Thursday, November 05, 2015

New Appeals Court foreclosure case

The Massachusetts Appeals Court just issued its decision in Moronta v Nationstar Mortgage. The case arose when a borrower whose home had been foreclosed and who was then being evicted, counter-claimed on several grounds, including a consumer protection violation claim under MGL c.93A that the lender knew or should have known that the borrower would be unable to repay the loan that was granted. The trial court granted Nationstar's motion for summary judgment on the grounds that there was no issue of material fact and that Nationstar was entitled to judgment as a matter of law.  The Appeals Court disagreed and returned the case to the trial court for further action.

The Appeals Court held that there was a "genuine issue of material fact whether [lender] should have recognized at the outset that borrower was unlikely to be able to repay the refinanced loans at issue" which is the standard set by the Supreme Judicial Court for finding a violation of 93A.

The decision is worth reading if only for background on how the mortgage industry worked during the boom years. The Appeals Court latched onto the terms of the new loan intended to "rescue" the borrower from the terms of the initial loan of which he was in default. The new loan was for 30 years, but the payments were amortized over 50 to reduce the monthly payment amount. This left a balloon payment due at the end of 30 years equal to 90% of the amount of the initial indebtedness, despite the borrower having payed 30 years of monthly payments. While the Appeals Court did not rule that this was a 93A violation as a matter of law, it did say it created a question of fact that was appropriate for further judicial inquiry.

Tuesday, November 03, 2015

October recording statistics

The total number of documents recorded in October 2015 was up 9% from October 2014 (5085 in Oct 2015 v 4915 in Oct 2014);

Deeds were up 1% (603 in Oct 2015 v 595 in Oct 2014);

Mortgages were up 7% (946 in Oct 2015 v 881 in Oct 2014);

Foreclosure deeds were down 10% (18 in Oct 2015 v 20 in Oct 2014);

Orders of Notice were up 48% (68 in Oct 2015 v 46 in Oct 2014).

Thursday, October 29, 2015

Recording a Purchase and Sales Agreement

Yesterday a person tried to record a Purchase and Sale Agreement for property in this registry district. We had to turn them away for two reasons. First, Massachusetts General Laws chapter 184, section 17Astates that "No purchase and sale agreement shall be recorded in any registry of deeds unless such agreement is acknowledged by the parties agreeing to sell such real estate or one of them" and neither of the seller signatures on this P&S were acknowledged. Second, the P&S just identified the land by street address.  I don't think that "360 Gorham Street, Lowell" describes the property with the level of specificity required in a contract for the sale of land. At a minimum, I think a book and page reference to the deed that established ownership in the seller would be required, although the full legal description, or at least a copy of the deed as an exhibit, would probably be better.

Wednesday, October 28, 2015

Electronic connectivity problems at the registry

We've encountered some connectivity problems during the past 48 hours. Yesterday at about noon, the MassLandRecords website became inaccessible to users. The same outage knocked out our electronic recording capability. Everything within the registry continued to work fine so we were able to record walk-in documents and mail and search the database on our public access computers, but offsite business was shut down for nearly three hours. The IT people at the Secretary of State's office and associated contractors resolved the problem. I'm still not sure what caused it. We resumed full operations at about 2:30 pm so we were out of business for about 2.5 hours.

Today we had a different problem. At about 9:15 am we got error message on all of our computers. They had "lost" the connection with the server that runs our land management software (recording, search, etc). The error resolved itself in only about 4 minutes but it's the second time it has happened. The other was on October 20 which again lasted for only a few minutes. We're not sure what caused these two outages but are concerned that the are indicators that some switch or cable on our internal network may be starting to fail. We've asked the IT people to dig into it to try to preempt a bigger outage.

Because so much of our operations have shifted to electronics, an electrical outage or computer problem have a major impact on us. We could always shift back to a paper-based system but that would only be done with a multi-day outage. 

Monday, October 26, 2015

Legal Implications of Rooftop Solar Panels

Here is an article I wrote for the October 2015 edition of the Merrimack Valley Housing Report, a joint venture of UMass Lowell and the Middlesex North Registry of Deeds. For more information about the Housing Report and to subscribe to it for future delivery to your email inbox, check out MVHR webpage.  Here's my article:

Drive through any neighborhood in Lowell these days and you will notice that the matte gray shingles on many homes have been covered with shiny black solar panels. These systems capture sunlight, convert it to electricity, and use that electricity to power the house’s appliances. Excess electricity is fed back into the power grid with the homeowner getting a credit to be applied against traditional electricity usage which occurs at night when no solar power is being created.

A typical agreement between a solar company and a homeowner lasts for twenty years. During those two decades, the solar company continues to own the solar equipment installed on the homeowner’s rooftop. To protect its property, the solar company records a UCC-1 financing statement at the registry of deeds. This form identifies the property owner, the property address, and the book and page of the property owner’s deed. The purpose of this filing is to notify everyone, especially potential purchasers of the property or lenders about to refinance the homeowner’s mortgage, of the security interest held by the solar company in the rooftop equipment.  

The solar companies vigorously assert that these financing statements are not liens.  Vivint Solar Developer LLC, one of the more active companies in this region, even includes the following language in its UCCs:


Another of the primary solar companies in this area, SolarCity, in its Frequently Asked Questions webpage responds to the question, “Is there a lien on the solar home?” with this:

No. What you’ll find on the title of a home with a SolarCity power system is a UCC-1 fixture filing. A UCC-1 fixture filing is not a lien against the home. SolarCity files a Uniform Commercial Code Financing Statement, or UCC-1, on all of our solar energy systems in the real property records where each system is located prior to or when the system is installed. We file the UCC-1 to notify anyone who might perform a title search on the address where the system is located that our property, the solar energy system, is installed on the home. This filing protects our rights as the system’s owner against any mortgage on the real property. If the lender that holds the mortgage on the real property forecloses on our customer’s home, the UCC-1 filing protects our interest in the solar energy system and prohibits the lender from taking ownership of it.

SolarCity goes on to acknowledge that “lenders prefer not to see anything on the title” so SolarCity routinely releases its UCC filing in the case of refinancing and then re-files it after a new mortgage has been recorded.  That SolarCity acknowledges the need to release its position before a lender will extend financing to the homeowner is strong evidence that the UCC filing is in fact an encumbrance on the property.

Besides complicating the refinancing process, a rooftop solar unit might also complicate the sale of one’s home. SolarCity’s website addresses this, offering three options. A property owner may transfer the existing agreement to the new homeowner; pre-pay the 20 year commitment to the solar company; or move the device to one’s new home. The website assures readers that the company will not be an impediment to the sale of a home.

The number of solar-related UCC filings is steadily increasing.  Approximately 1100 of these financing statements have been recorded at the Middlesex North Registry of Deeds with 65% of them coming in 2015 alone. Because these rooftop solar units are so new, their practical effect on owning, refinancing, and selling one’s home has not yet been fully determined. With the standard solar company-homeowner contracts being twenty years in duration, there are many rights and obligations involved. There are also many implications for lawyers, loan officers, brokers and appraisers. Should the standard purchase and sale agreement be revised to reflect the existence of a rooftop solar unit? What if the new buyer is willing to assume the agreement with the solar company but the solar company rejects that? What if the buyer wants nothing to do with solar energy and wants the unit removed? If the unit is removed, what impact will that have on the integrity of the roof? There are many unanswered questions and probably just as many questions that have not yet been identified.

Here in the northeast where energy costs are so high, the idea of powering one’s home with a rooftop solar panel is very attractive. Nothing in this article is intended to detract from that. Nevertheless, there should be a greater discussion of the real estate law consequences of these devices so that homeowners are fully aware of the consequences of adopting this type of energy solution and so real estate professionals are able to successfully navigate the legal and practical challenges posed by this new technology.

Friday, October 23, 2015

2015 recording statistics thru September

With more than three-quarters of the calendar year done, here's a comparison of the number of documents recorded in 2014 and 2015.

The number of deeds recorded from January thru September of 2015 was up 5% from the same period in 2014 (44,980 in 2015 vs 39,498 in 2014);

Mortgages were up 29% (8491 in 2015 vs 6575 in 2014);

Foreclosure Deeds up 24% (138 in 2015 vs 111 in 2014);

Orders of Notice up 35% (334 in 2015 vs 247 in 2014);

Total documents up 14% (44,980 in 2015 vs 39,498 in 2014).

Wednesday, July 08, 2015

Electronic Recording Statistics

In June, 43% of the documents we recorded were sent to us electronically.  In real numbers, 2886 documents were recorded electronically out of a total of 6707.  That translates into a daily average of 131 out of 305 documents coming to us via electronic recording.

The percentage recorded by electronic recording for the first half of 2015 was 44% or 12252 documents out of 27906.  The six month daily average would therefore be 103 electronic recordings out of a daily total of 235. 

A consistent 20% of our recordings come through the mail which would be an average of 47 documents per day.  That would leave 85 documents, or 36% recorded by walk-in customers.