Appeals Court Reviews Mortgage Obtained On Property Shared with a Trust

The Massachusetts Appeals Court reviewed an appeal by an ex-husband to quiet title on a mortgage taken out by his ex-wife in 2002 for property that they co-owned. In Poulos vs. Financial Freedom (14-P-1287), the husband appealed, seeking to reverse a summary judgment issued in favor of the lending institution and the family trust created by his deceased ex-wife. The husband wanted the mortgage granted to the lending institution to be declared void because he felt that it encumbered his share of the property rather than just the 50% of the property originally held by the wife as part of their 1987 settlement agreement, now owned as part of a trust she established prior to her death.

The court affirmed the summary judgment and discussed the effects of the settlement agreement, or the lack thereof, on their respective interests in the property after the escrow period in their separation agreement. While there was language in the property settlement agreement that the parties were not to encumber the property with a mortgage during the escrow period, nothing in the agreement prevented the parties from seeking mortgages or other potential encumbrances after this period ended.

The court did agree that the ex-husband initially had standing to pursue this course of action with the lending institution’s original position that the mortgage encumbered all of the property, rather than just the decedent’s and trust’s interest in it. The reverse mortgage documents clearly indicated that the institution believed that the mortgage the ex-wife granted covered 100% of the property. The ex-wife represented in the paperwork that she owned the entirety of the property and all the rights to mortgage, grant, and convey it, failing to mention her ex-husband’s interest. However, during the course of litigation, the lending institution eventually conceded that the mortgage could only cover the wife’s half of the property.

The court did not accept the ex-husband’s position that the entire mortgage should be considered void, even with this concession. The ex-husband argued that the mortgage on her share reformed the mortgage. The court felt the concession removed the ex-husband’s standing regarding the mortgage and that case law allows a tenant in common to transfer interests in the property without the consent of any co-tenants by deed, lease, mortgage, will, or intestate succession.

Poulos reveals the effect that actions during the course of a decedent’s life can have on members of a trust. Legal suits dealing with former spouses and business interests easily surface, so it is vital to have a clearly written document that divides interests and keeps conflicts to a minimum for the beneficiaries. The experienced Massachusetts estate planning attorneys at the Law Office of James K. Meehan have the skills and knowledge you need to draft a document that best suits your estate’s needs. For a free, confidential consultation, call our office today at 508.822.6600.

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