Guide to Massachusetts Real Estate Law, How Real Estate is Owned
Fee Simple – Most real estate is owned “in fee simple” which is a very old term that means outright ownership of land (subject to any mortgages or liens). Someone who owns property in fee simple may sell it, give it away, or dispose of it on death by will or the laws of inheritance. Every deed creates a fee simple in the new owner unless a different intention is clearly stated. Fee simple is so common, that the term hardly ever appears in legal documents.
Mortgage – You continue to own your property even if there is a mortgage on it. Your lender has a security interest in the property but does not own it. Neither is your deed held as security until you pay off your mortgage.
Life Estate – Another ancient ownership concept that remains in use today is the life estate which is ownership measured by someone’s life. A life estate is often used in estate planning to ensure that a parcel of real estate passes to another upon the death of the owner without the need for probate. The following language in a deed creates a life estate: “MOTHER grants the property to MOTHER for her life and then to SON.” Mother owns the property for as long as she is alive but the instant she dies, son automatically becomes the owner.
Trusts – The essence of a trust is divided ownership. The trustee holds “legal title” while the beneficiary holds “beneficial title.” In other words, the trustee owns the property for the benefit of the beneficiary. The purpose of the trust and the powers of the trustee are set out in a document called a Declaration of Trust which may be recorded at the registry of deeds. People create trusts for many reasons. Some are used to pass property from one generation to another without probate; others are used for investment purposes or to limit liability. Remember, the trust does not own property; the trustee does.
Joint Ownership – Property is often owned by more than one person. There are three types of joint ownership of real estate in Massachusetts. In all three, each owner has the right to possess the entire property subject to a similar right held by co-owners. The major difference among the three types of joint ownership is what happens when a co-owner dies.
Tenants in Common – When one tenant in common dies, his share of the property passes through his probate estate. If a deed to more than one person does not specify the type of joint tenancy, it creates a tenancy in common.
Joint Tenants – When one joint tenant dies, the surviving joint tenant automatically owns the entire property. This is said to be a “right of survivorship.” A deed to two or more people must specify that they hold the property “as joint tenants” to create a joint tenancy.
Tenants by the Entirety – Tenants by the entirety is a type of joint ownership that is limited to married couples. A tenancy by the entirety has a right of survivorship so when one owner dies, the survivor automatically owns the entire property. A tenancy by the entirety also provides some protection for one spouse against the creditors of the other spouse. A deed to two people who are married must specify that they hold the property “as tenants by the entirety” to create a tenancy by the entirety.
A deed is not an artifact that gets passed from one owner to the next. Instead, each time there is a change in ownership, a new deed must be created, executed, and delivered to the new owner. In that way, a deed is like a check. If someone owes you $100, they sign their check and deliver it to you. You now have $100. If you want to give that $100 to someone else, you sign your own check and deliver it to someone else. Deeds work the same way.
Add a name to a deed – Many people come to the registry of deeds and say “I want to add a name to my deed.” That is not how real estate law works. The phrase “add a name to a deed” describes transferring an interest in property to someone else. So, if Mother wants to “add” Daughter’s name to her deed, she would create and execute a new deed that said MOTHER grants the property to MOTHER and DAUGHTER.
Remove a name from a deed – If the person whose name is to be “removed” is still alive, he must sign a new deed as described in “add a name to a deed” above. For example, if mother and daughter owned property jointly but they wanted mother to be the sole owner of the property, they would create and execute a new deed that said MOTHER and DAUGHTER grant the property to MOTHER. Daughter could also sign a deed that simply transferred her interest in the property to mother, but then the evidence of mother’s ownership would come from two deeds: the original one to her and daughter and then daughter’s to her. It would be best for mother to show ownership coming from a single deed rather than from two.
Remove decedent’s name from a deed – If the person whose name is to be “removed” has died, there is a different process which is described in the DEATH section below.
Essential Elements of a Deed
Whether you are selling a house or just making a family member a co-owner of your existing home, you still need a new deed. Because real estate law is so complicated and because the asset involved— a house— is so valuable, we strongly urge you to HIRE AN ATTORNEY to prepare the new deed. There are no blank deed forms available and the registry of deeds cannot provide you with legal advice.
To sell real estate in Medieval times, the parties to the transaction would go the land where the seller would pick up a stick hand it to the buyer. This symbolized the “delivery” of ownership. This act of delivery is still an essential component of the sale of real estate, only instead of a twig, the seller delivers a deed to the buyer. In addition to the delivery requirement, a deed must be in writing and signed by the person conveying the property.
According to Eno and Hovey, Real Estate Law with Forms, a standard Massachusetts real estate deed contains the following elements:
Grantor – The name of the person/persons/entity transferring an ownership interest in the property;
Grantee – The name of the person/persons/entity receiving an ownership interest. When the property is being transferred to more than one person, the type of joint ownership (i.e., tenants in common, joint tenants, tenants by the entirety) should be stated. The mailing address of the grantee should be specified so the town assessor can mail property tax bills to the proper address;
Consideration – The amount being paid for the property. If the transfer is a gift or if there is no monetary consideration, the consideration on the deed is stated as ONE ($1.00) DOLLAR;
Words of Grant – Language that clearly expresses the grantor’s intent to convey title to the grantee;
Covenants – The promises regarding the state of the title granted (i.e., “with quitclaim covenants”);
Property Description – The land being conveyed must be described “with such particularity as to make it capable of identification.” At a minimum, the description must include the municipality in which the land is located, and must either identify the land as a particular lot on a recorded plan or include a “metes and bounds” description of the parcel, usually carried forward from the prior deed in the chain of title. The street address by itself is not an adequate legal description;
Title Reference – A statement identifying how the grantor became the owner of the property (usually the date and book and page number of the prior deed in the chain of title);
Property Address – The street address and town of the property must be written in the left margin of the deed so that town assessors can identify the property in their records;
Date of Execution – The date the deed is signed;
Grantor Signature – The signature of the person/persons/entity conveying the property;
Acknowledgement – Grantor signature must be acknowledged by a notary public;
Recording – Once executed and acknowledged, a deed should be recorded at the registry of deeds. The filing fee for a deed is $155, payable by cash or check. If the consideration being paid is $500 or more, a deeds excise tax assessed at the rate of $2.28 per $500 is due at the time of recording.