Lowell Deeds

If you searched our records for the most prolific lender in this district, you would conclude that it was Mortgage Electronic Registration Systems. Unfortunately, that entity, more commonly referred to as MERS, is only an agent for a wide variety of banks and mortgage companies. When MERS first came into existance, we and other registries concluded that the only name we would enter into the index as a grantee on a MERS mortgage was MERS. Even though the underlying lender was named in the mortgage, we felt that by also entering that name, it would defeat the purpose of MERS which was to have a central point of contact for anything related to these mortgages. This approach helped us handled the enormous number of mortgages we recorded during the past real estate boom. Now with the market having slowed so much and everyone trying to sort out what exactly happened, knowing which banks made all of those MERS loans has become more important. Starting next week, therefore, we will begin revisiting our index entries for MERS mortgages during the past five years and add the name of the underlying bank to our computer system.

Earlier this year, much attention was paid to so-called “multifunction documents.” Such a document would consist of a single paper that performed multiple functions. The most common example is probably a single document that discharges a mortgage, an assignment of leases and rents and a UCC financing statement. That document performs three separate functions. The
Appeals Court, in the Patriot Resort case, ruled that the plain language of the recording statute allowed the registry to only charge a single fee - $75 – for such a recording. In an outside section to the FY09 budget, however, the legislature amended the recording statute to charge a separate fee “for each document referenced.” Consequently, the fee to record the document described above would be $205 - $75 for the discharge of mortgage, $75 for the discharge of the assignment of rents, and $45 for the termination of the filing statement.

A related formatting practice that has largely gone unnoticed is called a “multiple document” in which a document that would be recordable in its own right (such as a death certificate or trustee’s certificate) is attached to another document (such as a deed) as an exhibit. Today I received the following email from an area law office:

There has been discussion on various list serves of incorporating a trustee certificate inside a deed. We have questioned a few attorneys and they confirm they routinely do it. We are wondering if we adopt the same practice could we save our clients the extra $75 of a separate filing fee. (This is simply for a deed out of a nominee trust. Thoughts?

Here’s my response:

The Massachusetts Deed Indexing Standards (standard 7-9) specifically prohibit that practice so if the registry personnel spot the attached certificate, they should refuse to record the document. The deed and the trustee certificate should be recorded as separate documents. I suspect that the enforcement of this and the rules regarding “multifunction” documents (such as a discharge that discharges both a mortgage and an assignment of leases and rents) will be enforced more strictly in the coming weeks.

As the economy worsens, there will be more pressure to save on recording fees, but there will be equal pressure on the registry to maximize the revenue coming into the state.

The recent amendment to Chapter 262, section 38 (contained in Outside Section 74 of the recently enacted state budget) was intended to codify the method of calculating fees on “multifunction documents” as it existed before the Appeals Court issued its decision in the Patriot Resort case. By way of background, Patriot Resort is a time-share in the Berkshires that provided financing to hundreds of condos with each unit having separate mortgages for each owner of a week-long time share. When Patriot Resort assigned all of these mortgages to a large financial institution, it combined them all together into a single document that it sought to record at the Berkshire North Registry of Deeds. Because each of the aggregated assignments served a separate function (i.e., assigning a separate mortgage), the registry treated this as a “multifunction document” indexing each assignment as a separate instrument with a separate recording fee. With so many assignments involved, this resulted in an astronomically high recording fee and Patriot Resort sued for a refund claiming it should have been charged only a single fee for recording this single (albeit blanket) assignment. The Appeals Court agreed reasoning that the plain language of the statute did not permit multiple charges. Because of the revenue that would be lost and the damage that would be done to the indexing system by this holding, the Secretary of State in conjunction with the registers of deeds proposed an amendment intended to restore the pre-Patriot Resort practice. Here’s the key language of the amendment:

provided, however, that if the paper includes multiple references to a document or instrument intending or attempting to assign, discharge, release, partially release, subordinate or notice any other document or instrument, each reference shall be separately indexed and separately assessed an additional $50 fee

While this language clearly permits the multiple charges that were imposed in the Patriot Resort situation, it may have overshot the mark. By its very nature, a subordination effects two documents – the mortgage being relegated to junior position and the more recent mortgage being granted a superior position. A literal reading of the recent amendment could lead one to conclude that since a subordination includes “multiple references” then “each reference shall be separately indexed and separately assessed an additional $50 fee” which is what some registries are doing. But subordinations were never considered multifunction documents, nor was the intention of the amendment to make them multifunction documents.

From my prior experience with the Deed Indexing Standards, I know that this whole area of multifunction and multiple documents defies clear and concise rules. There are so many different situations and different combinations, that the judgment and discretion of the folks at the recording counter play a much larger role than the words of any draftsman. All I can say is that the registers of deeds collectively understand the difficulties the varying interpretations of this statute are causing for our customers and we’re working to resolve them as quickly as possible.

A few days ago I wrote about the new amendment that codified the previous registry practice of charging multiple fees for documents that performed multiple functions, a practice that was overruled by the Appeals Court in the Patriot Resort case. The new amendment cleared the way for registries to return to the prior practice. Unfortunately, the language of the amendment may be open to multiple interpretations, so individuals trying to record documents are apparently confronting unexpected fees, even under the new system. I’m confident the formula for charging for multiple documents will be clarified soon, but in the meantime, here’s a document that the Registers of Deeds Association produced back in 2006 that lays out the calculations of charging (or not chargine) multiple fees under a variety of scenarios.

In an outside section of this year’s state budget that was just signed by the governor, the confusion over the fees charged for multiple documents should finally be cleared up. You may recall that the practice in many registries was to charge multiple fees for documents that performed multiple functions. For example, if one piece of paper discharged a mortgage and an assignment of leases and rents, it was doing the job of two separate documents. The registries would therefore index it as two documents and charge as though it were two documents. This practice was challenged by the developer of a time share resort in Berkshire County who ended up paying about $70,000 in filing fees for a “multiple assignment.” With that much money at stake, the matter went all the way to the Appeals Court which ruled that the law allowed registries to charge a single fee for a single piece of paper regardless of how many matters were contained in it. This new amendment reverses the appeals court and not only permits the multiple fee practice, it mandates it. And it applies retroactively. Here’s the text of the amendment:

a) Except as otherwise provided, the fees of the registers of deeds to be paid when a document or instrument is recorded shall be subject to a surcharge of $20; provided, however, that if the document or instrument to be filed includes multiple references to a document or instrument intending or attempting to assign, discharge, release, partially release, subordinate or notice any other document or instrument, each reference shall be separately indexed and separately assessed an additional $20 surcharge. The fee for recording a municipal lien certificate shall be subject to a surcharge of $10; provided, however, that if the certificate includes multiple references to a document or instrument intending or attempting to assign, discharge, release, partially release, subordinate or notice any other document or instrument, each reference shall be separately indexed and separately assessed an additional $10 surcharge. The surcharges imposed shall be used for community preservation purposes. No surcharge shall apply to a declaration of homestead under chapter 188. No surcharge shall apply to the fees charged for additional pages, photostatic copies, abstract cards or additional square feet for the recording of plans.

Questions about the proper procedure for re-recording a document have arisen lately, so that will be today’s topic. This typically becomes an issue when a problem is discovered after the original document has been recorded. Some of the cases we’ve seen involve ommitting the type of tenancy on a deed into multiple owners, placing the wrlong property address on a document or misspelling a party’s name. The standard practice has been to retrieve the original document, make the correction on it, add an annotation describing the reason the document is being recorded again, and then record it again, assigning a completely new book and page number to it. This was usually done without the knowledge of the party who had signed the document. The proper procedure for handling this situation from the registry’s perspective came up at several meetings on the Deed Indexing Standards. It seems that legally proper way to re-record the same document was to have it re-executed and re-notarized. The registers of deeds collectively decided that the cleanest way of handling this was to require an entirely new document and to completely prohibit the re-recording of any document (although I assume that if an original document was attached to an affidavit, then the document would get recorded as an attachment, but not as an independent document). This all led to the adoption of Deed Indexing Standard 7-11 which states: “The former practice of “re-recording” a document to correct an error or ommission is prohibited.” Although this office has not aggressively enforced this relatively new standard, we will do so now.

Clipping the Notice of Mortgagee’s Sale from the newspaper and taping it to the affidavit of sale on a foreclosure deed is a practice that has outlived its usefulness. I’ve often wondered why we require the orginal clipping rather than a photocopy of it. Admittedly, I’ve never inquired of anyone because up until now it was just a matter of curiousity. But with are relatively recent conversion to the “scan and return immediately” method of capturing images, the speed of scanning is at a premium. Feeding the page with the taped legal notice clipping through the scanner often results in a crumbled disaster, because the clip is only taped at the top and the bottom and it often becomes unsynched from the underlying page when travelling through the scanner’s auto feed. To prevent this from happening, we’re now photocopying the page of the document with the clip and feeding that through the scanner. If anyone can shed any light on the newspaper clipping requirement, please send me an email.

A local attorney discovered a tricky title issue today that shows up on a mortgage recorded in Book 21582, Page 1. The property involved is at 16 Congress Street in Dracut and the current owner is Empire Property Management Corp which bought the property from the town of Dracut back in 2002. The mortgage in question (from 2007) gets the parties mixed up. In the granting clause, it says “White Fox Development (the lender) grants to Empire Property Management Corporation (the property owner) with mortgage covenants . . .” While the correct property owner did sign the mortgage, when we enter indexing data into our database, we use the identities and spellings set out in the granting clause so we indexed this one with Empire as the grantee and White Fox as the grantor. If we noticed the discrepancy between the granting clause and the signature on the mortgage, we may have entered Empire twice, once as grantor and once as grantee. But our checklist requires us to ensure the document is signed, not to match signatures with the names in the granting clause. Now that we’ve learned of the discrepancy, we’ve added Empire’s name a second time with a “grantor” annotation and have made a marginal reference to the deed. Hopefully, the someone with the authority to do so will record a Scrivener’s Error Affidavit to clarify the record.

A customer sent an email asking how to discharge an old mortgage that’s past it’s maturity date and where the lender is a corporation that was long ago dissolved. Oh, and it’s registered land. If there’s no stated maturity date, then the mortgage expires in 35 years. If there is a stated maturity date, then the mortgage expires 5 years after that. For example, if a mortgage executed and recorded in 1980 stated it was due and payable in 20 years, that mortgage, that mortgage would have been deemed discharged in 2005. Of course, if there’s a valid extenion, acknowledgement or affidavit that the mortgage has not been satisfied, then it is not discharged. Absent that, if you have a mortgage that falls into this category, you should submit a written request that a “discharge notation” be made on the certificate. Your request should specify the document number of the mortgage and the date of registration, the original mortgagor and mortgagee and any assignee. Sign the request and include a check for $75 and, if all is in order, we will make the notation on the certificate.

On January 25, 2008, Governor Patrick signed legislation eliminating the final paragraph of G.L. c. 183A, s. 9 which required that the first deed out for any condominium unit have attached to it a copy of the floor plan of that unit and the adjacent units. The floor plan attachment is no longer required, although this statutory amendment does not take effect until April 24, 2008. As a practical matter, this should not have a major impact at the registry of deeds. Although we have been aware of the former requirement, we chose not to research every condo deed being recorded in an attempt to determine whether it was the “first one out.” Nevertheless, the absence of such a unit plan would raise questions about the validity of the deed, or at least its compliance with the law, so this is welcome legislation.

The Massachusetts Appeals Court issued its decision in Patriot Resorts Corp v. Register of Deeds for Berkshire North (No. 06-P-725), a case that may change the way that registries of deeds around the state calculate some recording fees. Patriot Resorts was the developer of a time share resort in the Berkshires. Buyers of time shares would receive a deed to the unit for a set period of time and, in most cases, a mortgage from Patriot Resorts. As a developer and not a bank, Patriot Resorts would quickly assign those mortgages to another financial institution. Rather than put one assignment on one piece of paper, Patriot would bundle dozens, if not hundreds, of assignments together in a single document. Following the accepted method of pricing documents, the Northern Berkshire Registry would charge a separate recording fee for each assignment. With recording fees reaching six figures, Patriot filed suit and, when a Superior Court judge ruled in the registry’s favor, appealed. By a two to one decision, the appeals court reversed the judgement of the Superior Court, holding that the applicable statutes did not permit the registry to charge multiple fees for multiple document. While this case has far reaching implications, we will maintain the status quo for now until a decision is made on whether to seek further judicial review of this matter.

Yesterday I attended a meeting of the REBA Registry Committee at the REBA (Real Estate Bar Association of Massachusetts) headquarters in Boston. The main topic on the agenda was electronic recording and that proved to be an interesting discussion with both sides (the registers and the attorneys) sharing their questions and concerns. But I’ll leave that to a future post because I learned of pending legislation that may be of interest to some of our readers. MGL c.183A, s.9 has always required a copy of the floor plan of a condominium unit to be recorded a along with the first deed to that unit. At this registry, at least, we have left that to the honor system since it would be impractical for us to ascertain whether a deed represented the first deed for that unit or whether it was a subsequent one. But while we will let your deed get on record even without the required plan, the absence of that plan could create a title defect. So a bill to abolish this requirement has passed both houses of the state legislature and is now on the governor’s desk awaiting his signature. Governor Patrick is expected to sign it any day now, but there is no emergency preamble was the amendment to the law will not take effect for 90 days. The amendment also retroactively cures any deeds that omitted the required floor plan which should be of some relief to real estate practitioners.

Last Friday, we got our first glimpse of a new application created by ACS, our computer provider. This program will allow us to make the older images that we have previously created and package them in the same way as our most recent images. Specifically, we will take the images from 1950 to 1976 which have previously only been available as single page images retrievable by book and page number and bundle them into multipage document images. For example, if you are now viewing a five page mortgage recorded in 1972, you have to retrieve each page as a separate individual index. In the near future, you will be able to retrieve all five pages of that mortgage at one time. In addition, we will be able to fully index these older documents in a much quicker, more accurate way than ever before. Finally, we will be able to quickly at pre-1950 documents to our system in the same way. This is all operational now: we just have to do the work now. These new images and indexing information will appear first on our in-house public access terminals and eventually will be transferred to our website. For now, if you happen to be at the registry, go to a public access terminal, select the “document” tab, and retrieve book 1000. This was the first book we completed and it will give you a preview of what’s coming in the not to distant future.

At a recent meeting, the Massachusetts Registers of Deeds Association adopted the following document formatting standards to be effective January 1, 2008:

DOCUMENT FORMATTING STANDARDS

Documents recorded after January 1, 2008 must meet the following requirements:

1. Be on white paper of sufficient weight to reproduce in registry scanners.

2. All document pages and attachments must be on paper that is no larger than 8.5 inches by 14 inches.

3. Printing shall be on one side only; double-sided pages will not be accepted.

4. Documents that contain printing, writing or other markings must be sufficiently dark in appearance to be legibly reproduced on standard registry scanners.

5. All printing and writing on a document must be of sufficient size to be legibly reproduced on standard registry scanners.

6. Margins on all sides of all document pages must be of sufficient size to be legibly reproduced on standard registry scanners.

7. The first page of all documents must contain a “recording information area” in the upper right hand corner measuring three inches from the top edge of the document and three inches from the right edge of the document that is free from all writing or printing.

8. Documents that do not comply with Formatting Standard 7 above may still be recorded when attached to an official registry Document Cover Sheet or through the use of some other method adopted by the registry.

We will publish an official version of these standards on our website and offer commentary on the rationale behind some of the standards here on this blog in the coming days.

From our very first electronically recorded document, we have used a cover sheet automatically inserted by our computer system. The reason for this sheet is that the non-uniform appearance and formatting of the documents we receive deprives us of a safe place to imbed recording information. On tangible documents, we are able to squeeze in recording info labels in any available space, but that’s a poor practice. The quality of our documents would benefit from having the recording information in the same location on every document. In seems that many mortgages routinely leave a 3 inch by 3 inch blank box in the upper right hand corner of the first page for recording information. This is that standard that we will be adopting on the first of the year. But we also recognize that our customers are often powerless to effect the formatting of documents that are received from governmental entities or large corporations, and they would get caught in a bureaucratic crossfire should be strictly enforce such a standard. The solution we’re considering is a coversheet for walk-in and mailed-in recordings. The cover sheet is an old concept, going back to the 1990s where it was considered as part of indexing by OCR (optical character recognition). While OCR- cover sheets are an obsolete concept now, the idea of a cover sheet is widely acceptable. So what we propose, is having a stack of blank cover sheets at the recording counter. If a document presented for recording doesn’t contain sufficient space in the upper right corner for recording info, we’ll just attach a cover sheet to the front of it and put the recording info there. If the customer doesn’t like it, the next trip to the recording counter, he can bring a properly formatted document. But in the meantime, we won’t be rejecting a large number of documents for noncompliance with this standard.