A previous blog post addressed lender liability for environmental conditions on property a lender might acquire as a result of foreclosure.  Another issue lenders in Connecticut must consider prior to foreclosing on a property is the Connecticut Transfer Act.  The Transfer Act requires transferors of “establishments” to make specific disclosures to transferees regarding the environmental condition of the property being transferred and also requires one party (usually either the transferor or transferee) to be a certifying party, i.e., the party responsible for all investigation and remediation of the property in accordance with Connecticut’s Remediation Standard Regulations (or “RSRs”).

An establishment includes properties where certain enumerated operations have occurred at any time since May 1, 1967:  dry cleaners, auto body repair, and furniture stripping; as well as any property where greater than 100 kg of hazardous waste was generated in any one month, on or after November 1, 1980; and/or where any hazardous waste, generated at a different location, was recycled, reclaimed, reused, stored, handled, treated, transported or disposed of.

Continue Reading Transfer Act for Lenders

Are you ready to jump on the tax-exempt bond bandwagon? Over the last eight years, the landscape of tax-exempt bond financing has changed and more and more bonds are being sold directly to banks across the nation.

Do you have customers or potential customers that are: hospitals, health centers, visiting nurses associations, nursing homes, assisted living facilities, continuing care retirement communities, child care organizations, colleges, universities, private independent schools, museums, theaters, zoos, adult day care facilities, boys & girls clubs, community action agencies, and social service agencies?

Continue Reading The Bond Bandwagon

Massachusetts is notorious for having hyper-technical rules about notarization.  The trouble started in 2009 with the bankruptcy case of Matthew H. Giroux.  Mr. Giroux signed a mortgage in front of a notary public.  He acknowledged to the notary public that he signed the mortgage voluntarily for its stated purpose.  The notary public signed where he was supposed to, affixed his notarial seal, and inserted the expiration of his commission.  The mortgage was then recorded in the appropriate registry of deeds.  The notary public, however, forgot to insert Mr. Giroux’s name in the certificate of acknowledgement (the notary block on the mortgage); so it said: “[B]efore me personally appeared _____________ to me known to be the person (or persons) described in and who executed the foregoing instrument . . . .”  The bankruptcy court didn’t like that and invalidated the mortgage.

Ok, lesson learned.  Notaries—don’t forget to fill in the name of the person who signed the mortgage.

Continue Reading New Forms May Alleviate Some Concerns About Massachusetts Notarizations

As I type this blog post, I am sitting at my desk with a four-inch-thick binder filled with title insurance forms—form policies, form endorsements, premium rate tables, survey requirements, etc.—and it occurs to me that many people who deal with real estate loans and title insurance on a daily basis may have never read a title insurance policy.

It’s probably not necessary for a loan officer involved in a real estate transaction to read the whole title insurance policy, but it may be helpful to have a basic understanding of the benefits and limitations of a lender’s title policy as well as some of the optional endorsements.  To provide a basic understanding of title insurance, this post is the first in what will be a series of articles on title insurance from a lender’s perspective.

Continue Reading Title Insurance: What is its Value?

The United States Court of Appeals for the Second Circuit issued a decision today in the case of OneWest Bank, N.A. v. Robert W. Melina, No. 15-3063 (2d Cir. June 29, 2016) holding that a national bank is a citizen only of the state in which its main office is located, as stated in the bank’s articles of association.

Continue Reading U. S. Court of Appeals 2nd Circuit Decision: National Bank is a Citizen Only of the State in Which its Main Office is Located

Are You Ready?

Recently Enacted Public Act 16-65 – also called The Act Concerning Banking and Consumer Protection:

  • Implements a new procedure for maintaining priority of a modified residential mortgage loan capitalization over subsequent encumbrances
  • Changes the foreclosure by market sale act requirements
  • Implements a new judgment procedure for foreclosures
  • Alters the execution for ejectment procedure for foreclosed properties
  • Alters or amends various other banking institution regulations and statutes

Continue Reading READER ALERT: A New and Improved Act Concerning Banking and Consumer Protection in Connecticut

Bankers and other professionals who have worked on construction loans in states other than Connecticut will know how much of a pain it can be to make construction loan advances. You usually need to perform a title update and obtain lien waivers and various indemnifications from contractors and borrowers. This is because many states give priority to liens for construction services and materials (i.e. mechanic’s liens) over subsequent construction loan advances.

This is not true in Connecticut.

Continue Reading Construction Financing and Mechanics’ Liens in Connecticut

You just got your committee approvals for a new relation.  It is a borrower you have been after for some time.  Approvals are fairly standard and call for a secured credit facility with a priority all business asset lien.

The borrower is moving nearly all of its accounts to your bank for cash management too.  But the borrower claims he needs to keep one account at a mutual since he is holding his breath that there will be demutualization and he will hit it big with stock redemption.  You do not have the heart to crush his retirement dreams so you let him keep that other account.

How can you comply with your approvals and get a perfected security interest on that deposit account?

Continue Reading Deposit Account Control Agreements. Who Needs Em?

You open the paper to discover that a “new business”- NewCo has opened at the same location as a current borrower (OldCo).  Upon further investigation, you drive by the former business location of OldCo and there is different signage.  The loan file shows a history of delinquencies and calls to the borrower remain unanswered.  Or, the borrower does answer but says that the company has gone out of business.….  

What’s next?

For Lenders, this is the time to pull the file and send it to workout, amend risk ratings, undertake a collateral analysis, calculate recoverable balances, etc.  But if there is even the suspicion that the borrower and its business may have conveniently morphed into something a bit different, it is time to act.

Continue Reading Borrower Out of Business? Using the Internet to Identify Successor Liability

On February 23, 2016, in the case of MERSCORP Holdings, Inc. et al. v. Dannel P. Malloy et al., the Connecticut Supreme Court upheld the constitutionality of certain state statutes which impose higher fees for mortgage nominees, such as MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. (“MERS”), for recording documents in the public land records.

A brief history shows that back in 2013, the Connecticut legislature created a two-tiered system by which town clerks collect recording fees with the effect that mortgage nominees were obligated to pay up to three times more for recording documents than other filers.

In response, MERS commenced an action against state officials.

Continue Reading State Statutes Requiring MERS To Pay Higher Recording Fees Declared Constitutional