Gregory Bradford and Alexander Eddinger
Commercial real estate transactions often involve a mix of diligence items that create complications for all parties involved. Environmental and permitting challenges are often top of mind. The more arcane realm of title also poses unique risks. While it is widely
understood that a property needs to have “clear title” or “marketable title,” some real estate professionals assume that merely getting a deed and a title insurance policy is sufficient for diligence purposes. The reality, however, is that a title insurance policy itself cannot extinguish all encumbrances or registry requirements that affect a property. Title issues will always pose the risk of significantly extending the amount of time required to acquire or finance a property, and in certain cases add burdens to the process of subdividing the land or converting the land into a condominium.
In all of these
situations, an attorney or project manager should prioritize determining whether
the land is so-called “registered land” subject to the title requirements of
the Land Court. Registered land is so-called Torrens system of title – in other
words, a method where the government maintains a registry for each parcel and issues
a certificate of title that acts as conclusive proof of ownership. This, in
turn, means that the registry clerks and Land Court staff scrutinize all
documents and plans submitted for recording, with increased likelihood of
delays or rejections with additional complications.
When creating a
condominium with the Land Court, the bulk of the condominium documents must be
presented to the court for approval before they can be recorded. Furthermore, each
unit must be separately registered after a review with the court staff. Similarly,
many development projects require the land to be subdivided into new parcels,
and sometimes a developer will try to file a subdivision plan as a strategic
move to “freeze” the current zoning designation under M.G.L.
c. 40A, § 6. In each case, timing and deadlines matter
immensely. When subdividing registered land, the draft plan must go through a
review process with court staff and satisfy certain specific engineering and
survey requirements that are not otherwise imposed on subdivision plans.
All of this begs
the question – why not simply “de-register” the land?
Until recently,
the answer to the question above was simple: it still took a long time for the
Land Court to approve petitions to withdraw the land from the registered land
system. And not all properties satisfied the specific criteria required to
qualify for withdrawal.
Fortunately, the Massachusetts Legislature enacted The Massachusetts Affordable Homes Act (H. 4977) in 2024, which revised G.L. c. 185, § 52 to allow registered land to be voluntarily deregistered for any reason and set an expedited timeline for the Land Court to approve deregistration complaints. These changes have now been implemented and the revised process is detailed in new guidance from the Land Court’s Chief Title Examiner
Filing and Serving the Complaint
To begin the
deregistration process, a Complaint for Voluntary Withdrawal and a Notice of
Voluntary Withdrawal must each be filed with the Land Court. The Complaint
must list all current owners of the property and identify any mortgagees,
lessees, or option holders of record (collectively, “Interest Holders”),
including any Interest Holders listed on the property’s certificate of title
and memoranda of encumbrances. It is recommended that the petitioner obtain and
file signed assents of any Interest Holders with the Complaint. Filing such
assents with the Complaint will eliminate the need to serve the Interest
Holders, as further detailed below. The Complaint must also include an attested
copy of the property’s certificate of title.
If the property
owner is a corporate entity or trust, certain additional materials must also be
filed with the Complaint. For corporate entities, a current (issued within the
last 60 days) Massachusetts Certificate of Good Standing is required, and trusts
must file a Trustee’s Certificate pursuant to G.L.
c. 184, § 35. In either case, the Complaint must also be signed
by a Massachusetts lawyer.
The Notice[1] must be signed and
acknowledged by all fee owners of the property to be withdrawn, with certain
basic title and owner information plugged into the form where indicated.
Once the Complaint and Notice have been filed with the court, (i) a Notification of Complaint for Voluntary Withdrawal and (ii) Land Court file-stamped copy of the Complaint and Notice must then serve by certified mail on all Interest Holders who have not assented to the Complaint. If assents of all Interest Holders were obtained and filed with the Complaint, this service requirement is eliminated. After serving any Interest Holders, an Affidavit of Service must be filed with the court certifying that any non-assenting Interest Holders have been served and providing proof of service. If the property owner is represented by a lawyer, that lawyer must sign the Affidavit.
Land Court Review and Deregistration
The new rules
provide that within 30 days of receiving all required information and
documentation, and if no objections to the deregistration have been filed, the
court will move ahead and endorse the Notice of Voluntary Withdrawal. Once the
Notice has been endorsed, the owner must file the Notice with the applicable
registry district. This is the final step for the owner to take (though the
registry district will then go through a ministerial process to verify the
deregistration to officially withdraw the property).
Although many
practitioners were initially skeptical of the court’s ability to process
petitions within the 30-day window, we are generally finding that the court
staff has been able to approve petitions within 30-60 days, depending on the
relative complexity of the title. Much of the timing pressure remains on the
front-end, when the owner and their counsel work on preparing the petition and
obtaining assents from lenders and tenants.
Gregory Bradford
is a partner in the Real Estate Department of Nutter McClennan & Fish LLP, and
a member of the Commercial and Real Estate Finance practice group and the
Development, Land Use and Permitting practice group. His practice focuses on
commercial transactions, and he also advises clients on various aspects of
complex development projects. He can be contacted at ebradford@nutter.com.
Alex Eddinger is
an associate in Nutter’s Real Estate Department. He advises clients on a broad
array of real estate issues, including acquisitions and dispositions, real
estate financing, zoning, and land use matters. His real estate litigation
practice currently focuses on representing clients in zoning appeals, easement
and title disputes, and related land use litigation. Prior to joining Nutter,
he served as a judicial law clerk to the Hon. Jennifer S.D. Roberts of the Land
Court. Alex can be contacted at aeddinger@nutter.com.
