Law Ends Need to Record Most Real Estate Trusts in Massachusetts
A law effective in January, 2003, eliminates the
requirement of recording trusts. This
legislation, Chapter 508 of the Laws of 2002, brings Massachusetts practice in
line with all other states in the nation. Prior
to the amendment, the statute required that a trust had to be recorded before it
could take title to realty. Failure
to record a trust created an indefinite reference. Under the new law when property is conveyed to or held in the
name of a trust only a trustee’s certificate needs to be recorded.
Specifically, the legislation amends Chapter 184 of the
Massachusetts General Laws by adding a new Section 35.
This section provides that, despite the provisions of the Section 25 (the
indefinite reference statute), a good faith purchaser may rely on a trustee’s
certificate as to the identity of the trustees or beneficiaries, the authority
of the trust to act or other facts germane to the affairs of the trust.
Further, the new law amends Section 2 of chapter 203.
The old Section 2 had provided that a trust concerning land had to be
recorded in the Registry of Deeds or Land Court Registry District in order to
impart notice of the trust. The
amended Section 2 provides that either the recording of the trust or the
recording of a certificate conforming to the requirements of the new Section 35
of chapter 184 shall impart notice.
Taken together these two changes in the statutes
effectively eliminate the need to record a trust in most situations.
A problem could arise because the statute states that the certificate is
to be signed by a trustee “of record”.
What happens in the case where the trustee named in a deed dies or
becomes unable or unwilling to serve? Without
the trust on record there is no way of determining how a successor trustee can
be appointed. A stranger to the
title signing a certificate and claiming to be new trustee would not meet the
requirements of the statute.
In light of the foregoing, it seems likely that very few trusts will now be recorded. Given the increase in Registry fees in March, 2003, raising the cost of recording a trust to $275, there seems to be little reason to incur this expense in light of this new legislation. By simplifying the procedure for a trust to hold title in most transactions the new legislation offers welcome relief for conveyancers.