Source: http://masscases.com/cases/sjc/461/461mass519.html
Timestamp: 2019-04-19 08:57:39+00:00

Document:
ROBERTA A. BOYLE vs. STEVEN WEISS, trustee in bankruptcy.
Trust, Beneficiary. Real Property, Homestead. Statute, Construction, Amendment. Words, "Owner," "By lease or otherwise."
CERTIFICATION of a question of law to the Supreme Judicial Court by the United States Bankruptcy Court for the District of Massachusetts.
Thomas F. Fleming for the plaintiff.
Steven Weiss (David K. Webber with him) for the defendant.
Confining our answer to the 2004 version of the homestead statute, [Note 2] we answer the certified question in the negative.
1. Background. The facts are undisputed. On July 16, 1990, Robert and Janet Boyle conveyed a property on Westview Road in Lowell, Massachusetts (Lowell property), consisting of land and a house, to one of their daughters, Maria A. Boyle, as trustee of the Westview Realty Trust (trust). The trust was established that same day under a declaration of trust filed and recorded in the Middlesex north district registry of deeds (registry). Robert Boyle and another daughter, the plaintiff Roberta Boyle (debtor), each hold fifty per cent of the beneficial interest in the trust. Robert Boyle succeeded Maria Boyle as trustee of the trust on May 22, 2009. The trust instrument does not reference the Lowell property or any other specific real estate, but it does give the trustee "full power and authority . . . to buy, deal in and manage real estate." The trust does not contain a spendthrift provision that would bar alienation of a beneficiary's interest to satisfy claims of creditors.
At all relevant times the debtor has lived in the house located on the Lowell property, apparently as a tenant at will of the trust [Note 3]; it is her residence. On February 26, 2010, the debtor caused to be recorded in the registry a declaration of homestead in the Lowell property. Four days later, on March 2, she filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. §§ 301 et seq. (2006). Pursuant to 11 U.S.C. § 522(b)(3), in Schedule C of her bankruptcy filing, the debtor claimed an exemption for her "[b]eneficial interest in The Westview Realty Trust, which holds title to real property used as the [d]ebtor's [r]esidence." The bankruptcy trustee objected to the debtor's claim of the exemption, arguing that under Massachusetts law a trust beneficiary residing in property owned by the trust may not acquire a homestead estate. Thereafter, the Bankruptcy Court judge certified to this court the question quoted above.
"An estate of homestead to the extent of $500,000 in the land and buildings may be acquired pursuant to this chapter by  an owner or owners of a home or  one or all who rightfully possess the premise by lease or otherwise and who occupy or intend to occupy said home as a principal residence. . . . For the purposes of this chapter, an owner of a home shall include a sole owner, joint tenant, tenant by the entirety or tenant in common . . . ."
(Emphases added.) G. L. c. 188, § 1. [Note 4] The debtor urges this court to answer the certified question in the affirmative because under Dwyer, the homestead statute is to be construed liberally in favor of the party seeking its protections. See Dwyer, supra at 30 & n.7. She argues that under a liberal reading of the 2004 act she is entitled to the exemption because (1) she was an "owner" by virtue of her fifty per cent beneficial interest in the trust that (through the trustee) holds title to the property, and (2) as a tenant at will she "rightfully possess[ed] the premises by lease or otherwise." [Note 5] We reject both these arguments, and conclude that even though the debtor resides in the Lowell property and uses it as her home, as the owner of a fifty per cent beneficial interest in the trust that holds title to the property but who does not direct or control the trustee, she cannot validly claim a homestead exemption for the property under the 2004 act.
(i) Ownership. The 2004 act provides that a homestead estate or interest can be acquired by an "owner," a term defined in that statute to mean "a sole owner, joint tenant, tenant by the entirety or tenant in common." As holder of a beneficial interest in the trust, the debtor is not an "owner" under the plain terms of this definition because she is not a sole owner, a joint tenant, a tenant by the entirety, or a tenant in common. Rather, by her own characterization, she is a tenant at will of the trust. As such, she holds no direct ownership interest in the Lowell property, and her ability to reside in it as her home is generally subject to termination within fourteen or thirty days of the trustee's service of a notice to quit. See G. L. c. 186, § 12.
(ii) "Otherwise" clause. The debtor argues also that even if she does not qualify as an owner of the Lowell property under the 2004 act, she was eligible to file a declaration of homestead because she rightfully possessed the property "by lease or otherwise" (emphasis added). G. L. c. 188, § 1. In her view, the quoted phrase encompasses her at-will tenancy.
tenant's argument would extend homestead protection "to tenancies at will, which would be absurd." Id. at 428.
exemption statute. Cf. Bellows Farms, Inc. v. Building Inspector of Acton, 364 Mass. 253 , 258 (1973) ("The difference between the earlier  and the later  versions of this part of [G. L. c. 40A,] § 7A is obvious and significant. This is not a case of using different language to convey the same meaning"). [Note 15] The changes to the homestead statute reflected in the 2010 act offer no support for the debtor's claim of entitlement to a homestead exemption under the 2004 act.
3. Conclusion. For the reasons stated, we answer the certified question in the negative. The Reporter of Decisions is directed to furnish attested copies of this opinion to the clerk of this court. The clerk in turn will transmit one copy, under the seal of the court, to the clerk of the United States Bankruptcy Court for the District of Massachusetts, as the answer to the question certified, and will also transmit a copy to each party.
[Note 1] This court previously has interpreted S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981), to include certification of questions from the United States Bankruptcy Court, even though that court is not specifically mentioned in rule 1:03. See Colonial Tavern, Inc. v. Boston Licensing Bd., 384 Mass. 372 , 373 n.3 (1981).
[Note 2] General Laws c. 188, § 1, as amended through St. 2004, c. 218, was revised in 2010. St. 2010, c. 395, § 1, effective March 16, 2011 (2010 act). We discuss the 2010 act infra.
[Note 3] Roberta Boyle (debtor) describes herself as a tenant at will of the Westview Realty Trust (trust). The bankruptcy trustee does not dispute that characterization, and we accept it as true for purposes of answering the certified question.
[Note 4] References to G. L. c. 188, § 1, in this opinion are to the statute as it appeared in St. 2004, c. 218 (2004 act), unless otherwise noted. See note 2, supra.
[Note 5] The debtor argues also that the amendments to the homestead statute effected by the 2010 act among other things clarified that under the 2004 act, a trust beneficiary could acquire a homestead estate. We address this argument in Part 2 (b), infra.
[Note 6] The trust instrument provides that if or when the trust is terminated, the trustee is to transfer and convey specific trust assets, including real property, to the trust beneficiaries according to their respective interests. The record contains no suggestion that the trust had been terminated at the time the debtor recorded her declaration of homestead.
[Note 7] That the debtor's interest in the trust qualifies as one in personal property is also reflected in the fact that under the terms of the trust, she is entitled to sell her beneficial interest for any purchase price she might set, subject to a right of first refusal held by the other trust beneficiary or beneficiaries.
[Note 8] We do not mean to suggest that under the 2004 act, the beneficiary of a trust holding real property can never acquire an estate of homestead in real property held by that trust. There is merit in the reasoning set forth in decisions of the United States Bankruptcy Court that where legal and equitable interests in a trust merge in one person -- as in the case of a nominee trust with a sole beneficiary and trustee -- that person especially may be eligible to file a declaration of homestead with respect to a home that is owned by the trust and in which she resides. See In re Szwyd, 346 B.R. 290, 293 (Bankr. D. Mass. 2006), aff'd, 370 B.R. 882 (1st Cir. 2007). See generally Birnbaum, The Nominee Trust in Massachusetts Real Estate Practice, 60 Mass. L.Q. 364, 365 (1976). The trust at issue here, however, is distinctly different. The debtor is a beneficiary but not the trustee, and as a beneficiary, she does not have the power to direct or control the trustee's actions.
[Note 9] Statute 1855, c. 238, § 1, provided in pertinent part that a homestead exemption was available for "the homestead farm or the lot and buildings thereon, occupied as a residence and owned by the debtor, or any such buildings owned by the debtor and so occupied, on land not his own, but of which he shall be in rightful possession, by lease or otherwise."
[Note 10] The court in Thurston v. Maddocks, 6 Allen 427 (1863) (Maddocks), appears to have misquoted St. 1855, c. 238, § 1, but the phrase the court did quote has virtually the same meaning as the actual language of the statute ("and owned by the debtor . . . of which he shall be in rightful possession, by lease or otherwise"). See note 9, supra.
[Note 11] The Maddocks case is an old case. Within the much more recent past, however, the Appeals Court, in Assistant Recorder of the N. Registry Dist. of Bristol County v. Spinelli, 38 Mass. App. Ct. 655 (1995) (Spinelli), relied on Maddocks to conclude that under the version of the homestead statute at issue in that case -- G. L. c. 188, § 1, as amended through St. 1992, c. 286, § 239, which is identical in all relevant respects to the 2004 act -- did not permit a beneficiary of a trust who held an equitable interest in the property in question to acquire a homestead estate in it. Id. at 658-660. To the extent that the Spinelli case may suggest that even one who holds an interest in a property as the sole beneficiary of a Massachusetts nominee trust could not qualify for a homestead estate under the homestead statute, its reasoning may be subject to question, see note 8, supra, but the issue is not before us and we do not decide it. The point worth emphasis here is that although the homestead statute was amended several times between the date of the Spinelli decision and the enactment of the 2010 act -- see St. 1995, c. 297, § 1; St. 2000, c. 174; St. 2004, c. 218 -- the Legislature left unaltered the provision allowing a party "who rightfully possess[es] the premise by lease or otherwise" to acquire an estate of homestead. It was not until the 2010 act, discussed infra, that the Legislature amended the statute explicitly to allow holders of a beneficial interest in a trust to acquire an estate of homestead.
[Note 12] We continue to follow the principle, as stated in Dwyer v. Cempellin, 424 Mass. 26 , 30 (1996), that the State homestead exemption is to be interpreted liberally. However, we cannot stretch that principle in a manner that fundamentally ignores the words of the statute.
[Note 13] The 2010 act also grants an "[a]utomatic homestead exemption" of $125,000, but an owner filing a written declaration of homestead can receive an exemption of $500,000. See G. L. c. 188, § 1, as appearing in St. 2010, c. 395, § 1.
[Note 14] The 2004 act included "a sole owner, joint tenant, tenant by the entirety or tenant in common" within its definition of "owner." G. L. c. 188, § 1. A joint tenant, tenant by the entirety, or tenant in common holds a direct ownership interest in the property in question. That is not true of the holder of a life estate interest or, as a general matter, one holding a beneficial interest.
[Note 15] It is also the case that under G. L. c. 188, § 5 (a) (4), as appearing in St. 2010, c. 395, § 1, a homestead declaration must be executed by the trustee of a trust; a beneficiary is not authorized to do so. Consequently, even if the provisions of the 2010 act were to apply to the debtor's homestead declaration, the declaration would have been invalid because it was not executed by Robert Boyle, the sole trustee of the trust. The debtor relies on language in St. 2010, c. 395, § 3, providing that existing estates of homestead continue to remain in full effect notwithstanding their failure to comply with the law's execution requirements, to argue that her declaration was exempt from the § 5 (a) (4) execution requirement. However, as correctly noted by the bankruptcy trustee, because the debtor's homestead declaration was not valid when recorded initially, it cannot be deemed to have been "in effect on the effective date of [the 2010 act]."

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