A Declaration of Homestead can provide protection for a multi-use property – Appeals Court upholds lower court decision.

Back in April of this year Attorney Christopher Knoth posted a blog reporting on a Bankruptcy court decision where the Homestead protections pursuant to Massachusetts General Laws Chapter 188 were found to be available to a mixed-use property.  Last week the Bankruptcy Appeals Court confirmed that decision making several noteworthy points.

The Court specifically noted that the Massachusetts Supreme Judicial Court had admonished (in a topic related decision) that the intended public policy and the purpose of the Homestead Act should cause courts to construe the homestead exemptions liberally in favor of debtors.  Consequently the Court held that the mere use of a residence for non-residential purposes, at least when the predominant purpose is residential, does not, by itself, preclude an exemption for the Property.

Although counsel for the appellant argued that any non-residential use of a structure would exempt it from the protections of the Homestead statute (citing that the statute itself specifically defined the properties which could enjoy the protection) the Court firmly rejected that argument (invoking our presently undefeated local professional football franchise to illustrate): “If a homeowner in Foxborough were to rent out her driveway to Patriots fans on Gillette Stadium game-days . . . it defies intuition to think she no longer lives in a single-family dwelling.”

It is still important to note that the Court did not mandate a hard and fast rule but rather indicated that evaluations (to determine a property’s “primary” use) would ultimately be made on a “case by case” basis.

This case provides another clear demonstration that a Declaration of Homestead can be an invaluable protection for Massachusetts homeowners.  The current Homestead statute even allows its filing for a property held in Trust.  Additionally, the Massachusetts Homestead Law increases (doubles) protection amounts for the disabled as well as for homeowners 62 years of age or older.

Contact our office to make sure you have recorded a Declaration of Homestead for your principal residence in Massachusetts!

Attorney Harold F. Moody, Jr.

Lender beware – recent appellate district court case finds that premature default notice voids foreclosure

A recent Northern District Appellate Court case (Federal Home Loan Mortgage Corporation v. LaPorta) provided a disconcerting decision for lenders regarding a recent foreclosure. The court found that since Wells Fargo provided notice of default, acceleration of the loan and right to cure to the homeowner prior to formally being assigned the mortgage (even though Wells Fargo was servicing the loan at the time of the notice) such notice was defective resulting in an invalid foreclosure and subsequent sale. The Court cited Massachusetts General Law Chapter 183, Section 21, which sets preconditions for foreclosure sales, ruling that a mortgagee may invoke the statutory power of sale only by first complying with the terms of the mortgage. As a result of Wells Fargo not actually being assigned the mortgage until four months after providing notice, it failed to comply with Paragraph 22 of the mortgage and thus could not exercise the statutory power of sale, the panel decided.
Although the Federal Home Loan Mortgage Corporation v. LaPorta decision is only a District Court Appellate Division case, oral arguments were presented to the Supreme Judicial Court in January in a case Pinti v. Emigrant Mortgage Company, Inc., that also challenges the validity of a foreclosure sale in which the bank did not comply with notice and right-to-cure provisions contained in the mortgage. If the within case is a foreshadowing of the SJC decision to come in Pinti the foreclosure bar could have another sword to avoid. Stay tuned.
Attorney Harold F. Moody, Jr.

A Declaration of Homestead can provide protection for a multi-use property.

A recent Bankruptcy case (in re Walter D. Catton, Jr.) provided an interesting perspective on a Massachusetts Declaration of Homestead. The court found that the Debtor’s multi-use property was protected by a Homestead. The subject property is a two-story (multi-use) structure where the debtor maintained his primary residence on the second floor while owning and operating an insurance agency on the 1st Floor. There are separate entrances for both the residence and the insurance agency.
The Bankruptcy court concluded that since the property was predominantly used for residential purposes it was therefore eligible for Homestead protection by the Bankruptcy Trustee. The decision cited that the square footage used for residential purposes was larger than the square footage used for commercial purposes and therefore the property was predominantly used for residential purposes and entitled to Homestead protection. It is important to note that the Court indicated that this was not a hard and fast rule but rather that the determination of residential or commercial “primary use” would be made on a “case by case” basis.
A Declaration of Homestead provides protection that can be an invaluable. We recommend recording a Declaration of Homestead for all principal residences in Massachusetts.
Attorney Christopher D. Knoth

Will non-competition agreements in Massachusetts soon be illegal?

According to Massachusetts Lawyers Weekly state lawmakers have recently introduced
legislation that, if passed, would ban the enforcement of employee non-competition
agreements in Massachusetts. If such a law were enacted it would significantly
affect the future of employment contracts. As proposed the law would be retroactive
– essentially voiding any currently existing non-compete agreement in the
Commonwealth. Even were the bill to become law it would likely be challenged by
counsel for employers citing the Contract Clause of the U.S. Constitution.
Accordingly, it is a long way from changing the landscape of current non-competition
agreements. Stay tuned.