Title Insurance: Don’t Buy Real Estate Without It
The Land Court’s decision in HS Land Trust v. Gonzalez reminds us all of the importance of title insurance when buying real estate and the often overlooked method of foreclosure: foreclosure by entry. At the heart of the dispute was a mortgage lender attempting to establish possession despite the fact that, for nearly two decades, he never resided on the property, paid no taxes, purchased no insurance, collected no rent, and the property was conveyed multiple times.
There are three ways to foreclose on a property in Massachusetts. The most common method is by sale at a foreclosure auction. A less popular option is judicial foreclosure because procedurally it takes longer. Finally and virtually extinct is the method of foreclosure by entry.
G.L. c. 244 §1 is Massachusetts’ foreclosure by entry statute. The statute allows a mortgagee to recover possession after breach of a condition of the mortgage “by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it … and possession so obtained, if continued peaceably for three years from the date of recording of the memorandum or certificate as provided … shall forever foreclose the right of redemption.”
In the Gonzalez case, a couple granted a mortgage on 390 Geneva Ave. and 95 Topliff St. in Dorchester to Santos Gonzalez in the amount of $80,000 in 1988. The mortgage was recorded at the Registry of Deeds. Subsequently, the mortgagor defaulted on their mortgage. As a result of the default, on July 26, 1990, Gonzalez made peaceable entry on the property for the purpose of foreclosing the mortgage and recorded a certificate of entry. Gonzalez took no further action to perfect his rights.
As a result of the default, on July 26, 1990, Gonzalez made peaceable entry on the property for the purpose of foreclosing the mortgage and recorded a certificate of entry. Gonzalez took no further action to perfect his rights.
The mortgagor conveyed the property in 1999, and over the years, the property was repeatedly conveyed. In fact, the property was eventually subdivided into two separate lots and converted into condominiums. One of the parcels was conveyed to HS Land Trust, LLC on December 29, 2009. On June 30, 2010, Gonzalez notified HS Land Trust of his interest in the property and his intention to pursue the claim. Significantly, Gonzalez never sustained the property nor did he pay any real estate taxes. The city of Boston did not list him as the owner of record. In fact, Gonzalez never lived at the property, never collected rents and never evicted any of the people who lived on the property.
The matter was filed in Land Court and HS Land Trust contested Gonzalez’s ownership and the validity of his foreclosure by entry. The plaintiff also made an adverse possession argument. Both parties moved for summary judgment. The Court ruled for Gonzalez, finding that he met all the statutory requirements for foreclosure by entry and, therefore, had established title to the property. The Court held “it is conceded that Mr. Gonzalez never had physical control over the property, but under G.L. c. 244 §1, he never had to.” The Court reiterated that the law simply requires a mortgagee to make peaceful entry on the property and duly record a certificate of entry to perfect his right. The Court dismissed the plaintiff’s adverse possession argument because the plaintiff made a claim before the twenty-year period had matured.
The Gonzalez case emphasizes the need for title insurance in any real estate transaction. When purchasing property make sure that your representative completes an adequate title exam. The industry standard is a fifty-year exam.
Contact an experienced real estate attorney at the Law Offices of Richard Mucci if you are buying real estate and need representation or have questions about your title exam.