May 21, 2012

2 Ionic Ave

Here goes:

  • 12/29/10   Building is sold to current owner for 250,000  
  • 2/15/11    City agrees to give seller 350,000 of home funds and completes an agreement which put a 350,000 mortgage on said property.  To protect the interest of the City the agreements says a prior 600,000 mortgage is to junior to this mortgage.

This was good business. 

Here is where the problem starts.  Nobody recorded the mortgage from the City of Worcester until 3/27/12--13 months later.   This would still be o'kay unless another mortgage is taken out and goes in front of the City of Worcester's interests.

Low and behold a 400,000 mortgage is put on the property the week before on 3/21.12.   Now if they City of Worcester forecloses to protect their 350,000 they will need to pay off a 400,000 mortgage  

Here is my question.  How does it take 13 months to record a mortgage?


Jahn said...

Ok wait a minute here

The Owner has already paid the 250,000 purchase price to the city?

Order of Mortages:

1st 600,000

2nd 400,000

3rd 350,000 (Home Funds)

Do I this right?

What about issue of an alleged oil spill on the property (per T&G). This been cleaned up? If not, will Worc Common Grd pull a "Mason St." Meaning take title to the land just to get freebie Mc Govern $$$ to clean up the spill aND THEN TRANSFER IT BACK to previous either in full or as part of a partnership deal.

Has this bulding been vacant since the Boys Club left there and if so why does it need to oil on the premises? How was the leak caused?

Ironic Ave Worcester Boys Club. There are Boys Clubs and then there are boys clubs.....then there is the Worcester Club.

Bill Randell said...

The first mortgage (600)was agreed to be in junior position to the city mortgage..

The second mortgage (400) was not.

If you look the owner of this property did deed the property to a non-porfit for a $1 and then it was deeded back,,, Looks like the Mason Street maneuver to get free EPA monies.

Jahn said...

Can we forget what was agreed to.

What was the end result for each Mortgage, the amt, and the mortgage holder


1st 400,000 The Jahn Bank

2nd 600,000 The Bill Bank

3rd 350,000 City Hall Bank

Do we know what the clean up costs were which brings me to anoterh question which I forgot all about.

Does Worc Common Grd have an ownership interest in Ironic Avenue.

Wonder if the Hystrionic Commission will just roll over on this one or can we expect another Downing St like city hall dog & pony show with the typical hand wringing, moaning, & groaning and then a cave by the HC (Hystr. Comm)

Then next up ... the Auditorium War Memorial facade and more masquerading...followed by Notre Dame Church

Bill Randell said...

Worcester Common Ground has nothing to do with this....

This is a private owner

Steve Foley said...

Bill, if the $400K lender knew about the $350K ("Actual Notice") loan they will not be in a senior position.

Jahn said...

Who is the non profit org. this was deeded to alleged pollution remediation? The cost, also.

Steve are you saying that as long as another lien holder or potential lien had knowledge of a potential 350K lien w/o the 350K lien actually being recorded at R. of Ds. that the 400K holder would be suborbinate to the citys 350k lien?

Bill i cant pull up recent prior posts w/o losing this response, but wasnt it mentioned on here a short while back something about money going to WGC for something to do with boys Club? Maybe it was new Boys Club and WGC was running some socila program there or whatever.

Also mea culpa, yesterday I pointed the finger at Curt schilling for whatI thought was a 125M$ problem with state of Rhodie. It appears it is more like ONLY $75M. Hey what's 50M between friends.

Has anyone bothered asking why someone like Curt Schilling, who has to have Millions socked away from his 15-20 year pro baseball career, has to ask the taxpayers to pony up venture capital for a busineess and/or a technology about which I dare say he probably knows nothing?

Bill Randell said...


I agree with you.. Not sure what Steve means but I am sure he will have an answer.

Every title examiner I have ever met stress the "chain" wne reviewing title.

That chain was based on date it was recorded not the date it was signed..

Worcester Common Ground has never had anything to do with the Hadley or Ionic.


Jahn said...

Bill, I too have a somewhat difficult time trying to fathom what Steve is saying. That said, he was quite knowledgable re the mechanics of the Direct Air credit card refunds so I will stand by for a more detailed explanation from Steve.

If I am holding a mortgage written to Ionic for 350k how am I supposed to know that Bill is out there holding an earlier dated 400K mortgage if Bills Mortgage isnt publicly recorded at R of Ds?.

Conversely, how is Bill supposed to know that I have a 350K mortgage to Ionic, so that he can notify me of his 400k mortgage?

W/o a written document filed in a central registry, it almost seems to be an impossible situation to control. And how does someone prove what another mortgage holder knew or didnt know and even if he did know, WHEN did become aware of it?

Jahn said...

And speaking of The (We've Been) Hadley'ed, didnt the city council and/or Lukes request an explanation from the Hadley dev'ers as to how they ran up a per unit cost of $513,000. Last I heard the hADLEY folks were going to get back to Konnie.

I am going to guess that The Hadley folks will come back and say the $513,000 figure includes state tax credits at face value and that does not really count as a cost b/c they, (the dev'ers) never actually paid it out of their pockets like they did for 2x4's, sheet rock, etc.

I wonder how the assessor valued the Hadley's Parking Lot. That is a parking lot...right?

Steve Foley said...

The purpose of the registry of deeds is to give the world notice that the mortgage is there and protect a subsequent lienholder from a prior lien. If the lender already had notice of the prior lien, there is no real need for the notice from the registry.

So, if the $400K lender already knew about the $350K, they cannot rush down to registry and record first to place their lien in a senior position.

On the other hand, if they did not know about the prior mortgage and recorded their lien then they would be placed in a senior position.

My guess is that during the processing of the $400K note, someone noticed the $350K note had never been recorded and called up the city and told them. That is why is was recorded a week after the $400K note.

Someone dropped the ball by not recording the City's lien, but I doubt it placed them in a junior position.

Bill Randell said...

Steve I talked to a couple title examiners and they tell me that the city lien is behind the 400K loan that was recorded the week before.

Not trying to start a fight but that is what they told me.

Steve Foley said...

Bill, that's quite possible. My scenario requires a particular set of facts.

Steve Foley said...

Just for fun, I dug up some caselaw on the subject. This is from MOORE vs. GERRITY COMPANY, INC., 62 Mass. App. Ct. 522

General Laws c. 183, § 4, makes clear that "an unrecorded mortgage is invalid as against third parties who do not have 'actual notice' of it." Tramontozzi v. D'Amicis, 344 Mass. 514 , 517 (1962). Because the Moores claim that their unrecorded mortgage had priority over Gerrity's, they have the "burden of proving that [Gerrity] had actual notice of" their earlier mortgage. Ibid. In support of their contention that they met their burden of proving that Gerrity had actual notice of the unrecorded mortgage, the Moores make two arguments: (1) the $30,000 mortgage note referred to in the altered purchase and sale agreement that Delaney provided to Gerrity was sufficient to establish that Gerrity had notice of the unrecorded mortgage

The holding was that because Gerrity had actual notice of the $30,000 unrecorded mortgage, it was senior to Gerrity's.

Bill Randell said...


You are referring to a 30,000 mortgage that was in a P & S agreement that was not recorded... That is different.

This guy had a mortgage and subordinated it to the City of Worcester. A year later he placed another mortgage on his property but the city never recorded their mortgage.

This 2nd mortgage a year later is senior to the City of Worcester. Imagine if you have this guy a mortgage would you want to be 2nd to the City of Worcester mortgage whenever it filed.

Case law cited does not support your arguement.

Steve Foley said...

Bill, the case cited is EXACTLY on point.

You can try to distinguish it all you like. The fact is that if the mortgagee had actual knowledge of the prior mortgage, it takes a junior position.

Jahn said...

"My guess is that during the processing of the $400K note, someone noticed the $350K note had never been recorded and called up the city and told them. That is why is was recorded a week after the $400K note".

Steve, how and where and when would they notice or become aware of the existence of a previously existing unrecorded mortgage(s) and then assuming previous existing, unrecorded mortgage holder wanted to be senior how does the now wannabe sr. mortgage holder prove the current sr. mortgage holder knew of the existence of an unrecorded mortgage that was supposed to be sr.?

Bottomline in this case is that if the owner wants the Home Funds the city will probably require the 350K in Home funds be senior. When you get to the substance of Home Funds, the bottomline is that they end up being add'l pure profit to teh dev'er/builder.

I have seen 1, maybe 2 instances where city RFPs place a maximum allowance of 25,000 per unit for Home Funds and the dev'ers ends up with 50,000 Home funds per unit. How would you like to have been the 2nd place, losing bidder in that instance. Of course the recipient of the add'l 25,000 Home Funds definitely fell in the category of "Favored Worcester Player"

It would not surprise me that city depts do not always communicate properly with each other.

Bill Randell said...


The case law you cite referred to a mortgage that was in a P % S. In other words I sell you a property and take back a $100,000 mortgage that is clearly outlined in the P & S. If I forget to record said mortgage then this case law applies.

None of the mortgages we are discussing here were ever in any P & S.

The title examines that I have talked to are wrong. I will let them know.


Bill Randell said...


Why bother even having a registry of deeds if we acknowledge mortgages and deeds that people are aware.

it does not even ahve to be in a P& S agreement. Who cares! As long as you are aware? How do you prove that??

Steve, when you go to registry they stamp deeds and mortgages and even hold back funds until these items are on record for a reason..

There may be an exception for mortgages that are specifically mentioned in a P & S per your case law but other then that, nobody would buy or sell real estate if mortgages are recognized on the basis that the either the seller or buyer are aware of them and they become senior to recorded mortgages.


Steve Foley said...

Bill wrote "The title examines that I have talked to are wrong. I will let them know"

Since your title examiners think that actual knowledge of an unrecorded encumbrance has no effect, they are clearly incompetent, but I doubt they will believe you when you try to educate them.

I would appreciate if you can tell me, privately, who these morons are so I can be sure my clients avoid them.

Steve Foley said...

Jahn wrote:
"how does the now wannabe sr. mortgage holder prove the current sr. mortgage holder knew of the existence of an unrecorded mortgage that was supposed to be sr.?"

Since Levin Development, managed by James Levin, originally loaned $600 to Whiz, managed by James Levin, and subsequently assigned that mortgage to Water Street Mill Corp, who's assistant secretary is James Levin, it can be pretty easily shown that when Water Street Mill Corp loaned Whiz more money, that Water Street Mill Corp, who's assistant secretary is James Levin, has actual knowledge of the unrecorded mortgage granted to the City of Worcester, and signed by James Levin, manager of Whiz.