of thecontribution must be adjusted for any in-creased value to adjacent property con-trolled by the donor. Across the nation,the IRS has recently increased its scruti-

ny of such contributions, seeking over-stated valuations and situations in whichthere is insufficient public benefit to meetthe requirements of a qualified conser-vation interest under IRS regulations.

No federal tax deduction may be re-ceived where the conveyance is a regu-latory requirement or a quid pro quo fora development approval.

Of particular note to the real estate baris M.G.L. c.184, §33, which provides thata municipality may file with its registryof deeds a “public restriction tract index”on which the §31 restrictions are identi-fied. The author is aware of no such in-dex having been created. Although all ofthe CRs approved under M.G.L. c.184have been recorded within the past 40years, and while CRs customarily requirethat notice of the CR is included in eachsubsequent deed conveying the proper-

ty, the time will soon be upon us whentoday’s customary title practices mightnot uncover a CR granted more than ahalf century before.

At that time, it appears that title prac-tices will have to change to either longertitle searches, review of an EOEA indexof CRs, or review of public restriction tractindexes for each municipality of the state.

Other related topics of interest are be-yond the scope of this article, includingapplicability of Article 97 or the charita-ble trust and public trust doctrines, cypres applications, and various limitationson standing and enforcement of CRs.

Resources for additional informationinclude EOEA’s Division of Conserva-tion Services (at mass.gov), the Massa-chusetts Land Trust Coalition (at mass-land.org), and the national Land TrustAlliance (at lta.org).

Mark YourCalendars!

REBA 2006 Annual MeetingTuesday, November 7, 2006

DCU Center, Worcester


Conservation restrictions – A primary land use tool

necessary instruments of release shouldcreate liability for the full penalties – ifthe responsible party provides the nec-essary documentation and the requiredrecording fees within 30 days of a writ-ten demand, except that a mortgagorshall still be entitled to “such actual dam-ages as the mortgagor reasonably es-tablishes are attributable to the failure tocomply” in the first instance.

Some lenders expressed concern thatliability may attach even when theycomplied with their responsibilities toprovide or present for recording a prop-er discharge, but which never got torecord due to the failures of registry staff,third party contractors, borrowers oreven closing attorneys, any of whommight be culpable for a missing dis-charge (or assignment) in a given in-stance.

Therefore, subsection (c) of Section55 provides that a mortgagee or servicerthat receives a written demand forrecordable documentation shall have noliability, if (a) it can reasonably demon-strate by documentation or other evi-dence from its files that the dischargeand any required supporting documen-tation and recording fees were sent to theclosing attorney or other person trans-mitting the payoff within the prescribedtime period; or (b) in the event that suchrecords are no longer available, “suchcompliance is reasonably demonstratedby showing that the mortgagee or ser-vicer …. has established reasonable pro-cedures to achieve compliance with itsobligations, that such procedures areroutinely followed and have become anestablished business practice.”

In either case, however, a mortgageeor servicer must provide to a mortgagoror an authorized person acting on its be-half a confirmatory discharge within 30days after receipt of the written demand.

The draftsmen believe that this finan-cial incentive to provide a confirmatorydischarge in a timely manner would beuseful in other circumstances in whichno discharge has been recorded butwhere there is evidence that a payoff hasbeen received by the mortgagee or ser-vicer.

The parallel responsibility of a closingattorney to promptly record dischargesand assignments duly received by his of-fice is another feature of the legislation.New subsection (d) of Section 55 pro-vides that a closing attorney who re-

ceives the original discharge would beheld to a similar standard as the lenderor servicer who accepts payment.

The responsibility of the closing attor-ney who has received a proper discharge(and other necessary documentation ofauthority) must record within 45 days,and failure to do so will result in liabilityfor the greater of $2,500 or actual dam-ages, plus reasonable attorney’s fees andcosts.

The closing attorney’s liability wouldbe limited to actual damages sustainedby a mortgagor if, within 30 days of re-ceipt of a written demand either to recordsuch discharge or to provide it to themortgagor or to another attorney clos-ing a transaction on the mortgaged prop-erty, he either records the discharge orprovides it to the mortgagor or the oth-er attorney making the demand, togeth-er with any recording fee previously with-held from the mortgagor’s funds.

Improved discharge by affidavit The old Chapter 183, Section 55 pro-

vided for only one remedial solution if theclosing attorney was unable to obtain adischarge when there is evidence that themortgage debt was paid: an affidavit, is-sued by a Massachusetts attorney, withevidence attached to show that the mort-gagee received payment. This evidencehad to include a copy of the cancelledpayoff check, often onerous or impossi-ble to obtain.

The new Chapter 183, Sections 55(g)and (h) provide for more than one re-medial solution for the inability to obtaina discharge. An affidavit from an attor-ney is the first remediation available un-der Section 55(g)(1) for prior mortgageswith less onerous requirements than inthe previous statute. The affidavit muststate that:

• it is made by a Massachusetts attor-ney;

• it is made on behalf of the mortgagoror her assigns;

• whether the attorney could determineif a written payoff statement was pro-vided by the lender;

• the affiant has ascertained that themortgagee, mortgage servicer, or noteholder has received full payment of theindebtedness secured by the mort-gage, and the affiant is in possessionof documentary evidence of the pay-ment, which may include (i) a can-celled check; or (ii) bank confirmationof a wire transfer; or (iii) written con-

firmation by an attorney that the lenderverbally acknowledged payment; or(iv) a M.G.L. c.183, §5b affidavit bythe closing attorney who transmittedthe payoff, certifying that the paymentwas not rejected or returned;

• more than 45 days have elapsed sincethe payment was received; and

• the closing attorney has not receivedeither the discharge or evidence thatthe discharge was recorded and thelender was given 45 days notice of theaffiant’s intention to record the affi-davit.

The affiant attorney must provide no-tice to the lender that he or she intendsto record a discharge by affidavit, andthat the lender will be subject to the lia-bilities and remedies under this sectionunless the lender provides a discharge.

In Section 55(g)(2), the legislation ex-plicitly includes the discharge-by-affi-davit option for current mortgages pur-suant to a notice that may accompanythe transmittal of a mortgage payoff bya closing attorney. In this way, a currentmortgagee can be put on notice at thepoint of receipt of a payoff that a dis-charge by affidavit may be recorded ifthe mortgagee does not provide orrecord the required discharge within thestatutory 45 days.

For residential mortgages, recording anote marked “paid” by the holder is nowrecord proof of payment, as provided innew Section 55(h), providing a secondmethod to discharge an undischargedmortgage.

New Section 55(i) of Chapter 183 cod-ifies the ability of an attorney to rely onthe recital of a merger of entities, or thechange of name of a corporate entitywithin the discharge of the mortgage, asproof of the merger or change of name.This provision mirrors a Minnesotastatute.

Judicial remediesAnother statute, M.G.L. c.240, §15, is

also completely replaced, with new stan-dards for discharging mortgages in theLand Court or the Superior Court, andshortened waiting periods for applyingfor such discharges.

The legislation also shortens the statuteof limitations to exercise a power of salefor obsolete (“older”) mortgages inM.G.L., c.260, §33, from 50 years to 35years, unless the maturity date is statedin the mortgage, in which case five yearswould be added to that date. In eithercase, the term may be extended up tofive years at a time, if the extension in-strument is recorded prior to expirationof the term. And M.G.L., c.260, §35 isalso updated to include registered landmortgages within the scope of Section 33of the chapter.

Other changesHistorically, Section 54B of Chapter

183 authorized a discharge or assign-ment of a mortgage to any officer ofan entity that holds record title to themortgage without a recorded vote au-thorizing the officer to so act. The cur-rent revision to Section 54B extendsthis authority to include the power tosign an instrument of subordination,non-disturbance, recognition or at-tornment, as well as a power of attor-ney, for the purpose of foreclosing amortgage.

Also included in the legislation is therepeal (sought by the MassachusettsBankers Association) of certain provi-sions in M.G.L., c.184, §§17B-D thatwere believed to be duplicative of feder-ally-mandated disclosures that lendersare required to give to consumers. Re-tained is the required disclosure bylenders that the mortgagee’s attorneyrepresents the interests of the mort-gagee, and that the borrower may wishto have personal counsel in the mort-gage transaction.

Except for those amendments toChapter 184, which took effect July 1,Chapter 63 shall take effect Oct.1, and“shall apply to all mortgages, whetherrecorded prior to, on and after the effec-tive date hereof, except that, as to anymortgage the term of which as a resultof [the shortened statute of limitations inSections 33 and 35 of Chapter 260] …would expire within one year after the ef-fective date … , said term shall be ex-tended for a period of one year from theeffective date....”



Legislation modernizes mortgage discharge statuteContinued from page 1

(Editor’s note:This is the second of a two-part article. The first part appeared in theApril 2006 issue of REBA News.On April 13,Gov. Mitt Romney signed into law Chapter63 of the Acts of 2006, a reform measurethat modernizes the Massachusetts mort-gage discharge procedures and other mort-gage-related practices in the closingprocess. This part of the article addressesthe new remedies for enforcing the law.)



quote. He said, “I never learned anythingwhile I was talking so I’ll shut up and lis-ten.” This “listen and learn” philosophyreally reflects my leadership style andhow I approach my role as Speaker.

The 2005-2006 legislative session hasbeen one of the most productive sessionsin recent memory. Progress has beenmade on many fronts – most notably inthe areas of economic development andhealth care.

Before I get to these accomplishments,I would like to take a moment to high-light two initiatives that are of particularinterest to the Real Estate Bar Associa-tion (REBA). First, as many of you mayknow, legislation to modernize the mort-gage discharge statutes became law onApril 13, 2006. I know that getting thislaw on the books has been a priority forREBA for some time.

Many of you worked with the Legisla-ture to see Senate Bill 2278 through topassage. I commend you for your effortsand am pleased to report that this lawbrings Massachusetts law in line with cur-rent national and international lendingpractices.

In contrast to S.2278, I am well awarethat REBA does not want to see HouseBill 904 signed into law – and for goodreason. H.904 would allow corporationsor agents of corporations to handle realestate closings. Proponents claim that al-lowing non-attorneys to assist home-buyers will bring closing costs down.They say it’s a pro-consumer initiativethat’s long overdue.

You know and I know that buying ahome is the single largest investmentmost families ever make. And they de-serve every possible legal protection af-forded to them by Massachusetts lawthrough every step of the way. H.904would sanction an unregulated and un-supervised process. This bill threatens tostrip consumers of critical safeguards andadd to the cost of buying a home.

Additionally, it would drain critical fund-ing from the Massachusetts Legal Assis-tance Corporation. The Legislature cre-

ated MLAC 20 years ago to provide civ-il legal assistance to poor and low-in-come citizens across the Common-wealth. Last year, we appropriated $8.56million for MLAC legal aid.

This year the budget the House passedat the end of April increases MLAC fund-ing by nearly $1 million, bringing itsFY’07 total to $9.47 million. IOLTA ac-counts, funded in large part by real es-tate attorneys, supplement MLAC statefunding and represent a critical financialunderpinning of civil legal aid programs.

If H. 904 were to become law, it wouldhave grave consequences for homebuy-ers and MLAC clients alike. Removingattorneys from real estate closings woulddeplete IOLTA accounts and, as a result,seriously impair MLAC’s ability to con-tinue to provide the services that openthe doors of justice for so many of theCommonwealth’s citizens.

The Committee on Judiciary held apublic hearing on H.904 in February. Iknow that members of REBA testified inopposition to the bill. I’ve met with REBAon this issue. You should know that I amopposed to H.904 as well and will workto make sure it does not advance thisyear.

A bill that will advance this year ad-dresses valid concerns about excessiveregulations in the state of Massachusetts,as well as build on the House’s consid-erable economic development achieve-ments. The House unveiled a sweepingstreamlined permitting bill in March andI am working to bring it to the floor in thenext couple of weeks.

In North Carolina, permitting takes twoto six months. In Massachusetts, thesame process takes up to three years.And to think that 10 taxpayers suits cancause further delays. This is bad for busi-ness, bad for the economy and bad forthe overall quality of life here in the Com-monwealth.

The House bill proposes two compre-hensive and innovative reforms.

First, it creates a new division of the tri-al courts to focus exclusively on land useand environmental appeals. Second, it

eliminates 10 taxpayer suits in waterfrontdevelopments while maintaining appro-priate recourse for impacted communi-ties and abutters. These two provisionswill go a long way toward reducing need-less delay, cutting through red tape anddrastically improving the predictability ofdoing business in Massachusetts.

Additionally, the legislation seeks to:

• Create a Massachusetts Permit Regu-latory Office to assist companies in theprocess of locating to Massachusetts;

• Require participating communities toact on building permits within 180 days;

• Employ regional permitting specialiststo walk businesses through the process;and

• Eliminate the backlog of Departmentof Environmental Protection appealsand require magistrates to issue a writ-ten decision within 90 days of a hear-ing’s conclusion.

I believe that the House bill establish-es a user-friendly process that promisesto attract new development. Working to-gether, we will help existing businessesexpand and show promising start-upsthat the future is bright here in the Com-monwealth.

And now, on to the issue that I’m sureyou’ve heard a lot about – health care re-form. Believe me when I say this was tru-ly a moment when opportunity and ob-ligation intersected. My colleagues and Ifocused so much time and energy on thisissue because costs were rising uncon-trollably and a growing number of Mass-achusetts residents were uninsured.

We had an opportunity to help peopleand once again have Massachusetts setan example for the rest of the nation tofollow. The law will cover 95 percent ofthe state’s 550,000 uninsured residentsover three years.

It’s complicated and intricate but basedon one principle that’s easy for everyoneto understand – shared responsibility. TheHouse embraced this principle early on.I told my members that the Massachu-setts Constitution says: “The body politic

is formed by a voluntary association ofindividuals: it is a social compact…thatshall be governed by certain laws for thecommon good.”

Everyone is asked to participate in thislaw and take responsibility. Everyone –individuals, state and federal govern-ment, employers, providers and insurers– all have to be part of the solution.

This law restores and expandsMassHealth benefits for the poor anddisabled. It requires individuals to getinsurance but helps them with subsi-dies and affordable products. It pro-vides fair and equitable financial sup-port for our hospitals, doctors andcommunity health centers, the insti-tutions and people who are the back-bone of our health care system.

It provides for a more efficient healthcare system by improving the quality ofour care and containing its costs. At theend of the day, it’s a blueprint for provid-ing affordable quality insurance to virtu-ally every man, woman and child in theCommonwealth. As we enter in to the im-plementation stages, I know that it willtake perseverance, diligence and a strongsense of purpose to make this work.

DiMasi: ‘I will work to make sure House Bill 904 does not advance this year’Continued from page 1

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H5I302

LISA KESSLER

House Speaker Sal DiMasi

Documents

DiMasi: ‘I will work to make sure House Bill 904 does not ... · The reservation of the practice of law to members of the bar is under constant attack. The Federal Trade Commission