Homestead Protection of Sale Proceeds

A lawyer called last week to discuss how provision of the Massachusetts homestead law might be interpreted by the bankruptcy court. She was referring to the following section which was created by chapter 395 of the Acts of 2010. That’s the major homestead revision from 2011 that created the automatic homestead, clarified the applicability of the law to property held in trust, and settled a number of other ambiguities about prior homestead law.

The new provision that caught me by surprise was this one:

Section 8. (a) If a home that is subject to an estate of homestead is sold, whether voluntarily or involuntarily, taken or damaged by fire or other casualty, then the proceeds received on account of any such sale, taking or damage shall be entitled to the protection of this chapter during the following periods:

(1) in the event of a sale, whether voluntary or involuntary, or a taking, for a period ending on the date on which the person benefited by the homestead either acquires another home the person intends to occupy as a principal residence or 1 year after the date on which the sale or taking occurred, whichever first occurs; and

(2) in the event of a fire or other casualty, for a period ending on: ( i ) the date upon which the reconstruction or repair to the home is completed or the date on which the person benefited by the homestead acquires another home the person intends to occupy as a principal residence; or (ii) 2 years after the date of the fire or other casualty, whichever first occurs. 

In other words, if you sell a house that is protected by a homestead, the cash you receive from the sale is protected from creditors by the same homestead for up to a year. The provisions for protecting the proceeds from an involuntary sale, a taking or a loss that’s compensated by insurance make sense to me – why should you be dispossessed by circumstances beyond your control? – extending the same protection to a voluntary sale is something I find harder to accept. Still, the language of the statute is fairly specific so its intent seems clear. Thus far, I have not heard of a case that has taken advantage of this provision.

Cursive Writing

Over the weekend I was at a civic event when someone in my group said, “It’s a shame that they don’t teach cursive writing in schools anymore.” I replied, “Why?” Not “why don’t they teach cursive writing” which we’ll accept as true even though I doubt it is, but “why would it be a shame if cursive writing was not taught?”

I confess to trying to be a bit provocative, but it was also intended as a serious question. One of my informal management rules is that if I ask someone why they are doing something, if the only thing they come up with is, “we’ve always done it this way,” then it may be time to reassess the practice being questioned.

I believe this is the case with cursive writing. The best argument in defense of the practice is that much of our accumulated knowledge is stored in cursive writing and so that knowledge might be withheld from someone who can’t read cursive. But that was once true for Latin, and few of us study Latin anymore. Some do, but these days it is a nice-to-have elective. I believe learning how to comprehend cursive writing will be like that, too, although that grossly overestimates the effort it takes to discern the meaning of cursive writing. In other words, if you can read printing (which is the common term for block lettering or non-cursive writing), it is not a great leap to be able to read cursive.

Given modern technology, there are some downsides to the continued use of cursive. Print, when produced on a computer of other device, is searchable and can be read by a machine whereas cursive cannot (as far as I know). These technological features of print are extremely valuable, but if you are not aware of them or you have never (knowingly) used them, you would be unaware of this utility. Not coincidently, the people most likely not to be aware of these newer technologies are the same people who have grown up with and are fully comfortable with cursive.

To be clear, I am not an enemy of cursive. I use it on a daily basis. When I take notes in cursive, I retain the material much better than when I take notes on a keyboard. But that’s only because I’m used to doing it that way. Someone who grew up with a keyboard might feel exactly the opposite.

So don’t give up on cursive, but on the other hand, don’t force it upon future generations of students, especially if it comes at the expense of another subject that might be more valuable such as math, science, history, literature, art, music, or just about anything else.   

Recording copies instead of originals

A longstanding rule at the registry of deeds is that only original documents (or a copy certified by another registry) may be recorded. This rule is codified by Massachusetts Deed Indexing Standard 8-4 and is strictly enforced at registries throughout the Commonwealth. However, at a time when the majority of documents are recorded electronically and when some documents never even exist in paper form, it may be time to reconsider this rule. 

The proper starting point for reconsidering a longtime standard is to ask what purpose is served by the rule When a person presents a document for recording, that person having custody of the original provides some authentication of the document. If the item presented is clearly a copy, it invites the question of what happened to the original. While there would undoubtedly be some innocent reasons for the original not being present, there could be some not-so-innocent reasons too. While it is also true that an original is better evidence in adjudicating a claim of forgery, the registry keeps only a copy and returns the original and so would not have possession of it when a claim of forgery arose. 

However, the authentication function of the original was far greater when documents were created with typewriters and ink pens. Both left discernable impressions in the surface of both sides of the page which made a document’s identify as the original version easier to determine. But in the age of laser printers and sophisticated copiers, decided whether a document is an original or a copy is more difficult to do.

The excellent output of today’s copiers has undercut another reason to require the original document for recording. In the age of carbon copies or even in the infancy of copier technology, copies tended to be poor and difficult to read. Having possession of the original document permitted the registry to create the best copy for the official records. Today, the distinction in legibility between the original and the copy has largely disappeared which takes away another reason for refusing to record a copy.

Finally, there is an argument to be made that the Uniform Electronic Transaction Act authorizes a copy of a document to be recorded. That law states that the electronic version of a document fulfills any law that requires a document to be in writing. Put another way, an electronic document is just as good as an original paper document. If you think of a photocopy as the electronic version of an original document that is then printed on paper, there is little reason to refuse to record such a document.

As technology and business practices continue to evolve and all-electronic documents become commonplace, our entire concept of “original” will need to change. In an electronic world where one copy of an electronic document is indistinguishable from another, there is no original document. The issue really is the intent of the person “signing” the document. Whether it is a traditional “wet” signature or some mark or symbol made on an electronic tablet, the relevant question is did the person intend that mark to constitute his signature. The answer to that question will depend on all the circumstances surrounding the execution of the document, not whether the document contains an original cursive signature made in ink on paper.

Community Preservation Funding

There are bills pending in both the House and the Senate that would increase the size of the surcharge imposed on documents recorded at the registry of deeds to fund the state's contribution to the Community Preservation Act (CPA).

Enacted in 2000, the CPA allowed residents of cities and towns to vote to increase their property taxes by a small percentage with the money thus raised dedicated to open space preservation, recreation uses, historic preservation or affordable housing. As an incentive, the state created a matching fund that would contribute to each the amount raised by each community.

To fund its contribution, the state legislature imposed a surcharge on documents recorded at the registry of deeds. For most documents, the surcharge is $20. For municipal lien certificates it's $10. There is no surcharge on homestead declarations.

House Bill 2463 would increase the CPA surcharge to $75 per document ($35 for MLCs). That means the total recording fee for a discharge would go from $75 ($50 fee, $20 CPA surcharge, $5 technology surcharge) to $130 ($50 fee, $75 CPA surcharge, $5 tech surcharge). This bill would be effective 120 days after enactment.

Senate Bill 1618 would increase the CPA surcharge to $50 ($25 for MLCs). The mortgage discharge would cost $105 ($50 fee, $50 CPA surcharge, $5 tech surcharge) under this bill which would be effective December 31, 2019.

These bills also apply different treatment to documents mailed to the registry. Under the House bill, the surcharge increase would go apply on the day the document was received by the registry regardless of when it was mailed. Under the Senate bill, the surcharge increase would apply based on the date of the postmark bearing the document regardless of when the registry received it. In other words, if your document was postmarked the day before the increase went into effect but the registry received it three days after the increase went into effect, the registry would charge the old fee for the document.

It seems likely that the CPA surcharge will be increased this year. How much the increase will be and how and when it will be implemented should be decided in the coming weeks.