952 N.E.2d 418
Mass. App. Ct.2011Background
- Housman, as trustee of Pine Banks, seeks a declaratory judgment that LBM's mortgage on its property is discharged under G. L. c. 260, § 33 and that the foreclosure sale is void.
- The trial judge dismissed the claim, holding the mortgage valid despite § 33, citing the plaintiff's knowledge of the extension.
- LBM's mortgage originally dated May 9, 2003, had a stated term of four months, with later unrecorded extensions extending to April 9, 2004.
- Pine Banks foreclosed Laverty’s mortgage on the same property in 2007; Pine Banks then acquired title subject to LBM's mortgage.
- LBM initiated foreclosure proceedings in 2008; Pine Banks moved to dismiss counts and for declaratory relief; the court dismissed count I in 2009.
- The issue is whether § 33 automatically discharges the mortgage five years after maturity unless a valid extension is recorded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 33 discharge a mortgage five years after maturity unless properly extended? | Housman argues § 33 discharges the LBM mortgage. | LBM argues extensions must be recorded to preserve the mortgage. | Yes; mortgage discharged unless properly recorded extension recorded. |
| Is actual knowledge of an extension sufficient to preserve a mortgage under § 33? | Pine Banks had notice of the extension and should be bound. | Notice alone does not satisfy recording requirements of § 33. | No; recording requirements control, knowledge is irrelevant. |
| Did the extension documents operate to extend the LBM mortgage’s maturity? | The documents may operate to extend if properly considered. | The modification and amendment were not recorded, so invalid. | No; unrecorded extensions do not extend the mortgage under § 33. |
| Was the LBM foreclosure sale void due to discharge of the mortgage under § 33? | Discharge by operation of law invalidates the sale. | Sale could proceed despite potential discharge. | Yes; disposition shows sale void due to discharge. |
| Did the trial court misapply § 33 in treating notice as a substitute for recording? | Statutory language should be read narrowly to require recording. | Notice may be relevant but recording is required for validity. | Yes; proper application requires recording, not merely notice. |
Key Cases Cited
- In re 201 Forest St., LLC, 404 B.R. 6 (Bankr. D. Mass. 2009) (statutory extension must be recorded to be valid)
- LBM Fin., LLC v. 201 Forest St., LLC, 422 B.R. 888 (B.A.P. 1st Cir. 2010) (extension recording requirement extinguishes expired mortgage rights)
- In re Shamus Holdings, LLC, 409 B.R. 598 (Bankr. D. Mass. 2009) (extension not recorded invalidates mortgage extension)
- U.S. Bank Natl. Assn. v. Ibanez, 458 Mass. 637 (Mass. 2011) (strict compliance with notice prerequisites to foreclosures)
- Willow Tree Invs., Inc. v. Wilhelm, 465 N.W.2d 849 (Iowa 1991) (strict construction of recording requirements for extensions)