If a purchase money first mortgage financed a Massachusetts home of up to four families that you’ll live in, the lender’s attorney has to give you a certification of title, and it’s worth asking for by name. M.G.L. c. 93, § 70 sets the examination behind it and the statements it has to make, and the borrower is one of the two people it goes to.
Which loans it covers
M.G.L. c. 93, § 70 applies to a loan secured by a purchase money first mortgage on real estate improved with a dwelling designed to be occupied by not more than four families and occupied, or to be occupied, in whole or in part by the borrower. In that situation, an attorney acting for or on behalf of the lender has to render a certification of title to the mortgaged premises to the borrower and to the lender.
What the examination has to cover
The certification has to include a title examination covering a period of at least fifty years, with the earliest instrument being a warranty or quitclaim deed that on its face doesn’t suggest a defect in the title. For registered land, it’s enough to start from the present owner’s certificate of title issued by the Land Court, except that bankruptcy indices and federal and state liens still have to be examined. Record title means the records of the registry of deeds or registry district where the property lies and the relevant records of the registries of probate.
What the certification states
At the time the mortgage is recorded, it states that the borrower holds good and sufficient record title to the premises free from all encumbrances, and it lists the exceptions. For the lender, it states a good and sufficient record first mortgage, subject only to the matters the certification excepts. The exceptions are where an encumbrance such as an easement, a prior mortgage or a lien would appear.
Who it protects, and for how much
The attorney’s liability under the certification is limited to the consideration shown on the deed with respect to the borrower, and to the original principal amount of the mortgage with respect to the lender. The certification is effective for the borrower as long as the borrower has title to the premises, and for the lender as long as the original debt remains unpaid.
If the attorney skips the buyer
The statute says a willful failure by an attorney to render the certification to the borrower is an unfair or deceptive act or practice under M.G.L. c. 93A, the state consumer protection law.
How it differs from title insurance
The certification is an attorney’s statement about the record, with liability capped as above. Title insurance is a separate product. The Consumer Financial Protection Bureau says most lenders require a lender’s title insurance policy, which protects the amount they lend, that you may want to buy an owner’s policy to help protect your investment in the home, and that you can usually shop for the title insurance provider separately from your mortgage.
Does this apply in Boston
Yes. M.G.L. c. 93, § 70 is a statewide statute about attorneys and mortgage loans, and nothing in it carves out any city or town.
At your closing
Ask the closing attorney for your copy of the certification and read the exceptions before you sign. If you’re closing this fall and want a second set of eyes on the paperwork, send it over. Diana Kim, REALTOR®, eXp Realty.
Questions
Common questions
What is a certification of title in Massachusetts?
Under M.G.L. c. 93, § 70, it is the statement an attorney acting for the lender renders to the borrower and the lender, based on a title examination, saying the borrower holds good and sufficient record title free from encumbrances, with exceptions enumerated, and that the lender holds a good first mortgage.
How far back does the title examination have to go?
At least fifty years, starting from a warranty or quitclaim deed that on its face does not suggest a defect. For registered land it can start from the present owner's Land Court certificate, with bankruptcy indices and federal and state liens still examined.
Which loans does the statute cover?
A purchase money first mortgage on real estate improved with a dwelling designed to be occupied by not more than four families and occupied, or to be occupied, in whole or in part by the borrower.
What happens if the attorney doesn't give the buyer the certification?
The statute says a willful failure to render it to the borrower is an unfair or deceptive act or practice under M.G.L. c. 93A.
Is the certification the same as owner's title insurance?
No. The certification is the attorney's statement with liability capped at the consideration on the deed. CFPB says most lenders require a lender's title policy and that you may want to buy an owner's policy, which you can usually shop for separately.
Sources
- M.G.L. c. 93, § 70: 'said certification shall include a title examination which covers a period of at least fifty years with the earliest instrument being a warranty or quitclaim deed which on its face does not suggest a defect in said title'.
- Consumer Financial Protection Bureau, What is owner's title insurance?: 'Owner's title insurance protects the homeowner if someone sues and says they have a claim against the home from before the homeowner purchased it.' 'Most lenders require you to purchase a lender's title insurance policy, which protects the amount they lend. You may want to buy an owner's title insurance policy, which can help protect your financial investment in the home. You can usually shop for your title insurance provider separately from your mortgage.'
Written by Diana Yeji Kim — REALTOR® at eXp Realty, serving Greater Boston in English, Korean, and Japanese.
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