Wednesday, March 27, 2013

Bidding Wars

If media accounts of sales activity are accurate, another real estate bubble is inflating in our midst. I do find persuasive today's Globe story that a lack of inventory of houses for sale is driving up prices and so properties offered for sale go fast for at least the asking price if not more. The cause of this lack of inventory is open to question. The Globe suggests that many would-be buyers are staying out of the market without much explanation. I do think that people generally believe that prices are rising and that the longer they wait to sell, the greater prices will rise. But I also believe that many people are underwater on their mortgage and are therefore unable to sell. Add to this a societal trend towards smaller living quarters and you have a propensity for owners to say put and perhaps renovate existing residences.

Tuesday, March 26, 2013

Micro apartments and small houses

The Globe today reports on the arrival in Boston of the micro apartment trend, a movement in urban housing that began in San Francisco. Urban living is increasingly popular to young people but it is also increasingly unaffordable. That's where micro apartments come in. Averaging 300 square feet or less, living in a micro apartment seems a lot like living in a tent only with modern amenities like flush toilets and running water but without the bugs and mud. Housing advocates are concerned that these units are just catering to young professionals and will tend to drive up overall housing costs if they become too numerous. Micro apartments are also related to the "small house movement" which strives for similar micro living in detached residences.

Monday, March 25, 2013

Community Preservation Act funding

A query arrived this morning asking how much money we had collected from recordings for property in the city of Lowell from the surcharge imposed on document recording fees by the Community Preservation Act. That statute, which was enacted back in 2000, provided state matching funds to municipalities that increased their own property taxes to fund a variety of projects ranging from open space preservation to affordable housing projects. The matching funds came from a surcharge imposed on documents recorded at the registry of deeds. Most documents are subject to a $20 surcharge although the surcharge on municipal lien certificates is $10 and homesteads are exempt. To illustrate, the recording fee for a discharge of mortgage is $50. On top of that is a $20 surcharge from the CPA (plus a $5 registry of deeds technology surcharge) bringing the overall fee to $75. The city of Lowell has never attempted to tap the matching funds accumulated probably because no one believes that residents would voluntarily increase their property taxes to qualify for the match. It's too bad because Lowell property owners have contributed more than $4 million to the fund since it came into being back in 2000.

Friday, March 22, 2013

Nominal consideratoin deeds

One of the document types we track is deeds. How many are recorded each week, month or year is an indicator of the direction of the market. However, not all deeds are created equal. At the end of each day as I scroll through the deeds just recorded, I detect quite a few that are for nominal consideration. These transactions don't involve the exchange of any money, but the consideration portion of the deed always says $1 or $100. Because the registry of deeds is charged with collecting the deeds excise tax due on every transaction and because the tax is based on the sales price of the property, the parties are required to state some quantifiable consideration on the deed. "Love and affection" is not sufficient. The nominal consideration deeds we see disclose several standard circumstances: transferring property into a trust or making a spouse or child a co-owner of the property (or making them not a co-owner of the property) are the most common scenarios. I looked at the deeds recorded this week (from Monday, March 18 thru Thursday, March 21) and compared the nominal to full consideration deeds. The nominal consideration deeds accounted for 57% of the total (39 of 69). Here's the breakdown by community: Billerica - 9 of 13 deeds were for nominal consideration; Carlisle - 1 of 2 deeds were for nominal consideration: Chelmsford - 5 0f 8; Dracut - 4 of 4; Dunstable - 0 of 1; Lowell - 12 of 19; Tewksbury - 4 of 7; Tyngsborough - 1 of 2; Westford - 3 of 9; Wilmington - 1 of 4. As long as we continue comparing total deeds to total deeds, we'll still have an accurate view of the broad trend. Still, there seems to be a lot of shuffling of properties and my sense is that's a relatively new phenomenon that warrants further study.

Thursday, March 21, 2013

A new housing boom?

The New York Times reports today that housing demand in the US is greater than it has been in years, causing rapid escalation of prices in some areas. I've heard some in the Greater Lowell broker community speak with similar optimism, but we're just not seeing it here at the registry of deeds. Perhaps because recordings here are a "trailing indicator" meaning that the fact of a home sale becomes clear to many long before the closing actually takes place - which is also when we first see a deed being recorded. It would be terrific for all concerned if the sales market picks up as the weather improves. We'll keep reporting the statistics, one way or another.

Wednesday, March 20, 2013

Deed Law, Part 1

Among a box of old law books recently given to the Middlesex North Registry of Deeds is a 1913 edition of Notes on Common Forms by Uriel H. Crocker. The book was first published in 1883 and the 1913 edition is the fifth. While some of the language is archaic and the concepts outdated, there is much in the book that is helpful to putting many of today's rules into context. For that reason, over the next few weeks I will occasionally summarize some of the contents of Crocker's here on our blog. Today, it's deeds. In 1640, a statute of the Massachusetts Colony provided that a conveyance of real estate in which the grantor remained in possession was valid only as against the grantor and his heirs unless it was acknowledged and recorded. In 1652, to curtail "the common evil of transferring real estate without deed", another statute provided that no conveyance would be valid unless "by deed under hand and seal" along with either delivery to the grantee or by acknowledgement and recording of the deed. In 1697, a statute clarified the existing practice that a recorded deed was sufficient to convey title to real estate "without any act or ceremony." That same statute also provided that "unless acknowledged and recorded, a deed should not be good except as against the grantor and his heirs." Those seem to be the major enactments in Massachusetts real estate law in the 17th century. It is amazing that the concepts enacted so long ago remain largely in force and effect today.

Tuesday, March 19, 2013

Electronic recording and snow storms

Ten days ago we had an intense overnight snowfall. During the overnight from Thursday, March 7 into the morning of Friday, March 8, approximately 8 inches of snow fell in Lowell. School was cancelled but the registry was open for business. Here's an observation I made that day:
As I write this at 1130am, the snow continues to fall without any hint of letup. Of the 88 documents we've recorded thus far today, 55 have come to us electronically, demonstrating another advantage of that new technology - bad weather doesn't keep you from getting on record (as long as the registry is open).
This morning we awoke to more snow and it has continued more or less through the day. Of the 233 documents that had been recorded a short time ago, 121 came to us electronically. That's 52% which is well above the 40% average we've been seeing during the early months of 2013. Whether this increased percentage of e-recordings is a consequence of more people using the technology in bad weather or just a number of customers putting off walk-in recordings until better weather returns is hard to say. Hopefully we'll have to wait until December for additional samples because with spring arriving at 7:02 A.M. tomorrow, we want this to be the last of the snow we see this season.

Monday, March 18, 2013

Sale of Sacred Heart Church

A deed recorded late Friday afternoon (book 27082, page 180)caught my attention in two ways: The sales price was $1.2 million and the property being sold was part of the old Sacred Heart Church complex on Moore Street in Lowell. Sacred Heart was for more than a century the center of the South Lowell neighborhood and its closing several years ago was particularly difficult for many long-time parishioners. In August 2011, the Roman Catholic Archdiocese of Boston sold the property to Moore Street Development LLC for $540,000. That deed, found in book 25191, page 138, contained a couple of unique covenants. The first was a permanent restriction which prohibits the property from being used as an abortion clinic, a facility doing stem cell research, or as a business engaged in "prurient activity." The second covenant was called an "unjust enrichment covenant." It provided that if the buyer of the property was to sell it within a year of that sale, then the buyer would pay the RCAB a sum equal to 50% of the amount in excess of the sale from RCAB (less the cost of any improvements); if the sale was to occur within 2 years, then the penalty would be 40%, 3 years would be 30%, 4 years 20%, and 5 years 10%. The covenant would expire after five years. Friday's sale was of only one of three buildings. If you're familiar with the property, standing across Moore Street from the front door of the church, the church is the center building (that will have 16 residential condo units); the convent would be to the left (with 12 condo units); and the rectory would be to the right (with 8 units). It was the rectory that just sold for $1.2 million. We'll be watching to see when individual condo units begin selling.

Friday, March 15, 2013

Mid-Month Statistics for March

With March reaching its midway point, here are the statistics for the first half of the month for 2013 compared to the same time in 2012: The number of documents recorded in the first half of March 2013 was up 14% from March 2012 (3129 v. 2734); The number of deeds recorded in the first half of March 2013 was up 29% from March 2012 (261 v. 202); The number of mortgages recorded in the first half of March 2013 was up 15% from March 2012 (618 v. 538); The number of foreclosure deeds recorded in the first half of March 2013 was down 82% from March 2012 (4 v. 22); The number of orders of notice recorded in the first half of March 2013 was down 54% from March 2012 (54 v. 25).

Thursday, March 14, 2013

Mechanics Liens in Massachusetts

Not too long ago someone gave me a stack of very old law books and I'm gradually working my way through them. Sometimes the content is worthy of a blog post which is the case today with a thin volume from 1898 called "The Law of Mechanics' Liens Upon Real Estate in Massachusetts" by Henry T. Lummus "of the Essex Bar." The book analyzes a recent (in 1898) amendment of a mechanics' lien statute first enacted in Massachusetts in 1819. Liens of this type were not recognized at Common Law so they are completely creations of the legislature. In 1898, a Mechanics' Lien was available "to any person to whom a debt is due for labor or materials furnished and used on a building or structure." The labor must have been performed with the consent of the owner and the lien attaches to the property when the labor was performed or the materials were furnished. "The lien shall be dissolved unless the person seeking the lien within 30 days of the completion of the work files in the Registry of Deeds for the district in which the property is located a just and true account of the amount due." The book suggests that under the law that existed before 1898, interpretation of the statute was hyper-technical and much litigation arose out of the accuracy of the amounts stated or the date upon which the work had been completed. This new amendment was intended to make this statute more practical; to prevent otherwise meritorious claims from being knocked out due to a technical defect. Besides filing the account within 30 days of the completion of the work, the person or entity seeking the lien was also required to commence a suit seeking enforcement of the lien within 90 days of the cessation of labor by the person seeking the lien. Unless such a suit was timely filed, the lien would dissolve automatically. These days, contractors or tradesmen come to the registry several times each week seeking a mechanics' lien. Because of the complexity of the current statute (i.e., its dictates on the content and timing of the various pleadings, we direct them to the upstairs Law Library to read Massachusetts General Laws chapter 254 which lays out all the steps and deadlines.

Wednesday, March 13, 2013

A new pope

It has nothing to do with real estate but it got a lot of attention today at the registry of deeds. At approximately 3:00 pm EST today news broke at a new pope had been selected in Rome. It is Cardinal Jorge Mario Bergoglio, S.J., Archbishop of Buenos Aires who has taken the name Pope Francis. Here's a biography and here's the news story from the New York Times

Tuesday, March 12, 2013

Deeds Excise Tax and Governmental Entities

Massachusetts imposes an excise tax on the seller of real estate based on the sales price of the property. Governmental entities, however, are exempt from that tax. Specifically, "the excise does not apply to any deed to which the commonwealth, a city or town or the commonwealth, or the United States, or any of their agencies are a party." Since it is the seller who is liable for the payment of the tax, it would seem logical for the exemption to apply only when the governmental entity is the seller, several Department of Revenue rulings from the early 1990s emphasized that the exemption occurred whenever the governmental entity was a "party to the transaction" which means either seller or buyer. That is how we have enforced this exemption through the years and as far as I can tell, that's still DOR's interpretation of the law.

Monday, March 11, 2013

Congratulations to UMass Lowell River Hawks

On Saturday night, the UMass Lowell River Hawks men's hockey team won its first-ever Hockey East championship by defeating Providence College at PC's Schneider Arena. The River Hawk's are the top seed in the Hockey East playoffs which begin this Thursday at the UMass Lowell Tsongas Center with a best of three series against eighth seed University of Maine. Despite coming out on top of one of the most competitive conferences in the country, the River Hawks are still ranked only seventh in the coaches poll which should give the team plenty of extra motivation in the Hockey East and subsequent NCAA tournaments.

Friday, March 08, 2013

Weather update

We'll preempt our regularly scheduled blog post this morning to report on the weather which remains nasty. Earlier in the week, forecasters called for snow on Thursday but as the days past, they kept sliding back the timing of the storm. In my mind, Thursday was still going to be the stormiest day. It did snow for long stretches yesterday but since the surface temperature stayed slightly above the freezing mark, little of it stuck on the pavement, ground or vehicles. Even at 11 last night, the snow was very light, just barely coating the grass and driveway. Things were very different this morning. Awakened at 5am by a heavy plow rumbling by, I glanced at my phone and saw an email alert that schools in Lowell had already been cancelled. Peeking out the window showed why. Everything was covered and snow was falling at a heavy rate. At that time, we only had about 3 inches on the ground. Between then and the time I cleared my driveway and left for work, the snow piled up rapidly, seeming to fall at a rate in excess of one inch per hour. As I write this at 1130am, the snow continues to fall without any hint of letup. Of the 88 documents we've recorded thus far today, 55 have come to us electronically, demonstrating another advantage of that new technology - bad weather doesn't keep you from getting on record (as long as the registry is open). UPDATE: The snow stopped falling in Lowell at 1240pm and the temperature quickly edged up to 35 degrees. The streets appear clear of snow and much melting is going on.

Thursday, March 07, 2013

Electronic recording volume continues to increase

During 2012, 34% of our overall recordings came to us electronically, which was the highest percentage of the thirteen registries in Massachusetts now offering that service. Our volume so far this year has been even higher, reaching 40% for both January and February. In January, we recorded a total of 6064 documents of which 2499 (41%) came to us electronically. In February, 2084 of our 5218 recordings were electronic (40%). Put in a daily perspective, in January, we averaged 289 documents per day with 119 of them being submitted electronically. In February, the average was 275 documents per day with 110 electronic.

Wednesday, March 06, 2013

Globe reports decline in new foreclosures

The Boston Globe repeats a Warren Group report that new foreclosures in January were down 30% from the prior year. That assertion seemed to be contradicted by our own figures which showed that the number of orders of notice recorded at this registry in January were up 61% from the number recorded in January 2012 (74 this year vs 46 last year). Upon further review, however, the Warren Group seems to be counting the number of new cases filed in the Land Court pursuant to the Service Members Civil Relief Act while the orders of notice we count are generated a month or so later by those same filings. Assuming it takes the Land Court a month to process a new complaint and issue the order of notice, the number of orders of notice we record in February should mirror the number of new foreclosure cases filed in Land Court in January. That does seem to be the case. While our orders of notice were way up in January, they were way down in February, dropping 59% from 78 in February 2012 to 32 in February 2013. Hopefully this is a trend that will continue through the spring.

Tuesday, March 05, 2013

Foreclosure Auction Calendar

Not long ago I wrote that we had started tracking mortgagees sale of real estate legal notices that appear in the local newspaper and posting the dates of the advertised foreclosure auctions on a Google calendar. Since we started tracking these notices, there haven't been many of them. (Too bad we didn't start this back in 2007; we may have averted the worst of the foreclosure crisis). Today I was able to embed this calendar in a page on the website (that page is HERE)and a link to that page is at the bottom of the left hand column of the main page of (that's HERE). We continue to update this calendar on a daily basis, but recently there hasn't been much to add to it.

Monday, March 04, 2013

Wrongful foreclosures against servicemembers

Today's New York Times reports that more than 700 members of the US military lost their home to foreclosure in violation of the Service Members Civil Relief Act. That law does not exempt homeowners in the military from foreclosure but it is intended to provide additional procedural safeguards. In these 700 cases, none of the additional requirements necessary to conduct a military foreclosure were followed. Massachusetts is one of only a handful of states (the only one, perhaps?) that make compliance with the Service Members Relief Act a judicial proceeding. That's where the Orders of Notice we frequently mention as indicators of a coming foreclosure come from. Massachusetts law requires a lender who wishes to foreclose on property owned by an individual to first file an action in Land Court or Superior Court the sole issue of which is determine whether anyone holding an interest in the property to be foreclosued is in the military. Once the complaint is filed, the court issues the Order of Notice that instructs the moving party in how notice must be provided to the homeowner. Notice always includes publication in a local newspaper, recording the notice at the registry of deeds, and either serving it on the homeowner or mailing it by certified mail. The notice instructs the homeowner to file an answer with the court by a certain date if he or she is in the military. No one else has any standing to raise issues in these cases. In other states, compliance with the Service Members Relief Act is accomplished by a representative of the foreclosing party (usually the attorney) signing an affidavit under the penalties of perjury that no one with an interest in the property was in the military. Given the well established practice of robosigning documents and proceeding on sketchy, mission, or fabricated information, it's not a surprise that these cases exist. I don't know how many if any are from Massachusetts. You'd like to think that our judicial procedure is more effective, but you do have to wonder whether a soldier deployed to Afghanistan could realistically be expected to respond to a certified letter, or see a legal notice in the hometown newspaper. But that's a post for another day.

Friday, March 01, 2013

End of February statistics

Here are the Middlesex North recording statistics for February 2013 compared to February 2012: Deeds - In February 2013 there were 451 deeds recorded, a 17% increase from the 385 recorded in February 2012; Mortgages - In February 2013 there were 1231 mortgages recorded, a 15% increase from the 1069 recorded in February 2012; Foreclosure Deeds - In February 2013 there were 15 foreclosure deeds recorded, a 38% decrease from the 24 recorded in February 2012; Orders of Notice - In February 2013 there were 32 orders of notice recorded, a 59% decrease from the 78 recorded in February 2012; Total documents - In February 2013 there were 5473 documents recorded, an 8% increase from the 5065 recorded in February 2012.