Commentary: Helping buyers protect their real estate investments

William V. Hovey 

With the economy apparently improving, it seemed appropriate to address the various requirements of acquiring a new home.

Too many purchasers of residential property with bank financing assume the certificate of the lender’s attorney under G.L.c. 93, §70, is all they need, and many even decline to purchase an owner’s title insurance policy because it is an additional cost.

Then, when an access or zoning issue rears its ugly head, they try to find someone to blame, many times without success.

The following is what I believe they need.

First requirement: In my view, the first thing every buyer needs to protect a real estate investment is a comprehensive purchase and sale agreement similar to the one described in my Nov. 30 column. It is usually relatively inexpensive and, in my experience, can be completed and ready for signing in two or three hours – a relatively modest investment to protect the buyers of a desired home.

Second requirement: Assuming the prospective buyers don’t want a comprehensive purchase and sale agreement prepared by their own attorneys, the buyers should insist on an owner’s title insurance policy from a responsible title company to insure they have legal access to the property and such access will be guaranteed during their ownership. In contrast, a title opinion certifying access may last only for the life of the attorney or attorneys so certifying.

Third requirement: A certificate by the lender’s attorney under G.L.c. 93, §70, although qualified, does give the home buyers some protection – good title for 50 years as to unregistered land – even though it typically has numerous exceptions. N.B. – Access to the property is usually not covered by the certification. Moreover, the required mortgage plot plan is not equivalent to a full survey and may not be accurate or show all record encumbrances.

Fourth requirement: An expansive title opinion from a responsible, experienced attorney, although good only for the life of the certifying attorney or attorneys, will fill in many gaps and give the purchasers a much more complete title picture. A sample opinion follows:

Title opinion long form:

Mr. and Mrs. A. Myles Stone

20 Summer Street

Utopia, MA 02332

Gentlemen:

We have examined the record title of Dudley Do-Right and Nell Fenwick to the Property in Utopia, Nulluslocus County, Massachusetts, marked “A-Area 210.43 AC. +/-” and “B-Area 157.61 AC. +/-” on a plan entitled “Plan of Land Surveyed for Utopia Land Company at North Hill, Utopia, Mass.” dated June 30, 1990, by Franklin Associates recorded with Nulluslocus County Registry of Deeds (“said Deeds”) in Book 4077, Page 128. In our opinion, Utopia Land Company had, on August 9, 1991, good and clear record title to said lands (hereinafter called collectively “the locus”) subject as follows:

1. Outstanding First Mortgage All of the locus was subject to the terms of a first mortgagee from Dudley Do-Right and Nell Fenwick to Nulluslocus Trust Company dated February 18, 1992, recorded with said Deeds in Book 4078, Page 201.

2. Location of Hill Road The locus was subject to rights acquired by the Nulluslocus County Commissioners under an instrument of taking dated March 6, 1961, recorded with said Deeds in Book 2019, Page 423, relative to the relocation and repair of Hill Road, including specifically the right to maintain slopes on the locus on both sides of said road. (Our opinion herein further assumes that said plan accurately locates the County Layout of the road.)

3. Sand Rights A portion of the locus situated on the northwesterly side of Hill Road as shown on Sketch A attached hereto was burdened by a right given to Utopia Cranberry Company to take sand therefrom as set forth in a certain deed recorded with said Deeds in Book 749, Page 32.

4. Implied Access Easement An 1884 plan recorded with said Deeds in Plan Book 1, Page 65, covered a triangular-shaped piece of land adjoining the locus close to but not fronting on Hill Road and showed an “old right of way” from the triangle over a portion of the locus to said Road. However, no such right of way was discovered among the records. As the triangular parcel appeared to be landlocked, an access easement by implication may well burden some portion of the locus on the southerly side of Hill Road lying between the Road and said triangular parcel. Attached Sketch B shows the triangle and old right of way.

5. Lack of Consents by Trust Beneficiaries A portion of the locus was, in the late 1800s, owned of record by a trustee under a trust requiring the written consent of at least three trust beneficiaries to a sale of trust property (See Book 465, Page 159 at said Deeds). Conveyances recorded with said Deeds in Book 439, Page 153; Book 446, Page 17; Book 563, Page 510; and Book 581, Page 535 lacked consents of three beneficiaries of record.

6. Paper Streets An 1854 recorded plan showed a number of streets laid out on the westerly portion of the locus of both sides of Hill Road. This plan was recorded with said Deeds in Plan Book 1, Page 34. Since Utopia Land Company did not own all of the land shown on said 1854 plan and since there was no evidence that adjoining owners had released their rights in these roads, it was theoretically possible that such rights of use still existed. Attached Sketch C shows the location of the paper streets.

7. Ownership of Beach Descriptions in deeds covering parts of the locus adjoining the ocean were “by” the shore or the sea or “by the bank” with rights in the adjoining beach and shore, thus creating the implication that at least a portion of the locus extended to mean low water, subject of course to rights of the public in and over the area below mean high water mark.

8. Vague Descriptions Many deed descriptions were quite vague and some boundary lines appeared to be missing. Accordingly, it was impossible to determine with complete certainty that all of the locus was covered by deeds to Utopia Land Company and its predecessors in title. It is, however, our opinion that there are no hiatuses in the title.

9. Stone Removal Privilege The portion of the locus may have been subject to an ancient privilege of removing stones therefrom as described in a 1916 deed from Eben Stephens to Josiah King recorded with said Deeds in Book 173, Page 260. In our opinion, this privilege benefited only Mr. Stephens individually and therefore expired many years ago. Attached Sketch D shows the approximate location of the privilege.

10. Matters Not Recorded The below listed encumbrances and other matters not of record which may affect the locus are not covered by our title opinion:

(a) Real estate taxes and other municipal charges;

(b) Mechanics liens for work performed on the premises;

(c) Easements by prescription;

(d) Possession of the locus by tenants at sufferance, at will, and under written leases of less than seven years’ duration;

(e) What buildings and other improvement are located on the locus and the location of any such improvements in relation to the boundaries of the locus;

(f) Betterment assessments or takings voted but not yet recorded;

(g) Zoning, subdivision control and historic district laws, building codes, and other state and local regulatory laws, and violation of such laws and codes by existing structures or use; and

(h) Any lack of access to Hill Road for travel and for connection with utilities that would be revealed by an examination of the Nulluslocus County Commissioners’ records.

The following rights are appurtenant to the locus:

Rights to enforce the restrictions and agreements set forth in a deed from Colin F. Murphy to Richard A. Sheehan recorded with said Deeds in Book 2349, Page 583, relative to the use of the locus. A copy of this instrument is attached.

Very truly yours,

Arbill, Hurtz & Howe

By: Artemis Q. Howe

Concluding thought

The recommended – if not malpractice-insurance-required – practice of engagement letters can address the various points raised herein (for example, zoning and building compliance) and focus the buyer’s attention on the important elements of acquiring real estate.      

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William V. Hovey practices in Boston.