David and Susan are purchasing a condominium unit in Boston under MGL Chapter 183A. Their lender requires title insurance. During the title search, the attorney discovers that the condominium's master deed was recorded but the condominium trust's certificate of organization was never recorded at the Suffolk County Registry of Deeds. Which of the following best describes the significance of this finding for the buyers' financing?
Correct Answer
B) It creates a potential title defect that may affect the validity of the condominium organization and the lender's lien priority
Under MGL Chapter 183A, a valid Massachusetts condominium requires both a Master Deed and a Declaration of Trust (condominium trust) to be properly recorded at the Registry of Deeds. The Declaration of Trust establishes the condominium association's legal organization. If the certificate of organization (or Declaration of Trust) was not properly recorded, it creates a title defect that could affect the legal validity of the condominium structure, the association's authority, and potentially the lender's ability to obtain a valid first mortgage lien on the unit.
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Related Topics & Key Terms
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Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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