In Drummer Boy Homes Association Inc. v. Britton, the Massachusetts Supreme Judicial Court recently ruled that condominium associations can impose consecutive, rolling super-liens against units that are delinquent in paying the common or special charges owed to the association. Condominium law in Massachusetts has always included the ability to impose regular monthly charges and irregular special assessments against units – since 1992, the law has also authorized a “super priority lien” to be filed against any units that failed to pay those charges.
The so-called super-lien takes priority over any mortgages that are also on the condominium unit, meaning that the condominium association charges are paid before the loan is paid if the unit is foreclosed on. This provides the association a very important tool in collecting its fees, because lenders require that borrowers pay the fees, and will often pay the condominium fees on behalf of the borrower in order to maintain their priority in the chain of title. (The borrower doesn’t avoid the fees when that happens – the lender simply tacks the amount paid on behalf of the borrower onto the borrower’s loan with the lender.)
The super-lien used by condominium associations can only be created and perfected when the condominium association takes specific steps to provide notice to the borrower and the lender, and the condominium law only allows for these notices to cover a six month period of unpaid condominium charges.
The importance of the Drummer Boy case was the court’s approval of the practice by which a condominium association could create and perfect a super-lien for a six month period, and then create and perfect a super-lien for the following six month period. Previously, it was argued by lenders that the super-lien was limited to a total of six months, but that argument was rejected by the SJC.
As a result of this decision, a condominium association is even better equipped to impose common charges and special assessments necessary for the successful continued operation of the association. Nevertheless, specific steps and timelines still have to be met to perfect and enforce these liens. If you’re a member of a condominium association, or a property manager working with a condominium association, contact Michael Gove at firstname.lastname@example.org or 413-583-5196 to discuss how to make sure these steps are being taken.
When you purchase real estate, you have an expectation that you can occupy and use the property as you wish, that the property will not be subject to debts or liens you haven’t agreed to, and that you’ll be able to mortgage or sell the property in the future. To ensure this is the case, you (and your lender) will want to make sure no third party has any claims against the property. This is done by having an attorney examine a number of things, including public records held by the local registry of deeds and the local probate and family court, the payment of taxes and utility services at the municipal and state level, and information from the seller about the prior use of the property. The attorney’s investigation should identify whether a third party has any potential claims of ownership, or has any potential liens for work done on the property.
Once this investigation is complete, and all potential issues have been identified and cleared up, your attorney will contact a title insurance company to issue a title insurance policy. The title insurance company will review the attorney’s investigation of the property, confirm all issues have been cleared up, and authorize the issuance of the title insurance policy. This policy insures your ownership of the property, and sets out the title insurance company’s agreement to defend your ownership if a claim arises and to pay out the value of the policy if any claim is successful.
There are two types of title insurance policies issued by a title insurance company: a lender’s policy and an owner’s policy. A lender’s policy is given to the lender and only insures the value of the loan issued. In contrast, an owner’s policy is given to you as the owner and insures the full value of the property, including any equity you may have. When you first purchase property, the additional cost of an owner’s policy is usually minimal, and is almost always worth the investment.
If you have questions about purchasing property, the process of obtaining title insurance, or any real estate matter, contact me at email@example.com or 413-570-3170.
Your home is not only one of your single largest financial investments, it’s also the place where your family lives and makes memories. The Massachusetts Homestead Act, revised in 2011, helps protect your home from business creditors, lienhodlers, and personal debts.
Under the revised Homestead Act, your principal residence automatically receives a homestead protection of one-hundred and twenty-five thousand dollars ($125,000). However, by recording a Declaration of Homestead in the Registry of Deeds, you can protect up to five-hundred thousand dollars ($500,000) of equity in your home. If you are older than sixty-two or are disabled, you are eligible for even more protection.
If you decide to file a Declaration of Homestead, you should make sure all the owners sign the declaration. Owners eligible to file a declaration include anyone with a legal interest in the property who also uses the property as their primary residence (non-owner spouses and family members are automatically protected as long as they are using the home as their primary residence). Even if you have granted the property to children but hold a life estate in the home, or even if the property has been transferred to a trust but you are one of the beneficiaries of the trust, then a homestead can still be filed. (If the property is in trust, the trustee would file the declaration and name the trust beneficiaries in the declaration.)
Your homestead protects your primary residence from attachment, execution, or seizure for the payment of many types of debt. A homestead does not protect you from all obligations, and some exceptions include claims arising in connection with your mortgages, government taxes and assessments, or court orders regarding payment of alimony or child support. The protections afforded by the Homestead Act are not effective against liens or claims recorded before your Declaration of Homestead is recorded, so consider preparing and recording a homestead now.
If you have any questions about the Homestead Act, or other ways to protect your property, contact me at firstname.lastname@example.org or 413-570-3170.