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Spencer A. Stone

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Spencer Stone is a member of  the Firm’s Business and Finance Department, and Real Estate Practice Group. He is experienced in all aspects of commercial and corporate law and represents clients in real estate, commercial financing, business transactions, general corporate and commercial matters. Spencer’s representation of clients includes negotiation of loan documentation, purchase and sale agreements, leases and entity formation, as well commercial real estate and asset-based lending transactions.

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Massachusetts is notorious for having hyper-technical rules about notarization.  The trouble started in 2009 with the bankruptcy case of Matthew H. Giroux.  Mr. Giroux signed a mortgage in front of a notary public.  He acknowledged to the notary public that he signed the mortgage voluntarily for its stated purpose.  The notary public signed where he was supposed to, affixed his notarial seal, and inserted the expiration of his commission.  The mortgage was then recorded in the appropriate registry of deeds.  The notary public, however, forgot to insert Mr. Giroux’s name in the certificate of acknowledgement (the notary block on the mortgage); so it said: “[B]efore me personally appeared _____________ to me known to be the person (or persons) described in and who executed the foregoing instrument . . . .”  The bankruptcy court didn’t like that and invalidated the mortgage.

Ok, lesson learned.  Notaries—don’t forget to fill in the name of the person who signed the mortgage.

Continue Reading New Forms May Alleviate Some Concerns About Massachusetts Notarizations

As I type this blog post, I am sitting at my desk with a four-inch-thick binder filled with title insurance forms—form policies, form endorsements, premium rate tables, survey requirements, etc.—and it occurs to me that many people who deal with real estate loans and title insurance on a daily basis may have never read a title insurance policy.

It’s probably not necessary for a loan officer involved in a real estate transaction to read the whole title insurance policy, but it may be helpful to have a basic understanding of the benefits and limitations of a lender’s title policy as well as some of the optional endorsements.  To provide a basic understanding of title insurance, this post is the first in what will be a series of articles on title insurance from a lender’s perspective.

Continue Reading Title Insurance: What is its Value?

As most people (at least in the banking world) know, a security interest is the granting of an interest in property to secure obligations, usually loan debt.  If the borrower defaults under its obligations, the bank can foreclose and take the collateral.

Continue Reading Collateral 101: Perfecting Security Interests in Common and Uncommon Collateral

Bankers and other professionals who have worked on construction loans in states other than Connecticut will know how much of a pain it can be to make construction loan advances. You usually need to perform a title update and obtain lien waivers and various indemnifications from contractors and borrowers. This is because many states give priority to liens for construction services and materials (i.e. mechanic’s liens) over subsequent construction loan advances.

This is not true in Connecticut.

Continue Reading Construction Financing and Mechanics’ Liens in Connecticut

Foreclosing a mortgage in Massachusetts can be a pain.  Among the many, very technical requirements, a foreclosing mortgagee must be able to prove that it is the holder, or the authorized representative of the holder, of the original mortgage note before it can begin the foreclosure process; the mortgagee must be able to prove that it is either the original mortgagee or the holder of a valid written assignment of the mortgage; the mortgagee (or, more likely, its attorney) must publish in a newspaper and mail a series of notices on somewhat demanding schedules.  In the case of residential foreclosures, the mortgagee must provide the homeowner with a 150-day right to cure the mortgage default, and, in some circumstances, the right to a mortgage modification .

Continue Reading Difficulties Foreclosing in Massachusetts

For secured lenders, a consumer debtor’s chapter 13 bankruptcy filing can be a mixed bag.

A chapter 13 bankruptcy petition often is utilized by a consumer debtor to avoid a foreclosure by allowing a debtor time (usually three or five years) to catch up on mortgage payment arrears.  In the ideal situation, where real property is not underwater, chapter 13 allows a secured lender to recoup a debtor’s delinquent payments over time and avoid costly foreclosure procedures. On the other hand, if the secured real estate is underwater (or the debtor otherwise does not wish to retain the property), the Bankruptcy Code allows a debtor to “surrender” the property to the secured lender.  Until relatively recently, “surrender” meant merely allowing the secured lender to exercise its rights with respect to the property in accordance with its ordinary and customary practice under state law (usually by foreclosure, deed in lieu of foreclosure or short sale).

Recently, however, there has been a trend in some jurisdictions whereby secured lenders might end up being forced to accept title to underwater real estate without any say in the matter (i.e., over its own objection).

The Bankruptcy Court for the District of Massachusetts is now split as to whether a chapter 13 debtor can force a secured lender to accept underwater real estate over the lender’s objection. Indeed, two bankruptcy judges in the District of Massachusetts recently issued opinions on the exact same day (March 4, 2016) reaching the exact opposite conclusions as to this issue, a possible signal that these judges want this practice to be reviewed by a higher court.  See In re Brown  (finding that a chapter 13 plan may provide that title to real estate vests in the secured lender despite lender’s objection); In re Tossi  (finding that a plan that vests title in a lender over the lender’s objection is not permissible).

Continue Reading The District of Massachusetts Calls for Review of Practice of “Surrendering” Underwater Property